You Have Financial Questions? We Have Answers!Oct 10, 2023
In our research about the challenges facing board members, “financial literacy” comes out on top every time. Members know that they are financial stewards, individually and collectively, and that they cannot rely on one “literate” board member for assurance and protection. Yet, they are reluctant to admit that they do not know how to read financial statements or what to ask.
We should add that we have written previously about red flags. We have also strongly suggested bringing in an external financial expert (perhaps from city hall, or a well-regarded community member) to provide a brief overview of what you need to know and what you need to look for.
(Sidenote: we also found that many Chief Executive Officers and Executive Directors have minimal knowledge of things financial, beyond budgeting and revenue and expense records.)
BoardSource has been answering governance-related questions posed by not-for-profit leaders for more than 30 years. Here are their answers to some of the most frequently asked questions about financial issues.
- Can a nonprofit organization have too much profit?
- What is private inurement?
- What is self-dealing?
- What are the key financial questions our board should ask?
- What is an internal audit?
- What is the auditor’s role in ensuring financial propriety?
- What are the top ten questions you should ask your auditor to help prevent fraud?
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- What are intermediate sanctions?
- How can a board protect itself from intermediate sanctions?
- What constitutes excessive compensation for chief executives?
- What is Unrelated Business Income Tax (UBIT)?
- What level of reserve funds is appropriate for a nonprofit?
- What should our nonprofit investment policy include?
- How could we benefit from an endowment?
- What should an endowment resolution include?
BoardSource is all about purpose-driven board leadership. They seek to empower boards and inspire leadership. They provide leaders with an extensive range of tools, resources, and research data to increase board effectiveness and strengthen organizational impact
What are your main “pain points” in dealing with financial matters?
What advice would be most helpful to you?
And we always assume that you are asking for a friend!
Get in touch. We’ll address your questions and concerns in an upcoming blog post.
Don't Break the Bank!
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P.S. May I ask a tiny favour? Would you mind sharing this blog with one person? I would love it. You can post the links in your Facebook Groups, LinkedIn or even send an email.