Finance Committee Orientation Meetings are Worth the Effort

Is having regular finance committee orientation meetings value-added? The answer is a “Strong Yes.” If you are thoughtful with planning and execution of the finance committee orientation meeting, the answer will be an “Amazing Yes.”  The return on time and effort here will pay many dividends.

Do not have a finance committee orientation meeting just to say you had one and to check a box. Plan to be more thoughtful in your approach.

The purpose for having a finance committee orientation meeting (FCOM) is to help participants to be better stewards of how financial resources are used and to help them monitor the related impact on sustainability and financial health. You want the participants to come away from the FCOM feeling empowered, appreciated, useful, and with new knowledge and skills to help them fulfill their fiduciary roles.

To get the most out of your FCOMs, give extra thought to the frequency of these meetings (rate of recurrence), and devote more planning time to covering the basics as well as setting goals and addressing challenges.

FCOMs occur annually or at some other interval. The frequency can be based on finance committee member terms of service (one, two or three years) when a new treasurer is installed, or when there is a special circumstance like a merger, consolidation or partnership with another nonprofit that leads to a governance restructuring.

I prefer annual FCOMs aligned with the annual meeting cycle. Annual meetings are required meetings that typically correspond with the start of a new fiscal year, and when new officers, directors, and committee members are appointed. Having an FCOM annually provides the opportunity to enhance finance committee performance and effectiveness, and to emphasize that an FCOM is not just for new finance committee members. FCOMs also help returning members to refocus on the year ahead, correct bad habits and set new goals.

Divide your FCOM into two separate agenda sessions: “Covering the Basics” and “Setting Goals and Addressing Challenges.”

1. Covering the Basics

In the “Covering the Basics” session, the goal is to familiarize finance committee members with the finance department structure, internal accounting control systems (IACS), and key financial policies, financial reporting, budgets, and finance calendar.

When addressing the finance department structure, introduce finance department staff and have them briefly tell their personal story and describe their main work responsibilities. Next, describe how transactions flow through the IACS and explain how the chart of accounts and departments and cost centers are set up to meet functional reporting of programs, fundraising and general and administrative expenses. And make sure to explain key financial policies such as the cash management policy, investment policy, operating reserve policy, and others so finance committee members will see how these policies work and any fiduciary role they may have related to these policies.

End this session by walking them through monthly financial reports, the annual budget, and the finance calendar. Finishing this session by going through the finance calendar will help finance committee members to anticipate how and when financial statement audits, Form 990, annual budget compilation, licenses and other key deliverable dates effecting finances occurs each year.

2. Setting Goals and Addressing Challenges

The agenda for the second session should focus on “Setting Goals and Addressing Challenges.” This is where we can empower finance committee members and energize them to feel most useful. Balance past financial performance reporting with a look forward. Let them know that no budget is static. The world around us is constantly changing so they will be expected to interact with new rolling budget projections. Explain that they will have input into the budget preparation process for the next fiscal year.

Also, be honest with the past year challenges and what challenges and hurdles are expected in the year ahead. Ask the finance committee members for their initial reactions to these challenges and have them commit to working with staff for setting goals both for the finance committee and for overall financial performance.

Planning Tip – Consider opening attendance at finance committee orientation meetings to include other Board members who are not on the finance committee. They will gain a better understanding of finances and these meetings will help them to understand that all Board members have a fiduciary responsibility to monitor the organization’s financial resources.

By restructuring your FCOMs and emphasizing these key subject areas, your organization will gain amazing front-end volunteer leadership awareness and empowerment that will help them to protect financial health and meet their fiduciary financial oversight duties.