Your role in Creative Living’s finances
Creative Living’s finances–and its financial health–are major concerns of the board. Here’s why…
As a board member, you have to make sure there’s adequate income to pay for our day-to-day operation, as well as for its long-range goals. You’re also a trustee of our assets–which means that you and your fellow board members are ultimately responsible for the bottom line.
It sounds hopelessly complex, doesn’t it? It really isn’t because your role is to be concerned with our overall fiscal health, rather than to be obsessed with every penny it spends.
To perform your proper role, though, the treasurer and you must monitor our finances. Here are four areas you’re responsible for…
• Setting financial policy. You decide where the money goes, based on your nonprofit’s long-range plan. This requires the ability to discriminate between high- and low-priority items.
• Approving a budget. The budget is the nonprofit’s annual financial blueprint. Your responsibility is to make sure there are enough resources available to meet goals and objectives for the upcoming year,
• Delegating the executive director to carry out financial policy. It’s our executive director’s job to spend money we have budgeted. Once you’ve approved the budget, step aside and let him or her spend allocated funds.
• Monitoring financial outcomes. A big part of the board’s responsibility is to monitor the results of the executive director’s spending decisions.
Board members are naturally worried over bills. The board member’s proper role, however, is to monitor financial outcomes. To do this, the treasurer and executive director need to answer these questions…
• Are we on target with planned expenses and revenues?
• Do budget expenses and revenue projections work out?
• Are we financially solvent, and can we pay current expenses?
• Will we have income to meet future expenses?
Fund raising is your responsibility
Fund raising is one of the most important things you’ll do as a board member.
Unfortunately, it’s also an activity that many board members shrink from. Why? Because they instinctively recoil from the prospect of asking others for money. But this doesn’t lessen its importance for board members. Here’s why..
When an organization’s income starts to slip, a board has only two options: cut programs or come up with more money.
It’s pretty obvious which one board members want. Cutting programs will destroy our organization–but there’s so much you can do if board members go out and bring in money.
Board members are fund raising naturals
If fund raising is so important, you may be asking yourself why board members should be required to shoulder most of its burden.
There are a number of reasons: The first has to do with why you were chosen to serve on the board in the first place–because you’re a leader who has the respect of the community. Another is related to the board member role itself. Board members unselfishly donate their time, talents and energies to Creative Living. When the public sees this community spirit, it naturally assumes that Creative Living is worth supporting!
This is where an important responsibility about board fund raising comes into play. As a board member, you have to lead by example. So, give until it feels good!
Your next move is to decide how you and your fellow board members will bring in much-needed revenue. Generally, it will be one of these four activities…
• Annual campaigns to raise money for operating expenses during the year. These usually involve several steps like direct mail, solicitation telephone calls and personal contacts.
• Special events such as our Service Board’s fundraiser, Golf Outing, etc. These can be simple or elaborate, original or tried-and-true, and raise lots of money or just a little–depending on your expertise, hard work and the type of donor base you target.
• Grants. These are separate from operating expenses. The executive director will submit a grant that will clearly specify what the money will be used for.
• Planned giving to fund future growth or plans. Planned gifts are often life insurance policies or bequests from donors’ wills. This money can go to an endowment or trust, where either interest or the principal itself is drawn.