In the nonprofit sector, the board of directors is responsible for the well-being and financial health of the organization. The board as a body and each individual board member is expected to exercise due diligence while overseeing that the organization’s financial situation remains sound. Board members need to know proper financial processes and practices so as to not place an organization in financial jeopardy. This is a board’s “fiduciary duty” and it is a critical component of the overall accountability of boards to the public and to a nonprofit’s supporters.
Some of the financial oversight responsibilities of the board include:
- Approving the budget
- Monitoring financial statements
- Installing adequate internal controls
- Ensuring legal obligations are met
Exercising fiduciary duty doesn’t mean that every board member needs to have an accounting degree. However, it does mean that board members should be aware enough about accounting practices and procedures to ask the right questions of the people in the know.
Education on nonprofit fiduciary duties, as well as other board roles and responsibilities, is provided by Nonprofit Leadership Center. Both classroom training and online resources about fiduciary duties are available. Whether you are new to board responsibilities or if you are contemplating serving on a nonprofit board soon, you can benefit from the knowledge of fiduciary responsibilities, the experience of others like you in the classroom, and the expertise of the presenters.