Passion for a cause, a love for community and a set of specific skills that can be used to help others are all great reasons to join a not-for-profit organization’s board of directors. But what can you do to ensure that your membership is effective and valuable to the organization and provides a rewarding experience for all parties?
Smart Business spoke with Susan D. Krantz, CPA, a Partner at Zinner & Co. LLP, to find out.
Maintain a Proper Commitment
Through our experience at Zinner & Co. LLP, we have found that board member commitment has a significant and direct impact on the success of a not-for-profit organization. As work and personal commitments change, it becomes necessary to find that balance of time that allows you to properly support your organization.
Efficient and Valuable Communications
Communications among board members and between board members and the management team is one of the most important aspects of the position you hold. First and foremost, boards should meet monthly, or at least quarterly, with regular attendance and participation by all board members who should be familiar with the organization’s major initiatives and mission statement. The board should have adequate skills in the areas of law, accounting, finance and personnel as it pertains to the organization’s major initiatives, even though any one member may not be skilled in all areas.
Try stopping by the organization’s offices unannounced for a friendly and casual visit with management. Join a committee. Board members can even have a presence in the organization without actually being physically present. Get out in the community and talk with people to gain a better idea of how your organization can better serve them.
Oversight and Approval on the Transaction Level
Board members should be involved in the oversight and approval of significant transactions and processes, such as new loans, property and equipment purchases, advances, payments to key employees and all other significant transactions. Proper board member review by designated members should include examining supporting documentation, such as purchase orders, invoices and vendor contracts, and the budget on regular basis.
Familiarize Yourself with External and Internal Factors
In the current social and economic environment, not-for-profit organizations face more risks than ever before. One of the major responsibilities of the board, as well as management, is to continuously assess and manage the risks facing the organization, both externally and internally.
The external risk assessment process primarily involves keeping up to date on changes in the political, social, economic and technological environment surrounding the organization and assessing how those changes will affect the organization’s mission and funding. As a member, it will be up to you to be aware of the changes within your area of expertise in addition to the many multiple sectors of the environment the organization operates in, including new accounting pronouncement, laws and law revisions, social and administrative changes in the political landscape and compliance updates from regulatory and cognizant agencies.
During the internal risk assessment process, the organization as a whole must identify its goals and objectives in the major areas of financial reporting, level of service, and compliance. Internal controls are the key safeguards in meeting these goals. All effective internal control systems contain five attributes: a control environment that sets the tone of the organization from the top down, continuous risk assessment, control activities, information and communication, and monitoring which make certain that all internal controls are operating effectively and as intended.
A knowledgeable board member who is both involved and present is in the best position to help an organization manage risks, make informed decisions and help achieve impact. With extensive experience in the not-for-profit field, Zinner & Co. plays a key role in helping organizations and their board members to overcome a wide range of obstacles and achieve their mission.
Susan D. Krantz, CPA, is a Partner at Zinner & Co. LLP. Reach her at (216) 831-0733 or firstname.lastname@example.org.