Does a Nonprofit Need a Finance Committee?

     Today, I want to share the benefits of having a finance committee and discuss whether they're a required part of your nonprofits board. I've served on many nonprofit boards, and I've also started nonprofits. Some nonprofits begin with a finance committee and some add a finance committee when the need emerges.

     Some of my most rewarding service has happened in a finance committee. Why? Well, I'm an accountant and a numbers person. In a full board meeting, someone like me might hold back their 1 million questions and ideas on finance, but in a finance committee, these questions are completely expected, and I'll show up ready and willing to bring all the questions! In my experience, these conversations have led to great ideas and opportunities that would've been missed without a finance committee to cultivate them.

     While it's not strictly required for a nonprofit to have a finance committee, it's highly recommended. A finance committee can help ensure that the organization maintains proper financial oversight and manages its resources effectively.

Why is a Finance Committee So Beneficial?

• Expertise- A finance committee can bring together individuals with financial expertise who can help with budgeting, financial planning, and even monitoring the financial performance. They know how to read those reports!
•  Focus- It helps the board to delegate the detailed financial work to a smaller group, freeing up the full board meeting to focus on the broader strategic issues.
•  Oversight- A finance committee can closely monitor financial statements for compliance with financial policies. They can even audit or review the processes and ensure that the financial practices are sound, safe, and transparent.
•  Risk Management- a finance committee can help identify and mitigate financial risks and ensure that the proper internal controls and efficiency are in place.

     By focusing on financial matters, the committee can help ensure that the board is well informed and able to make more effective decisions. If a nonprofit doesn't have a finance committee, it's okay. These roles can still be handled by a finance officer or a treasurer, but a dedicated committee can actually provide a powerful resource to provide additional oversight.

Practical Application for Your Nonprofit Board

     I want to inspire you to take action on this topic today. I encourage you to evaluate the current stage of growth in your nonprofit using this free tool. It’s an organizational chart tool that helps lay out your nonprofit’s financial staffing levels. Compare your organization’s staffing and confirm whether your staff is aligned with your current stage of growth. If it's not, then you may need to make some changes. It might be time for a finance committee!

     If this topic interests you, I want to share that our newly created Financially Thriving Nonprofit masterclass discusses this topic in much greater detail. You can join the waitlist here to gain access when it launches to the public in January!