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Cultivating an Effective Working Relationship with Your Treasurer

Category: Articles

By:  A. Michael Gellman, CPA, Shareholder

We often squander valuable resources.  A Treasurer is a precious resource and we need to make sure we maximize the potential of that resource.  Universally, nonprofit organizations indirectly undermine the benefits that can come from an interactive treasurer relationship.  Why does this happen?  Simply, nonprofit organizations just have too many barriers in place.  Some of these barriers come from poorly designed governance policies and practices.  But many of these barriers come from human nature itself.  We need to work smarter when it comes to effectively integrating our treasurers into the fabric of our financial management systems.  The results will be beneficial and fulfilling.

A step in the right direction would be to view your treasurer relationship as a business partnership.  For-profit business partnerships, in general, have all the elements that are necessary to create an effective working and interactive treasurer environment that will be both beneficial to the organization and be rewarding to the volunteer treasurer who is giving of his/her valuable time and expertise.

Let’s explore this concept a little.  Effective for-profit business partnerships have many elements in common with a trust filled relationship between a nonprofit organization and its treasurer.  Business partnerships are built upon trust, common purpose, shared expertise, oversight and transparency.  Each of these elements needs to exist in a successful nonprofit organization relationship with its treasurer.  Designing systems and procedures around these elements will maximize the relationship for both parties.

Trust is always the first and most important element.  Trust drives everything; consequently, trust must be built into each aspect of the treasurer relationship.  Also trust is hard to keep and easy to lose so we must constantly be vigilant making sure that the relationship stays on a high plane.  The best way to build trust is to make sure both the treasurer and the organization are on the same page.  You accomplish this by having a set of clear working rules with well-defined responsibilities that are linked to deliverables and due dates.  So often all the treasurer knows is the date their term of office begins and the date it ends.  Everything in between is often a big mystery.

The big mystery can be solved by defining common purpose.  The common purpose is to safeguard the financial assets of the organization.  The roadmap is a set of working rules for the treasurer and the finance committee to follow that will ensure an orderly due process with a purpose of safeguarding financial assets.  The components of this process should include a job description for the treasurer and the finance committee along with a set of working rules defining expectations for both and the mechanism for the exchange of information.  The exchange of information is core to the process.

The exchange of information highlights the next two ingredients shared expertise and oversight.  A key element of a working treasurer relationship is ensuring that specific financial information flows to the treasurer and the finance committee on a regular and defined basis.  The treasurer job description and the working rules for the finance committee should have these elements clearly listed.  The flow of information is best organized around natural reporting time periods or cycles:

  • Monthly Cycles – this cycle melds closely with the regular flow of financial reporting from the organization and its accounting/finance department.  The information starts with standard financial reports that also include comparison to budget and any special purpose management reports that the organization relies on to manage programs, operations and mission.  These special purpose reports can include cash flow reports, projections, program specific reports (annual meeting, grants, fundraising events, etc.) and line-item specific reports (membership, contributions, investment income, etc. for revenue and labor, scholarships, professional fees, etc. for expenses).
  • Board Meeting Cycles – this includes financial information needed by the board to fulfill its fiduciary role.
  • Annual Cycles – this includes major financial operations that happen on an annual basis for example; preparation of next fiscal year’s budget, preparation for fiscal year-end, financial statement audit (mostly an audit committee function), and other financial cycles like compensation, loan and line-of-credit approvals, federal form 990 and grant and contract approvals. 

The treasurer along with the finance committee performs an oversight function regularly reviewing the above information with the CFO or controller or the appropriate accounting staff person for a smaller organization.  The review process is centered on an open dialogue where the reports are discussed between the accounting department and the treasurer using their shared expertise as a platform.  Ultimately, the treasurer’s questions are answered and treasurer approval for passing along the information to the finance committee and to the board is obtained and documented. 

This end product of passing along financial information sounds simple as a goal but is the end result of a highly complex process that is built upon trust between the treasurer and the organization’s accounting personnel generating the information.  The trust comes from an open dialogue between these two parties respecting and sharing each other’s expertise in a manner that plays tribute to transparency.  By keeping transparency as part of the process we also gain trust from all the other users and observers of the financial information generated.

All of these elements discussed are in place in a successful for-profit business partnership.  In the nonprofit world we replace common purpose of making a profit with a high level of respect for mission and a great appreciation of highly motivated volunteers giving of their time and expertise.  The result is a working business partnership between your organization and its treasurer based in trust and beneficial to all.

Mr. Gellman is a Shareholder with Rubino & McGeehin, Chartered and he manages the Consulting Services Group (CSG), which provides specialized management and accounting consulting services to exempt organizations, organizations and companies receiving Federal Funds and government contractors.  CSG work is largely focused on management advisory services, budget systems, indirect cost rate systems and compliance, accounting systems and services support, and audit preparation assistance in coordination with client accounting departments. 

For more information about Mr. Gellman and the courses in nonprofit finance, budget and management he teaches, please visit http://www.rubino.com/about/bios/gellman.htm or contact him directly at mgellman@rubino.com.

 

 

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