Six steps to being an awesome treasurer

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Virtually every charity or not-for-profit organization in Canada has a treasurer. That means there are likely almost 200,000 charity and not-for-profit treasurers in Canada. Interestingly, to the best of my knowledge, there is little if any training available or provided to these valiant souls who volunteer their time and energy to look after the finances of these organizations.

So, if you are one of these people, how can you ensure that you’re doing a good job and being an awesome treasurer? Well, first of all, there is a free, one-hour CharityVillage webinar on March 14, 2019. The remainder of this article will touch on a few of the topics that will be covered in the webinar.

Step #1: Figure out the member’s and the board’s expectations of your role in the organization.

The treasurer role varies significantly between organizations. In very small organization, the treasurer may look after everything financial (do the bookkeeping, make bank deposits, write cheques, prepare financial reports and statements, etc.). In larger organizations, the treasurer usually takes on a more strategic role – engaging the board in strategic financial discussions, evaluating the organization’s funding model, developing the board’s financial literacy, etc. Different organizations have different needs and requirements of their treasurers. So how do you figure out exactly what your role should be?

There are multiple places to look. Start by asking if your organization has a detailed position description for the treasurer role that sets out clearly the board’s expectations for your role. In addition, if your organization has a finance and/or audit committee, they may have developed Terms of Reference for that committee, which will add more information about the Treasurer’s role – since the Treasurer is usually the committee chair for this/these committees.

Next, you should look at your bylaws. Most bylaws either lay out some high-level responsibilities or note that the treasurer shall have such powers and duties as the board may specify.

Many bylaws have some version of the following basic responsibilities: The treasurer is usually responsible for doing, or making the necessary arrangements for, the following:

  • Preparing an annual financial budget
    • revenue and expense budget
    • cash flow projections
  • Managing the organization’s financial transactions
    • receiving and banking monies collected
    • paying the organization’s employees and vendors
  • Keeping accounting records in respect of the organization’s financial transactions
    • bookkeeping and accounting
    • maintaining adequate financial books and records
  • Preparing the organization’s financial statements and reports
    • for internal purposes (management, board meetings, etc.)
    • for external stakeholders (members, funders, etc.)
  • Making the organization’s filing with respect to taxes
    • income taxes, sales taxes, payroll taxes, etc.
    • Employment standards, Workers Compensation insurance

The problem with the descriptions in the bylaws, is that they are usually so high-level and so generic, that they really don’t provide much specific guidance about the detailed roles that are relevant for your organization in its sector and at this stage of its development. So, if your organization doesn’t have a good detailed position description, one of your first jobs would be to develop one and get the board to approve it. This will ensure that everyone is on the same page with respect to what your specific role is in that organization at this time. This is Step #1 in becoming an awesome treasurer.

In the upcoming webinar, we’ll recommend additional roles that awesome treasurers perform. Tune in on Thursday, March 14th to get the additional roles.

Step #2: Learn and understand what it takes for your organization to stay in financial compliance with regulatory agencies, including the Canada Revenue Agency.

Depending on the kind of work your organization does, there may be many regulatory agencies that you have to comply with. The two main ones that all organizations must comply with are the legislation under which they were incorporated and the Canada Revenue Agency (CRA) rules and regulations. In addition, if you have employees, you are also required to comply with employment standards and workers compensation rules. There can also be provincial regulations with respect to fundraising or investments.

Most charities and not-for-profit organizations are incorporated under provincial legislation, but some organizations (about 10%) are incorporated under federal legislation. The financial rules of your incorporation legislation can vary significantly between jurisdictions and often imposes rules around some or all of the following issues:

  • Payments to directors (if and when you can make payments to directors)
  • Whether you can budget for and earn a profit or have a deficit
  • Whether you are required to have your annual financial statements audited by an external accountant
  • Annual report filing requirements
  • Record keeping requirements

Make sure you read the legislation under which your organization was incorporated. The CRA has multiple sets of requirements that effect all charities and not-for-profit organizations.

  • Annual information return filing requirements
    • Charities
      • T3010 Registered Charity Information Return (required)
    • Not-for-profit Organizations
      • T2 Corporation Income Tax Return (required)
      • T1044 Non-Profit Organization (NPO) Information Return (may be required)
      • T3 Trust Income Tax and Information Return (may be required)
  • Payroll returns and remittances
  • Sales tax returns and payments (there may also be non-CRA provincial sales tax requirements)
  • Record keeping requirements

In addition, the CRA has specific rules around operating either a registered charity or a not-for-profit organization.

Registered Charity Restrictions Registered Charity Restrictions
1. Organized exclusively for charitable purpose 1. Can’t be organized with a profit purpose
2. Operated exclusively for charitable purposes 2. Can’t be operated with a profit purpose
3. No part of income can be paid to or available for the personal benefit of any proprietor or member 3. No part of income can be paid to or available for the personal benefit of any proprietor or member

4. Prohibited activities:

  • Partisan political activities
  • Unrelated business activities
  • Gifts to other than qualified donees

4. Prohibited activities:

  • Operating with a profit purpose
  • Issuing donation receipts for income tax purposes
  • Receiving gifts from foundations

5. Restricted activities:

  • Public policy dialogue and development
  • Accumulating property
  • Related business activities
  • Social and fundraising activities
  • Operating through intermediaries
  • Issuing donation receipts for income tax purposes
  • Private foundations

5. Restricted activities:

  • Accumulating surpluses

Many of these issues are complex and nuanced. Spend whatever time you need to in order to understand the rules and ensure your organization stays in compliance with them. It is interesting to note that not many treasurers do this, making it a great way to distinguish yourself as an awesome treasurer.

Step #3 – Help the board think strategically about the financial viability and sustainability of the organization.

Help the board think strategically about its finances by asking some or all of the following questions:

  • Does your organization have the right funding model?
  • Are the funding activities that you are undertaking the most efficient and the most effective?
  • Are you tracking the right financial key performance indicators with respect to the organization’s financial health, financial performance and financial sustainability?
  • Do your revenue streams have enough diversification to protect your organization?
  • Do you have appropriate financial reserves in place in case something goes wrong?

Adding time on board meeting agendas to have robust conversations on topics like these is a great way to ensure you’re helping the board think strategically and to become an awesome treasurer.

Step #4 – Help the board think about financial risk and what can be done to reduce financial risk.

Consider asking your board members some or all of the following questions:

  • What are the primary financial risks that your organization faces and how might you reduce those risks?
  • Does your organization have appropriate financial systems in place for:
    • Managing financial transactions
    • Bookkeeping and accounting
    • Budgeting and financial reporting
    • Financial governance (financial policies and procedures, internal controls)
  • Does your organization have appropriately skilled financial people in place at all levels of the organization (Board, Treasurer, Finance Committee, CEO, CFO, Controller, Bookkeeper)?
  • Do you have appropriate financial internal controls in place – to protect the assets and reputations of the organization and its directors?
  • Do you take financial skills into account when you are succession planning for all positions?

Helping your board identify primary financial risks and what the organization can do to reduce those risks will set you apart as an awesome treasurer.

Step #5 – Bring in help if you need it.

Consider finding a mentor – someone from a similar organization who has more experience that would be willing to help you out. Also consider engaging accounting articling students to do some of the basic bookkeeping. It looks great on a resume for them and it adds segregation of duties and a level of independent review for you. Everybody wins.

Finally, if you start to feel uncomfortable with the potential financial risk, see if you can hire a part-time controller or Chief Financial Officer (CFO) to help with some of the higher level tasks.

Step #6 – Help find and train your successor and be available to answer questions.

For most volunteer positions in charities and not-for-profit organizations, succession planning for your position should be a first priority. Finding someone with the appropriate skills to replace yourself when you leave/retire is extremely helpful for the organization. In fact, there would be far less stress and anxiety if all volunteers agreed to help find and train their own replacement. After all your great work, you want to be sure that you set you organization up for future success, so be kind to your organization. Helping to find and train your successor will help ensure you are remembered as having been an awesome treasurer.

There you go. Hopefully some of the thoughts and ideas in the sections above will be helpful in helping you become an even more awesome treasurer!

Gordon Holley is the President and CEO of Humanity Financial Management Inc. As a CPA, CA, Gordon loves helping individuals and organizations that are trying to make the world a better place. He has over 40 years of experience on charity and not-for-profit boards, mostly as treasurer. In his role at Humanity Financial, Gordon sees the stress and anxiety produced by finances and financial reporting for many not-for-profit-organizations (NFPOs), charity board members, and senior staff. He excels at providing financial oversight to small to mid-size NFPOs and charities to help them better manage their internal finances and financial budgeting and reporting.

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