Nonprofit Accounting Basics

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Protection

Originally Posted: December 30, 2008

Satisfactory protection against liability (and loss) starts with rigorous risk management.

Legal Duties

Originally Posted: December 30, 2008

To protect the organization, itself, and its members, the board must start by following the legal obligations common to all boards: duty of care, duty of loyalty, and duty of obedience.

Liability

Originally Posted: December 30, 2008

With authority and legal responsibility comes liability.

Investment Committee

Originally Posted: December 30, 2008

Not every board needs an investment committee. If the organization has sizable assets, an endowment, and/or a planned giving program, it probably should form an investment committee.

Audit Committee

Originally Posted: December 30, 2008

The primary function of an audit committee is to ensure the organization carries out an independent outside audit. Specific duties include:

Finance Committee

Originally Posted: December 30, 2008

The primary duties of a finance committee are:

Financial Committees

Originally Posted: December 30, 2008

Through its financial committee’s structure, the board can help carry out its accountability function.

Officers

Originally Posted: December 30, 2008

A board officer is a board member with additional duties and responsibilities. State laws stipulate which officer positions a nonprofit must have.

Role in All Volunteer Organizations

Originally Posted: December 30, 2008

Most nonprofits start as all-volunteer organizations (AVO), without a paid staff. The organization operates with the support of its board and maybe additional volunteers.

Individual Board Member Responsibilities

Originally Posted: December 30, 2008

Board members must realize they have personal expectations and responsibilities for their board service.

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