What do I need to know about being treasurer of a nonprofit?
June 3, 2008 6:05 PM   Subscribe

I've been elected treasurer of a small nonprofit. I'd like some advice about best practices for creating a budget and tracking our finances, and also about other responsibilities I should be aware of.

I guess I'm looking for advice on how to track money. I'd also like to know if there's more to being a treasurer than managing the books.
Are there Excel templates out there I can use? What one book I should read to better understand budgeting for an organization? What else I should know about the duties of a treasurer?

Some background:
The group has about $25,000 in the bank, and its assets tick up by a few thousand dollars each year. Every year the group runs one big fundraiser, and spends most of the money collected on training events. We have no paid staff.

Previous volunteer treasurers have had no experience in this sort of thing, just like me. I'd like to at least take a stab at assembling a respectable budget for us to follow, and at getting our books in some kind of order for the first time.

I'm good at budgeting my own cash, but this is above my experience level. Advice?
posted by croutonsupafreak to Work & Money (7 answers total) 11 users marked this as a favorite
Best answer: You won't really be able to make a budget until you know your expenses.
You won't know your expenses until you've been there a year.
Once you've been there a year, use last year's data to project next year's expenses.
Locate all the accounts, and verify the people that are allowed to make withdrawals.
Get to know the secretary of your organization: you and him are the only people with any
"real" duties in a nonprofit, and he might have been covering for the other treasurer.

Discover and understand Form 990, with the IRS.
Check with the secretary of (your) state to find out your incorporation details, and
make sure that your addresses are up to date, unless you secretary has already done
Try to locate your nonprofit letter.
Read up on nonprofits, depending on how you're incorporated.
Try to recover and centralize as many records as you can from previous treasurers.

Good luck.
posted by the Real Dan at 6:20 PM on June 3, 2008

Best answer: I highly recommend purchasing QuickBooks. You can go with the standard edition and bypass the "non-profit" version. The learning-curve is short for basic QuickBooks operations. Set up a basic chart of accounts (more on this in a bit), then go back and enter all your checkbook transactions for 2008, 2007 and possibly 2006, categorizing each transaction as you go. Hopefully you have checkbook stubs and bank statements for this clerical work; set aside a full day and get everything entered and balanced.

QuickBooks has a series of pre-built reports, and you'll want to run a Profit/Loss and Balance Sheet report monthly and annually to send to the board (or president or membership). Optionally you can run a cash-flow report, plus others reports if they strike your fancy. You'll be able to easily reconcile your bank statement, even without the optional online features. Once you get the initial accounts and historical data entered, it's pretty damn easy. Document the process, even if it's only one page, so you can give it to the next person who takes the job.

Find an accountant to review your chart of accounts (or set it up for you). If you don't already have an accountant, sent out a note to the other volunteer staff / membership-- almost every group knows a small accounting firm (and smaller is better for you). It cost us about $150 to have an accountant review our accounts and verify we had the right set-up. Email me if you want to reach our accountant, who does a nice job with this. Have the accountant review your year-end books.

Having a good set of books and a documented procedure for disbursements and income, along with an accountant review will help you with grants/donations and give your volunteer staff a good degree of confidence. You can set up budgets in QuickBooks and easily track budget vs. actual. The cost of the software is minor considering the time it saves and the results/flexibility it will give your organization.

You don't have to file a 990 until you have $25,000 in annual revenue (accumulated assets don't matter). If you're not at this level, then you don't have to bother with the 990. If you think you'll be there soon, you'll want your chart of accounts to mesh with the 990, and your accountant can set that up.

As treasurer you are ultimately responsible for the corporation's finances. You need to determine who can write checks, what the approval process will be, how deposits are handled, what financial reporting is required and approve/submit any filings with local, state and federal taxing agencies (income, sales, property and possibly annual filings). You should read your articles of incorporation and bylaws to see what other responsibilities you may have.

As far as setting up a budget: once your historical data is entered (even if it's only a year), use that as a baseline. Send out the previous year's expenditures by account to the volunteer staff and ask if they want to keep spending/income levels the same or if they should be changed up/down by a set amount or a percentage. Many volunteers in small non-profits don't have any idea on what to do with this, so be prepared to make a decision for them. Once they see a few months or a year of 'budget vs actual reports,' they'll get the hang of it.

It takes a little bit of work to get a system in place, but once you've done so it can be surprisingly easy to maintain. Remember to document, and keep an electronic backup off-site.

I am the Executive Director of a small non-profit and you're welcome to email me with additional questions.
posted by F Mackenzie at 7:09 PM on June 3, 2008

Best answer: I will second a few items listed above: Get the 990, get last year's budget and expenses, articles of incorporation should be kept nearby too. I will add: get a current copy of the bylaws, have a working understanding of your personal liability as a board member (look up officer's insurance), look at the board minutes for the past year (to get a flavor for what has been attempted, motioned, failed, accepted, etc.).

An investment policy for the money that you do hold is recommended so that it is clear how the $ is managed (what happens when the rate of return dips below X%?). I would also make it clear that no one is personally benefiting from managing this financial account.

I would make sure that each of your financial reports are submitted and read into the minutes to show your due diligence as a Treasurer. Of course, any discussions about the financial statements should also be seen in the minutes.

Thanks for volunteering to help a non profit. We need good folks to lend their passion and talent to our many missions.

Good luck.
posted by zerobyproxy at 7:25 PM on June 3, 2008

Best answer: I second everything above. You'll also be responsible for policies and procedures for safeguarding the money and assets of the organization. For instance, policies on having 2 people open mail and make deposits...good checks and balance systems throughout the organization.

An excellent resource is Charitychannel.com. There's even an area for non profit accounting.

I'm the Executive Director of a 25 year old non profit. If I can help in any way...even providing a listing of our financial policies, let me know.

Good luck to you and your organization!
posted by Jandasmo at 7:48 PM on June 3, 2008

Best answer: I also have a fair bit of non-profit experience. The treasurer role is a very important one - risk management, planning, and lots of responsibility.

You should have some type of financial statement from last year, which you can use to start a budgeting template for the current year. The big thing to consider when doing that is what new expenses your group might be incurring this year, that haven't been present for prior years. The big thing to remember (or at least, this is what my financial people tell me) is that a budget is a guidepost, not something that is set in stone.

I see that you are in Oregon; can I suggest you look into joining with NAO, if you haven't already? They appear to have some tools and templates that can help you.

Like Jandasmo, if you think I can be of help, let me know!
posted by never used baby shoes at 8:35 PM on June 3, 2008

Response by poster: Thanks, everybody. This is all very helpful. I may just take some of you up on your offers to help, as I progress in my work.
posted by croutonsupafreak at 7:00 AM on June 4, 2008

My advice to you is to make sure that you are on the same page as the executive director. The rest is all academic.
posted by Ironmouth at 8:23 AM on June 4, 2008

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