In any organisation the Treasurer bears the responsibility of managing its finances and overseeing all financial decisions. In a not-for-profit (NFP) association, much of the success of the organisation rests in its ability to acquire and appropriately utilise funds and thus the Treasurer plays an essential role in the NFP achieving its goals.
The Treasurer may be elected by the Board, or the association members as determined by the constitution. It is envisaged that the normal term for a Treasurer could be for an allotted period, based on their satisfactory performance. It is a formidable task that isn’t for everyone but having a well-equipped and experienced Treasurer can be a game changer for your NFP.
What exactly does the role of Treasurer require? Let us break it down for you.
One of the most significant requirements for a Treasurer is to manage all finance related activities within the organisation and ensure that the rest of the Board is adequately informed on them. Additionally, all financial decisions should be made in accordance with the organisation’s own policies and adheres to all legal requirements.
This task in particular requires significant organisation skills and the ability to condense large amounts of information into a format that can be easily understood by those without a background in finance or with a limited accounting knowledge. The Treasurer should act as a trusted advisor to both the Board and other employees on all matters financial, and this involves having both the required skills and knowledge, and the necessary documentation to support all decisions.
The NFP organisation’s internal policies should determine how often Treasurers are required to collate and present financial reports to the Board, and these reports should include:
Financial goals and benchmarks should be determined by the Board in collaboration with the Treasurer and subsequent financial reports will be assessed in relation to these goals. It is the responsibility of the Treasurer to implement certain strategies with the intention of achieving the wider organisation’s objectives, whether these are reflective of the operation’s long-term ambitions or short-term growth. Financial management and reporting ensure transparency within the NFP and allow decision makers to stay informed on the financial health of the organisation.
A great level of trust is instilled in the Treasurer to ensure the organisation does not run into any financial trouble. Strategic and cautious spending is essential to protect the NFP from monetary troubles and a Treasurer with strong attention to detail will be able to recognise and prevent losses before they become a bigger problem.
An important aspect to risk management is to ensure that appropriate internal financial controls are in place and operating efficiently. Treasurers should be aware on who has access to the NFP’s funds, how this money is accessed, how it is being spent and how much is being spent at a time.
Depending on the size of the organisation, it can become difficult for one person to keep track of all money flowing in and out on a day-to-day basis. This is why strong internal controls and procedures that employees adhere to is essential. For example, if staff have access to a credit card for daily expenses, the Treasurer should be aware of who has access to it. The Treasurer should also determine if employees need to apply to use the card (if it’s freely available), and they should have a plan in place for paying off the credit card debt.
One key aspect of mitigating financial risk within the NFP is to become familiar with any financial management software used by the organisation (such as MYOB or Xero). When used correctly by staff members, this software can be an essential tool to tracking the NFP’s overall financial activity, particularly as the organisation grows and more employees are attained. These programs can be used to manage spending and implement fail-safes that prevent accidental overspending or restrict certain people from accessing funds they should not need to
The Board of an NFP will often look to the Treasurer to implement the strategies they have developed and to advise as to whether the organisation’s goals are financially viable. Ideally the Treasurer will have previous experience in financial strategizing and be able to apply this knowledge to the NFP and its long term goals. In-depth knowledge of the NFP’s current financial status, projected income and budget is essential to effectively building these strategies. The Treasurer is expected to work in cooperation with both the Board and other employees to set realistic benchmarks and develop the necessary procedures to achieve them.
To effectively perform this task, the Treasurer should:
For further information on the responsibilities of a Treasurer and how to best develop and implement financial strategies in your NFP, get in touch with Association Executive Services today.
With over 30 years of management expertise, Executive Director and Founder of AES, Nick Koerbin is one of the most experienced NFP leaders in Australia. He has held positions as the CEO of Materials Australia, the National Parts Code, as well as senior positions in the Institute of Insurance, Australian Quality Council, the Financial Planning Association, the Australian Human Resources Institute, and the Furniture Industry Association of Australia. Nick created AES with a vision of creating a set of management practices that could be consistently followed to ensure success. Over his 30 years in the industry, he noticed that inconsistent management practices often impeded delivery of services to members, which in turn created issues with membership renewal. By establishing AES and creating the NFP Association Best Practice Self-Assessment, Nick has been able to assist leaders in becoming more confident and informed decision makers so that they can create more effective strategies and implementation plans.
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The Fair Work Legislation Amendment (Closing Loopholes No 2) came into effect on 26 February 2024. The new legislation introduces new rules and changes some existing laws, including the Fair Work Act 2009 and comes into effect at various times between now and 2025.
In case you missed it, we recently delivered an insightful webinar explaining the significant tax reform changes for not-for-profit (NFP) organisations. ATO Assistant Commissioner Jennifer Moltisanti shared her advice and guidance on the topic in great detail.
