When financial statements are presented at your board meeting, what kinds of questions are asked? Do you get the occasional question about a variance, or a robust discussion about whether
the budget matches the organization’s strategic plan or an inquiry into internal controls? The discussion you have and how productive it is both depend on how well your board understands
its role relative to financial oversight. This is impacted by how effective your on-boarding process for new board members has been.
In our experience, the most effective on-boarding programs incorporate the following elements:
The Right Information. Most not-for-profit organizations provide a binder of information to new board members, and ask them to read through it before orientation begins. Ideally, the binder should include:
- The board member’s job description, including a description of his/her duties of good faith, loyaltyand care
- The current strategic plan
- The organizational chart for the non-profit’s staff
- Minutes for previous meetings
- Committee overviews and assignments
- Board contact information
- The current budget and recent financial statements
- The organization’s most recent Form 990
- The organization’s mission, vision and values
- Current materials describing the organization and making a case for support
- Current messaging for board member use
Contextual Orientation. While most not-for-profits provide information, many forget to provide the context for that information. In particularly, we recommend making sure new board members get:
- A tour of the not-for-profit facility or facilities so that they have a solid understanding of the organization’s operations, and
- Introductions to key staff members
Adequate Training. Many not-for-profit board members have limited experience with nonprofit financial statement analysis. Those who do have financial background may not have experience with not-for-profit financials, or may not understand their responsibilities relative to financial statement and Form 990 review. The most effective on-boarding processes incorporate some form of financial training into the board orientation. The most common approaches (and related resources) include:
- Training provided by the ED/CEO, CFO/Controller or Treasurer leveraging existing resources such as:
- The “Finance Unlocked for Nonprofits” (“FUN”) series by Washington Nonprofits
- “What Board Members Need to Know About Not-for-Profit Finance and Accounting,” a booklet published by Jacobson Jarvis for board training and reference
- Training through external firms/individuals like Jacobson Jarvis or United Way
A Framework for On-Going Support. Regardless of how effective your training is during orientation, much of it will be lost by the time the board member reaches her second or third year – or even her second or third meeting – on the board. To help board members continue to develop financial skills year around, consider:
- A buddy program that pairs a new board member with one who is leaving the board. This person can serve as a sounding board for concerns a new board member might feel hesitant to share in a broader meeting.
- Ongoing training during and outside of board meetings. Take advantage of the plethora of newsletters, training programs and reference information. Incorporate mini-training into every financial statement review with your broader board (and your nonprofit audit/finance committee) so that they continue to learn, and pass along links to training outside the organization.
Does your organization have an on-boarding practice that is particularly effective? Share it with us! We’ll pass along any tips we get in a future Communique newsletter.
About the authors:
Julleen Snyder, Howard Donkin, and Erin Welch, partners at Jacobson Jarvis, have over 50 years of experience helping not-for-profit organizations by providing nonprofit audit, tax, and consulting services. They can be reached at firstname.lastname@example.org, email@example.com, and firstname.lastname@example.org.