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Four pillars of nonprofit leadership

Published: Sunday, Sept. 8, 2013 5:30 a.m. CDT

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Last month, I provided my five easy pieces to becoming a board member.

A successful board member has taken time to understand the people and particulars of the specific organization he is to join and has considered how to successfully transition into the new role. Now it is time to govern.

My No. 1 rule is that the entire board is responsible. Does this mean every board member is involved in every activity? Hopefully not. Your job will require careful consideration of your role within the organization, using a big-picture approach to governing: take a step back and provide high-level oversight of operations based on my four pillars of nonprofit leadership.

Effective governance: A good board member is engaged, works well with the team, and is mindful of where his role begins and ends. Respect the customs and culture in place while ensuring adherence to organization bylaws, policy and procedure. BoardSource.org is a great resource for guidance.

Fiscal responsibility: Everything you do will rely on having money in the bank to operate programs, and it is every board member’s duty to ensure resources are used appropriately.

Small organizations often lack resources to hire a financial professional. Having only a few staff or volunteers might result in a lack of expertise and inadequate segregation of duties. That means one person may deposit funds, write checks, and reconcile bank accounts with little or no supervision. This creates a situation where there is risk of material misstatements in the financial processes, including risk of theft.

You can mitigate this problem by looking at monthly financial statements in a timely manner. Make sure you review the balance sheet and income statement every month. Additionally, more than one board member should take a regular, in-depth look.

Legal compliance: It is the board member’s responsibility to ensure timely filing of federal and state information returns, corporation registration, and payroll and sales tax returns. All reporting must be done in a timely manner to avoid costly penalties or, worse, loss of tax-exempt status.

Additionally, IRS regulations require annual board review of federal form 990 before filing. This is an excellent opportunity to review finances and reflect on program accomplishments. If audited financial statements are required, the board should meet with the auditors at the close of the audit to review the statements and management letter. Remember, auditors work for the board and should report annually to the board.

Responsible fundraising:  More and more galas, 5K races and other events mean more organizations competing for limited contribution dollars. Creativity can find previously untapped resources, but beware. My past columns have addressed common fundraising pitfalls. Other considerations include monitoring the true cost of your fundraising, in dollars and the opportunity cost of staff and volunteer time. Lastly, always take care to respect the privacy of donors.

Good luck as you embark on your board commitment.  

• Nancy Gonsiorek is a Certified Public Accountant providing audit, tax and consulting services to nonprofit organizations. Her firm, Nancy L. Gonsiorek, CPA, LLC is based in Crystal Lake. She can be reached at 815-455-9462 or via email at NancyGonsiorek@comcast.net. Past articles can be found at www.NancyGonsiorek.com.

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