Nonprofit Finance Committees – What They Are Doing Well, Where They Need to Improve, and Why It Matters to the Mission
The growing influence of Nonprofit Finance Committees on nonprofit finance and mission effectiveness cannot be overstated. These committees approve organizational budgets, defining the short and long term financial mission of the organization. They set financial goals for nonprofits that are strategically aligned with programmatic goals. Their understanding of the organizational business model, operational needs (both leadership and managerial), unrestricted net assets, fundraising capacity, and impact on capital investment including space and technology ultimately determine the mission trajectory of the organization. This perspective is critical in today’s hyper-competitive nonprofit world. Yet too often the focus on short term financial reporting has re-configured their fiduciary responsibility to overreact instead of being proactive. Why is this happening, and to what extent is the makeup of nonprofit finance committees relevant? Are changes in Finance Committee mandates necessary?