One of the most crucial board responsibilities is keeping nonprofits financially accountable. And as open data initiatives roll out at the federal level, organizational transparency grows in importance.
Board members must understand how new grant-reporting changes will increase their fiduciary responsibilities by calling even more attention to fund oversight and performance.
Board Member Responsibilities
Board members are required to be honest and trustworthy role models for the organizations they represent. To help their nonprofits succeed and avoid unnecessary risks, each board member should be able to:
- Demonstrate knowledge of financials.
- Enforce legal and ethical values.
- Evaluate planning and reporting processes.
- Make strategic decisions.
New Grant Legislation Increases Responsibilities
Core responsibilities remain the same. However, as public and private funders focus more on grant performance, and crack down on waste, fraud and abuse, board members must become even more accountable for their actions and spending.
To be compliant with new grant legislation, boards will be expected to:
- Eliminate wasteful processes and projects.
- Evaluate activities against performance measures.
- Strategically allocate resources based on historical results.
- Increase accountability of financials and activities.
- Pinpoint fraud and abuse within their organizations.
By placing accountability center stage, board members can avoid unnecessary setbacks and ensure organizational compliance. Board members should work closely with their nonprofit’s staff to answer questions, such as:
- How consistent is our strategic plan compared to our financial plan?
- Are we meeting our goals and requirements within pre-established timeframes?
- Do performance reports and activities appropriately match up?
- Are all processes compliant with new regulations?
- Are our expenses appropriately spent and documented?
Checks and balances should be a number-one priority for all board members.
Financial Monitoring and Reporting
Properly organized information allows boards to catch errors and challenges early, so unnecessary mistakes, lost funds and legal liabilities can be avoided.
To create more detailed and accurate reports, internal processes are essential. A structured system must be in place to compile, manage and monitor spend and performance data. All internal reports should include:
- Accurate performance measures.
- Financial activity.
- Internal identifiers.
- Timeframes, milestones and deliverables.
Verify your organization is running both internal management reports and financial expenditure reports on grant money.
Image Source: Ken Teegardin