Every nonprofit needs a capable board member who can take charge of the organization’s financial management.
Unlike a paid executive director position, however, the treasurer role in nonprofit organizations (or NPOs) is usually voluntary. So it’s especially important that the officer you elect understands and is committed to their fiduciary duty to act in the best interests of your organization at all times.
To help you get a better idea of what this pivotal role requires, let’s take a brief look at the duties and responsibilities of the nonprofit board treasurer.
What does a nonprofit treasurer do?
As an officer of the board, 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 condition, but they also keep its board of directors up to speed on all things financial so they can make better decisions.
The specifics of a nonprofit treasurer’s financial leadership role vary depending on the size of the organization they serve.
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 nonprofit is very small 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.
Typical nonprofit treasurer duties
Although different organizations will have different needs and requirements when it comes to their treasurer’s role, all nonprofit boards should ideally aim to elect an officer who has knowledge of nonprofit accounting and finance.
To help you choose the best candidate for the role, here’s a breakdown of the 2 main categories of financial duties your treasurer may need to perform.
1. The treasurer's role in nonprofit financial strategy.
From a strategic perspective, nonprofit 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
2. The treasurer's role in nonprofit financial procedures.
From a financial performance perspective, nonprofit 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 ensure their role, responsibilities, and any communication requirements are clear.
Avoiding a financial conflict of interest
Sometimes, a nonprofit treasurer will be responsible for both 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 role in nonprofit 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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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.