Every non-profit organization (NPO) needs a capable board member who can take charge of the organization’s financial management.
Unlike the executive director, who is paid, the treasurer's role in non-profit organizations is usually voluntary. So it’s especially important that the officer you elect understands and is committed to their fiduciary duty to always act in your organization's best interests.
To help you better understand what this pivotal role requires, let’s look at the duties and responsibilities of the NPO board treasurer.
What Does a Non-Profit Treasurer Do?
As an officer of the board, a nonprofit treasurer oversees all aspects of an organization’s finances. They monitor the NPO’s financial condition and brief its board of directors on all things financial so they can make better decisions.
The specifics of an NPO treasurer’s financial leadership role vary depending on the size of the organization.
In larger nonprofits, for example, the treasurer may be involved in broad-scale, strategic undertakings like:
- Spearheading budget discussions during board meetings
- Assessing the organization’s funding model and taking responsibility for investing its reserve funds
- Advancing the financial literacy of board members
If your non-profit is smaller, on the other hand, your treasurer’s responsibilities are more likely to include everything from making bank deposits to preparing your organization’s financial statements.
Regardless of organization size, all NPO treasurers seek similar outcomes and have similar goals. Treasurers are vital leaders in a non-profit organization because they oversee all financial activities, ensuring accurate record-keeping and compliance with legal requirements. They oversee budgeting, financial planning, and reporting, which are essential for transparency and informed decision-making by the board. By effectively overseeing funds, the treasurer supports the organization's sustainability and its ability to fulfill its mission.
Although different organizations will have different needs and requirements for their treasurer’s role, all NPO boards should aim to elect an officer who has knowledge of non-profit accounting and finance.
To help you choose the best candidate for the role, here’s a breakdown of the two main categories of financial duties your treasurer may need to perform.
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The Treasurer's Role in Non-Profit Financial Strategy
From a strategic perspective, NPO treasurers are often responsible for ensuring the organization puts sound financial measures and internal controls in place—including, in many cases, the development and implementation of policies to invest funds and maintain cash reserves.
You might also need your treasurer to:
- Provide support for fundraising strategies
- Ensure funding is being spent in accordance with any restrictions
- See that budgets and other financial reports are periodically prepared and presented to board members for regular review and discussion.
In any type of NPO, a board treasurer will involve themselves in many or all of the following financial strategy functions.
1. Financial Analysis and Assessment
- Reviewing Financial Statements: The treasurer analyzes balance sheets, income statements, and cash flow reports to understand the organization's current financial position.
- Identifying Trends: They examine historical financial data to identify patterns in revenue and expenses, helping to forecast future financial scenarios.
- Assessing Financial Health: By evaluating liquidity, solvency, and operational efficiency, the treasurer gauges the organization's ability to meet its obligations and invest in its mission.
2. Budgeting and Forecasting
- Leading the Budget Process: The treasurer coordinates the creation of annual and multi-year budgets that align with strategic goals.
- Revenue Projections: They estimate future income from donations, grants, and other sources, considering factors like donor trends and economic conditions.
- Expense Forecasting: Anticipating costs associated with programs, operations, and capital projects ensures resources are allocated effectively.
3. Setting Financial Goals and Objectives
- Aligning with Strategic Plan: The treasurer helps define financial objectives that support the organization's mission, such as increasing reserves or funding new initiatives.
- Establishing Key Performance Indicators (KPIs): They identify metrics to measure financial performance, like fundraising efficiency or program expense ratios.
- Long-Term Financial Planning: Developing strategies for sustainability, including endowment growth or debt reduction plans.
4. Developing Financial Policies and Procedures
- Creating Financial Policies: The treasurer helps draft policies on investment, reserves, and risk management to guide financial decisions.
- Internal Controls: Helps establish procedures to safeguard assets and ensure accurate financial reporting.
- Compliance Frameworks: Setting guidelines to comply with legal and regulatory requirements, which is crucial for maintaining charitable status.
5. Risk Management and Mitigation
- Identifying Financial Risks: The treasurer assesses potential risks such as funding volatility, economic downturns, or changes in donor behaviour.
- Developing Contingency Plans: They propose strategies to mitigate risks, like diversifying revenue streams or establishing emergency funds.
- Insurance and Protection: Recommending appropriate insurance coverage to protect the organization's assets.
6. Resource Allocation Strategies
- Prioritizing Funding: Provide advice on which programs or initiatives should receive funding based on strategic importance and financial viability.
- Cost-Benefit Analysis: Evaluating the financial impact of proposed projects or expenditures to ensure they contribute to the organization's goals.
- Efficiency Improvements: Identifying areas to reduce costs or improve operational efficiency without compromising mission delivery.
7. Collaboration with Leadership and Stakeholders
- Engaging with the Board and Committees: The treasurer works closely with the finance committee and board members to align financial strategies with organizational priorities.
- Stakeholder Communication: Treasurers present financial strategies to donors, grantors, and other stakeholders to build trust and secure funding.
- Cross-Departmental Coordination: Collaborating with program managers and department heads to understand financial needs and constraints.
8. Strategic Financial Advising
- Investment Strategy Development: Crafting strategies for managing investments to grow assets responsibly.
- Revenue Diversification: Exploring new funding opportunities, such as grants, partnerships, or social enterprise models.
- Financial Sustainability Planning: Setting strategies to ensure long-term financial health, like building endowments or legacy giving programs.
9. Regulatory and Environmental Monitoring & Evaluation
- Staying Informed: Keeping abreast of changes in financial regulations, economic conditions, and sector trends that could impact the organization's finances.
- Adapting Strategies: Modifying financial plans in response to external factors, such as new legislation or shifts in the funding landscape.
10. Ethical Financial Leadership
- Promoting Transparency: Ensuring that financial strategies and decisions are made openly and ethically.
- Accountability Standards: Setting high standards for financial integrity and stewardship to maintain public trust.
The Treasurer's Role in Non-Profit Financial Procedures
From the perspective of financial performance, non-profit treasurers are often responsible for approving expenses and other transactions, preparing and signing cheques, and monitoring the organization’s budgeted vs actual cost and revenue amounts.
You might also need your treasurer to:
- Keep up to date on CRA policies and ensure compliance around account record maintenance, financial reporting, and the filing requirements for annual information returns, sales tax payments, and payroll remittances
- Create a budget and prepare cash flow forecasts to help identify and prevent financial issues over the long term
- Serve as chair of your nonprofit’s finance or audit committee (this typically includes planning and preparing for internal and external audits when required, and presenting audited financial statements to the board)
If you have a dedicated bookkeeper or other staff handling your day-to-day bookkeeping, your treasurer should also be prepared to discuss accounting procedures and financial practices with them. This will help clarify their roles, responsibilities, and communication requirements.
Specifically, an NPO treasurer will be involved in many or all of the following financial and budgetary tasks.
1. Budget Execution and Monitoring
- Allocating Funds: The treasurer oversees the disbursement of funds according to the approved budget, ensuring that resources are directed toward priority programs and initiatives.
- Expense Tracking: They monitor actual expenditures against the budget, identifying variances and taking corrective actions when necessary.
- Cash Flow Management: Managing the timing of income and expenses to maintain adequate cash flow for operational needs.
2. Implementing Financial Policies and Procedures
- Enforcing Policies: Applying financial policies developed during strategic planning, such as spending limits, approval processes, and procurement guidelines.
- Internal Controls: Establishing and maintaining controls to prevent fraud, waste, and misuse of funds, including segregation of duties and regular audits.
- Policy Updates: Revising procedures to respond to changing circumstances or to improve efficiency.
3. Oversight of Daily Financial Operations
- Overseeing Accounting Functions: Supervising bookkeeping, payroll, invoicing, and accounts payable/receivable activities.
- Technology Utilization: Assisting in the implementation and management of financial software systems to streamline operations and improve accuracy.
4. Risk Management
- Monitoring Risks: Keeping an eye on financial risks identified in the strategic plan, such as funding shortages or investment volatility.
- Mitigation Strategies: Taking proactive steps to mitigate risks, like adjusting budgets or diversifying income sources.
- Insurance Oversight: Ensuring appropriate insurance coverage is in place and updated as necessary.
5. Revenue Generation Support
- Fundraising Collaboration: Working with the development team to implement fundraising strategies, providing financial insights and ensuring proper handling of donations.
- Grant Compliance: Managing financial aspects of grants, including budgeting, tracking expenditures, and fulfilling reporting requirements.
6. Resource Optimization
- Cost Management: Identifying areas to reduce costs without compromising the quality of programs and services.
- Efficiency Improvements: Streamlining financial operations to maximize resource utilization.
7. Financial Reporting and Transparency
- Preparing Financial Statements: Ensuring timely and accurate production of financial reports such as income statements, balance sheets, and cash flow statements.
- Stakeholder Communication: Presenting financial results and progress towards financial goals to the board, donors, and regulatory bodies.
- Regulatory Compliance: Filing required financial reports and disclosures to government agencies and adhering to legal obligations.
8. Investment Management
- Executing Investment Policies: Managing investments in accordance with strategies and policies approved by the board to achieve desired returns while minimizing risks.
- Performance Monitoring: Regularly reviewing investment performance and making adjustments as needed.
9. Compliance and Regulatory Adherence
- Tax Obligations: Overseeing the preparation and submission of tax returns and ensuring compliance with tax regulations.
- Legal Compliance: Staying informed about financial laws and regulations affecting the non-profit and ensuring all activities are compliant.
- Audit Coordination: Facilitating external audits and implementing recommendations to improve financial practices.
10. Communication and Collaboration
- Board Engagement: Keeping the board informed about financial status, challenges, and progress in implementing the financial strategy.
- Cross-Departmental Coordination: Collaborating with other departments to ensure financial considerations are integrated into all aspects of the organization's work.
- Training and Support: Educating staff and volunteers on financial procedures and the importance of compliance.
11. Monitoring and Evaluation
- Performance Metrics: Tracking key financial indicators to measure progress toward financial goals set in the strategy.
- Adjusting Plans: Recommending changes to the financial strategy based on performance data and external factors.
- Continuous Improvement: Seeking opportunities to enhance financial processes and implementing best practices.
12. Stakeholder Relationship Management
- Donor Relations: Providing financial reports and insights to donors to demonstrate the impact of their contributions.
- Regulatory Bodies: Maintaining positive relationships with regulatory agencies through compliance and open communication.
Avoiding Financial Conflicts of Interest
Sometimes, a nonprofit treasurer will be responsible for performing and approving an organization’s financial transactions. This could involve:
- Processing accounts payable
- Administering accounts receivable
- Performing monthly bank account or credit card reconciliations
There’s nothing technically wrong, inappropriate, or even uncommon about having your treasurer take care of your bookkeeping tasks—especially if yours is a small nonprofit organization with resource constraints.
However, while the treasurer's role in non-profit accounting is integral to having well-managed financials (and positioning your organization to achieve its mission), it’s still considered best practice to hire a separate bookkeeper to handle your day-to-day bookkeeping duties.
That’s because while your management team (including your bookkeeper) is tasked with actively managing your nonprofit—the board (including your treasurer) is ultimately responsible for overseeing its progress. The best way to avoid a potential conflict of interest between these two areas is to separate the roles and responsibilities involved.
Having a separate treasurer and bookkeeper is a highly effective way to give your nonprofit organization an extra layer of oversight around its financials and strengthen its internal controls.
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