Have you recently stepped into the role of volunteer treasurer? The treasurer role of a nonprofit organization can be an incredibly rewarding experience but also a little bit daunting. The position does require financial expertise, dedication as well as time and patience. However, that doesn’t mean that record keeping can’t be fun!
We are here to help you with your transition into your new role and we have developed this Ultimate Guide just for you. From the moment you agree to the position, to a handy end-of-year checklist; consider this ultimate guide your go-to reference. This is your cheat sheet and road map to treasury success.
The Role of a Treasurer
The role of the Treasurer can vary depending on the size of the organization. Many volunteer-led groups do not have the resources to employ staff, so the treasurer may have many responsibilities. However, a large organization may have staff to manage daily transactions and record keeping. In this case the treasurer reviews and maintains accounts each month. All treasurers will be involved in the following:
Each organization is accountable to its members, donors, funders and the governing board and must show financial transparency in regards to whether it is making a profit, breaking even or operating at a loss. In order to operate in an efficient manner, the organization must authorize each payment and record all transactions. A bookkeeping system can enable this system to function smoothly. A digital accounting system, like MoneyMinder can make the organization’s financial system easy to access.
The treasurer is responsible for managing bank accounts. In small organizations the treasurer may be tasked with making deposits and withdrawals. The treasurer should promote good banking practices and should stay up to date on changes and improvements. Local nonprofit councils oftentimes provide training on banking, fraud prevention and other helpful topics.
The financial management of a nonprofit organization includes planning, budgeting and reporting. It is the responsibility of the treasurer to prepare a budget. This is your financial roadmap for the year. A budget outlines expected expenses and estimates income. It makes allocations for unforeseen expenses and therefore helps minimize risk. The budget must go through board approval, if you have a board. In the case that board members do not have financial expertise, it is up to the treasurer to explain the budget in terms that can be clearly understood. The treasurer presents regular reports on the organization’s financial position, prepares accounts for audits and provides advice on possible investments.
Liaison with The Auditor
Once a year, all accounts must be audited. The auditor position is usually elected by the board. The treasurer provides the auditor with all Assets (Cash in Bank, Accounts Receivables and Fixed Assets) Liabilities and Revenue.
It is the role of the treasurer to advise on fundraising strategy. The treasurer may also assist with proposals for sponsorships and grants. Sometimes the treasurer develops a fundraising committee and/or works closely with the committee to ensure that proper fundraising policies and compliance are taking place.
Reporting to The Board
The treasurer is responsible for preparing and presenting regular financial reports to the board. The report must include an explanation for any major discrepancy. It is the responsibility of the treasurer to recommend an alternate course of action for any difference.
There are a number of items that you should request before you begin your role as treasurer. Getting all of these pieces of the puzzle organized in advance will get your year off to a strong start.
- A list of all the tasks the treasurer must do
- Procedures for performing each task (even if simply in note form)
- Tips and techniques for making the job easier
- Commitments that the outgoing office made that the incoming officer is expected to keep
- Documentation/Supplies (procedures, keys, cash box, passwords, old files, etc.)
It is a great practice to schedule a meeting with the outgoing treasurer. Make sure and request your items in advance and then plan to meet for an hour or so. This gives you the opportunity to gather useful information and get your supplies.
Plan for your transition time to last about a month. If you have the opportunity to work with the outgoing treasurer, please utilize that time together to learn as much as you can. Take notes on the transition process and use them to improve upon when it is your turn as the outgoing treasurer.
Using the information that you have, get a good idea of where the organization stands financially. This doesn’t have to be a full financial report but you should get a sense of how the organization is doing. Look at all account Balances (which tells you how much money you have), Accounts Receivable (who owes money to you), and Accounts Payable (who you owe money to). Once you have a clear picture of the accounts you can determine whether a certain aspect of the treasury has been lacking and where you might need to focus more energy.
Please be aware of the possibility of fraud and take steps to minimize the risk of fraud happening. As the treasurer, there is a high degree of trust between you and your organization. You must operate with the highest degree of financial transparency as possible. A number of fraud-prevention measures and policies can help you operate with transparency that also helps to protect yourself. That way, if there ever is an issue or you are chosen to be audited, you are well organized and protected.
A well thought-out budget is very useful. As a volunteer treasurer, you may inherit last year’s budget which you can build upon; or you might be developing a budget of your own. Either way, a budget is a powerful tool that can be used to keep your organization on financial track by predicting future financial pitfalls. By sticking to a budget, you have greater control over financial highs and lows.
How to Develop a Budget:
- Using a timeline checklist, write down your budgeting process. Using a timeline might seem silly, but it will lay out all of the steps and responsibilities of the treasurer. This will will be valuable information for future years.
- Develop a draft and approval process. Typically, the treasurer creates the budget and it is presented and approved by the board of directors. Sometimes approval is granted by a Finance or Executive Committee but these specialized committees are rate in small organizations. Decide a protocol and stick with it.
- Set a timeline for budget approval. Calculate 2-3 months before the new fiscal year begins for your budget to be approved and finalized.
- Using your timeline/checklist assign tasks to your board or committee members. Make sure and include a deadline. For example, have one person accountable for submitting expenses and one researching forecasted costs.
- Income and expenses should align on your budget. If they don’t, consider increasing income, like with an extra fundraiser, or decreasing expenses by decreasing programming.
Working with a Budget
It is a good bookkeeping practice to be realistic with your expenses and estimating conservatively for your income. Equally important is to refer to your budget throughout the year. If you do need to make adjustments, make sure they are approved through your board or committee.
As a treasurer there are a number of reports that you will find useful. Two reports that we find especially helpful are the Treasure’s Report and a Budget Report. Typically these reports are run monthly, even if your organization meets less frequently.
A Treasurer’s Report must detail the time period for which it is reporting and include each bank account. For each account, there should be balances at the beginning and the end of the period. The balance at the end of the period should match the balance in the organization’s checkbook registrar or the Bank Statement Report for the same time period.
A Budget Report is used to remind members what the forecasted goals are for the year. It can be used as a road map and is especially helpful when fundraising and tracking income.
Board of Directors
Here is how a volunteer treasurer fits into a board of directors. No matter how small an organization is, there is almost always at least 3 individuals serving on the board of directors.
The Board is usually comprised of unpaid individuals who are the trustees of the entity. They represent the organization and are responsible for the clients of the organization, the community and the donors. They ensure the organization upholds the mission and ensure that the organization follows all laws that are applicable to them. Depending on the size, it is not uncommon for a board member to hold 2 or 3 positions on the board. Some of the positions include:
- Chair or President
- Vice Chair or Vice President
- Committee Chair
- Board Member
A good digital accounting system will keep you organized. MoneyMinder is a program that was designed for the volunteer treasurer. The program can help you track bank transactions, budgets and run reports. Additionally, there is a helpful calendaring feature so you can rest assured that you won’t be missing any important payments or dates. One more bonus of the program is managing contacts. You can keep track of all member’s contact information in one easy spot.
The end of the fiscal year is an important time for a volunteer treasurer. Not only do you have to tie up all financial loose ends, you need to prepare for the upcoming year. Here is a list of items that will help you through this busy time.
- Schedule the annual audit; and be available to answer any questions that your auditor might have
- Make sure all transactions are entered and your bank reconciliations are up-to-date for the entire year
- Check that your Daily Operations binder is up-to-date and well organized
- Make plans to complete the 990/990EZ/990N, if applicable – you are the best person to fill this out
- Ensure that all banking supplies are well stocked (checks, deposit slips, endorsement stamp, etc.)
- Note any items that the next treasurer needs to address that might be out of the norm (ie outstanding NSF checks, etc.)
- Change authorized banking signatures (or at least get the process started)
- Pay any outstanding bills (if appropriate)
- Make a list of important occasions/deadlines: insurance renewal, MoneyMinder renewal, 990/EZ deadline, etc.
- Review the (hopefully already approved) budget with the incoming treasurer
- Train the incoming treasurer to do as great as job as you just did!
As a volunteer treasurer you have a big job to do! Utilize this guide throughout your fiscal year and you should have a very successful time as a treasurer.