Nonprofit Finance Committee 101

nonprofit finance committee imageIn many nonprofits, the few people who specialize in finance review the budget and the rest of the board nods – without any real understanding either of the information, let alone the specific role of the finance committee.  Here is a brief overview of what ought to be expected:

The finance committee is charged with helping the staff create an annual operating budget, and, of course, through ongoing oversight, help ensure a balanced budget is achieved.  That can and should include suggesting ways to reduce costs and increase and diversify revenue streams whenever and wherever possible.  While sections of the budget may be determined by different committees including, among others, development and program, the finance committee members are responsible for ensuring that everything is coherent and everyone understands how annual financial operating priorities fit with the organization’s goals.


The finance committee monitors monthly spending and cash flow.  This is not a detailed look at each check although that may be necessary in some unfortunate organizations, but a glimpse to ensure the organization is on track and that no surprises are lurking.


Included in annual monitoring is checking, developing, and/or tracking:

  • a consistent policy and method for documenting all financial transactions;
  • methods of reporting finances to the board of directors; and
  • an annual audit – potentially with helping to select an auditor.

Also on an annual basis, the committee should develop long-term goals along with suggestions on how to achieve these goals, oversee that all required governmental filings are completed in a timely fashion.

As part of a strategic planning process, the finance committee might also be tasked with the responsibility of creating a contingency plan.  The contingency plan is often placed with this group because, more than any other group, they understand where the ebbs and flows of the budget occur and where there are potential points of crisis.  As such, the finance committee serves as the early warning system—either for good news or bad.


The specifics of the finance committee are always dependent on the organization and its needs, but a general understanding of the roles and responsibilities will help many others involved in the nonprofit.