Keeping It Ethical is our weekly blog series highlighting the 33 Principles for Good Governance and Ethical Practice. Throughout the series, we hope to highlight the importance of each Principle and the helpful resources associated with it and learn more from you about how you’ve incorporated these Principles into your charitable organization.
What does Snoop Dogg have to do with Principle 22? Everything! While rolling down the street, Snoop wisely opined about the importance of keeping “my mind on my money and my money on my mind.” And although a nonprofit’s financial assets certainly aren’t the board’s money, board members should always have their minds on the sound financial management of the organization they oversee.
Establishing clear policies that protect a nonprofit’s financial assets and ensure strong internal controls should be at the top of a board’s priorities. While it falls to organizational staff to manage day-to-day accounting and finances, the board is responsible for reviewing reports and making sure staff is strictly following board-approved policies.
Boards should regularly review financial reports, including an organization’s budgeted and actual expenditures and revenues, to determine whether adjustments are needed to reflect revenue changes. Further, boards should review financial reports to certify that they reflect how the organization has met requirements placed on funds by donors or grant programs.
Beyond monthly and annual financial management oversight, board members need to keep the future in mind. This includes the generation of cash reserves and policies that govern how funds are invested and the portion of returns, if any, used for operations or programs. If independent investment managers are needed, board members should select them and monitor their activities.
Financial management oversight may seem daunting, but guidance is available to show the way! There are a multitude of resources available to ensure your organization is managing and investing its funds responsibly and in accordance with legal requirements. Here are just a few of the top resources:
- Financial Oversight and Accountability Resources and Tools, BoardSource
- Financial Oversight, Governance Matters
- Beyond Financial Oversight: Expanding the Board’s Role in the Pursuit of Sustainability, NPQ
- The Role of the Board of Directors in Financial Oversight, LawHelp.org
And that’s just for starters. You can access even more resources on Independent Sector’s Principles Resources Center.
Help Us Improve our Resources on Ethics & Accountability
We need your feedback to improve our ethics and accountability resources and programming. Please complete this five-minute survey by Friday, March 8. One lucky survey participant will win a free registration for the upcoming Independent Sector/Nonprofit Leadership Alliance online course on ethical leadership. The course starts in mid-April, and your free registration is transferable to a peer or colleague.