As a board member of a nonprofit organization, you have a great deal of responsibility. Not only do you need to protect the organization and support your mission, but you also have to ensure its assets and financial activities are sound.
Financial Responsibilities of Nonprofit Board Members
According to BoardSource, an organization that inspires and supports nonprofit governance, there are 10 basic responsibilities of nonprofit board members. Those pertaining to financial security are:
- Ensure effective planning: Boards must actively participate in an overall planning process and assist in implementing and monitoring the plan’s goals
- Ensure adequate financial resources: One of the board’s foremost responsibilities is to secure adequate resources for the organization to fulfill its mission
- Protect assets and provide proper financial oversight: The board must assist in developing the annual budget and ensuring that proper financial controls are in place
If you need any help finding nonprofit board members that fit these descriptions, we share some tips on how to find the right board members for your organizations
Types of Nonprofit Financial Statements
There are three main types of nonprofit financial statements. They are:
- Statement of Activities
- Statement of Cash Flows
- Statement of Financial Position
Learn more about the different types of financial statements here.
Common Nonprofit Accounting Terms
Below are some of the more common nonprofit accounting terms that will help you as you serve on the board:
- Assets – An item of current or future economic benefit to an organization
- Audit – A financial statement of a certain date, usually covering 12 months, prepared by a CPA, that includes an opinion letter, statement of financial position, statement of activities, statement of cash flows, and notes
- Balance Sheet – Statement of showing an organization’s financial position at the close of business on a given day
- Board Designated Funds – Unrestricted net assets that have a defined use or purpose, as determined by an organization’s board of directors
- Liabilities – items owed by an organization or claims against its assets
- Permanent Restricted Funds – Funds with donor-imposed stipulations that the principal not be spent
- Statement of Cash Flows – Summary of the sources and uses of cash that reconciles cash at the beginning of the year with cash at the end of the year
- Unrestricted Funds – Funds that have no external restriction as to use or purpose
Contact Us for Help with Nonprofit Accounting Basics for Board Members
Capital Business Solutions is an integrated financial solutions provider for private and public sector organizations. We offer a variety of fund accounting solutions, in addition to training and implementation services for Blackbaud and MIP products. Learn more by calling 843-971-9061, emailing email@example.com, or filling out this contact form.
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