Every nonprofit, regardless of size or focus, needs a capable person who can oversee the organization’s financial management and operations. The treasurer is a member of the organization’s board of directors or a part of the finance committee, and their primary responsibility is to oversee and manage the financial affairs of the nonprofit.
Because the treasurer’s role in a nonprofit is often voluntary, it is particularly important that the officer you select understands and is dedicated to their fiduciary duty to act in the best interests of your organization at all times.
To help you better understand what this important role requires, let’s take a look at the duties and responsibilities of a nonprofit treasurer.
Roles and responsibilities of a nonprofit treasurer
As an officer of the board or member of the finance committee, a nonprofit treasurer is responsible for overseeing all aspects of an organization’s finances. Not only do they manage and monitor the NPO’s financial health, but they also keep the board of directors up to speed so that they can make better decisions.
Below are the many roles and responsibilities of a nonprofit treasurer:
- Financial Management: The treasurer is responsible for managing the organization’s finances, including budgeting, financial planning, and making sure that the organization operates within its budgetary constraints.
- Financial Reporting: The treasurer is responsible for presenting financial reports to the board of directors and other stakeholders including the organization’s income and expenses, assets and liabilities, and other financial performance indicators.
- Internal Controls: The treasurer establishes proper internal controls to safeguard the organization’s assets and prevent fraud or misuse of funds.
- Compliance: The treasurer ensures that the nonprofit is compliant with all relevant financial and accounting regulations, as well as legal requirements or reporting obligations specific to charitable organizations.
- Banking and Investments: The treasurer manages the organization’s bank accounts and is often involved in decision-making related to investments, subject to the organization’s investment policy.
- Fundraising and Grant Management: In some cases, the treasurer may be involved in fundraising and the management of grants and donations received by the nonprofit.
- Strategic Financial Planning: The treasurer collaborates with other board members to develop long-term financial strategies that align with the organization’s mission and goals.
- Auditing and Review: The treasurer may be involved in annual audits or financial reviews to ensure the accuracy and transparency of the organization’s financial statements.
The nonprofit treasurer’s role may vary depending on the size of the organization they serve. In larger nonprofits 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 nonprofit is on the smaller side, your treasurer’s responsibilities are more likely to include everything from making bank deposits to preparing your organization’s financial statements.
Choosing the right treasurer for your nonprofit
Attracting a treasurer can be difficult. You typically want to find someone with an accounting or finance background at a minimum and today, accounting and finance professionals are not only in high demand in the job market at large, but also for their time on boards. As a nonprofit, you have the added pressure of finding someone who will relate to your cause.
Here are some of the qualities you should consider when finding a treasurer for your NPO.
- Financial Expertise: The treasurer should have a strong background in finance, accounting, or related fields. They should be familiar with financial principles, budgeting, and financial reporting and analysis.
- Nonprofit Experience: Prior experience working with nonprofits or a good understanding of the nonprofit sector is very valuable. Nonprofits have unique financial challenges and compliance requirements, so relevant experience will be important in handling those challenges.
- Integrity and Ethics: The treasurer will have access to sensitive financial information and may be responsible for managing significant funds. Look for candidates with a strong sense of integrity, ethics, and a commitment to transparency and accountability.
- Attention to Detail: A treasurer must be detail-oriented to accurately manage financial records, prepare reports, and identify errors and/or discrepancies.
- Analytical and Problem-Solving Skills: The treasurer should be able to analyze financial data, identify trends, and make informed financial decisions.
- Communication Skills: Effective communication is critical for a treasurer to convey financial information to the board, staff, and other stakeholders in a clear and understandable manner.
- Team Player: The treasurer will work closely with other board members, the executive director, and finance staff (if they exist). They should be able to effectively collaborate and contribute positively to the team.
- Time Management: Nonprofit treasurers often have multiple responsibilities, so the ability to prioritize tasks and efficiently manage their time is vital.
- Commitment to the Mission: You want to find a candidate who is genuinely passionate about the organization’s mission and has a clear understanding of the goals and values.
- Financial Risk Management: A treasurer should be able to assess financial risks and propose strategies to mitigate them, ensuring the organization’s financial stability.
- Adaptability and Continuous Learning: Financial regulations and best practices will evolve over time. A treasurer who is open to learning and adapting to change will go a long way in keeping the organization up-to-date and compliant.
- Dedication and Availability: Serving as a treasurer can require a significant time commitment, especially during financial planning and reporting periods. Look for a candidate who is dedicated to fulfilling the role and has the time to do so.
When considering potential treasurers, conduct thorough interviews, check references, and seek input from other board members or stakeholders to ensure that the chosen candidate has the necessary qualities and skills to succeed in the role.
Current challenges of hiring and retaining NPO treasurers
Nonprofit organizations face a number of challenges in relation to their treasurers. Some of the greatest challenges include:
- Recruiting and Retaining Qualified Treasurers: Finding individuals with the right financial expertise, experience, and commitment is challenging. Retaining qualified treasurers over the long haul can be difficult due to the significant responsibilities and time commitment required.
- Volunteer Burnout and Turnover: Many treasurers in NPOs are volunteers who dedicate their time and effort while still maintaining “regular” jobs and personal commitments. The demanding role of a treasurer often leads to burnout and high turnover rates, which can disrupt financial management and stability.
- Financial Complexity: Nonprofit finances can be complex, especially for organizations with multiple funding sources, grants, and restricted funds. Treasurers often struggle to navigate complex financial reporting, budgeting, and compliance requirements.
- Regulatory Compliance: NPOs in Canada are subject to a variety of financial regulations and reporting requirements to maintain their charitable status and eligibility for tax benefits. Treasurers must ensure that financial records and reporting are in compliance, especially for smaller organizations with limited resources.
- Limited Resources: Smaller NPOs may face resource constraints, making it challenging to provide treasurers with the necessary support, training, and access to financial management tools.
- Balancing Mission and Financial Viability: Treasurers must strike a balance between achieving the organization’s mission and maintaining financial viability. This challenge can be particularly pronounced for NPOs facing uncertain funding sources or financial sustainability concerns and put a lot of pressure on the treasurer.
To avoid some of these challenges, NPOs should improve recruitment and retention strategies, provide treasurers with solid support and training, establish strong succession plans, and foster open communication and collaboration within the organization. Securing external support, or partnerships with financial experts and organizations can help alleviate some of the challenges associated with financial management.
Treasurer vs. bookkeeper: Avoiding a financial conflict and job burnout
Sometimes, a nonprofit treasurer will be responsible for both performing and approving an organization’s financial transactions. This could involve things like processing accounts payable, administering accounts receivable, performing monthly bank account or credit card reconciliations, and more.
There’s nothing technically wrong, inappropriate, or even uncommon about having your treasurer take care of your bookkeeping tasks—especially if you are a small nonprofit organization with resource constraints. That said, most accounting/finance professionals have “graduated” from the mundane activities associated with bookkeeping, and will look for roles that don’t require them to get involved in those lower-level activities
While the treasurer’s role in nonprofit accounting is integral to having well-managed finances (and positioning your organization to achieve its mission), it’s considered best practice to hire a separate bookkeeper to handle your day-to-day bookkeeping duties.
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, and to reduce job dissatisfaction for your treasurer, 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 finances and strengthen its internal controls.
At Enkel, we work with Canadian nonprofit organizations to provide reliable, accurate monthly bookkeeping, payroll, accounts payable, and controllership services. If your nonprofit is looking for a bookkeeper to handle the books, get in touch with us today to learn more about our nonprofit accounting services.
