What Does a Nonprofit Treasurer Do? The Complete Guide

Tuesday, December 5, 2023

For nonprofits like yours, financial oversight is an essential part of effective management. Your organization needs to stay accountable to the donors and stakeholders who provide critical funding for your mission, and establishing oversight helps ensure that those funds are properly allocated and accounted for.

Most forms of oversight lie with your nonprofit’s board of directors, and the primary board member responsible for financial oversight is the treasurer. In this guide, you’ll learn all you need to know about a nonprofit treasurer’s role and duties to your organization, including:

• What is a Nonprofit Treasurer?
• Key Responsibilities of a Nonprofit Treasurer
• Nonprofit Financial Management Roles

Although the treasurer isn’t the only person responsible for managing your organization’s finances, they should be well versed in best practices so they can develop effective reports for the board and collaborate with your nonprofit’s financial professionals to complete a variety of tasks. Let’s dive in!

What is a Nonprofit Treasurer?

A nonprofit treasurer is a team member who provides financial oversight for an organization. In most cases (although not all), the treasurer is a member of the board of directors and serves as the financial liaison between the nonprofit’s board and staff.

For someone to become a nonprofit treasurer, they usually need to be nominated by a specialized committee, another board member, or one of the organization’s leaders. Then, the board has to confirm the nomination, typically by voting.

To help your nonprofit choose a treasurer who will perform well in the role, look for these key qualities in your nominee:

• Leadership. A nonprofit treasurer will often chair the finance or audit committee of the organization’s board, so they need to be good leaders to be effective in the role.
• Communication. The treasurer should be able to communicate clearly in both oral and written formats in order to collaborate with other board and staff members and create strong reports.
• Organization. Treasurers need to be able to keep track of multiple financial projects and datasets at any given time and pay attention to detail to ensure accuracy in their work.
• Financial expertise. The most important quality of a prospective treasurer is a background in finance, accounting, auditing, or other related fields, as well as knowledge of how those concepts apply to nonprofits.

Additionally, make sure to choose someone for the treasurer role who is trustworthy. They’ll need access to potentially sensitive financial information in order to complete their tasks, so it’s important that they always take security precautions and are fully committed to acting in your organization’s best interest.

Key Responsibilities of a Nonprofit Treasurer

Depending on your nonprofit’s size, financial situation, and priorities, your treasurer may take on a wide range of duties. However, there are six main activities that most treasurers play a role in, which we’ll walk through in more detail.

Strategic Planning

Developing a strategic plan to guide the next two to 10 years of your nonprofit’s work is a major undertaking that involves collaboration between your entire board and leadership team. The nonprofit treasurer plays an important role in the financial aspect of strategic planning.

While your organization’s chief financial officer (CFO) or another staff member with financial knowledge may take the lead on setting goals and metrics for your organization’s revenue generation and allocation, your treasurer will often participate in the decision-making process. With their experience in governance, they’ll make sure that the financial aspects of your strategic plan are attainable and in order before it’s finalized.

Budgeting

Like strategic planning, creating budgets for your nonprofit is typically a team effort. Your treasurer will work closely with your fundraising and finance teams to create your annual operating budget, as well as more specific budgets for new programs or long-term projects. These staff members’ inside knowledge of daily operations at your organization, combined with the treasurer’s expertise and oversight, can result in more accurate, useful budgets.

Additionally, budgets typically require board approval before your nonprofit can start acting on them. Having inside knowledge of the budget, the treasurer can make the case to the rest of the board about whether they should approve it as is or request revisions before it’s finalized.

Financial Policy Development

An essential area of financial management where your nonprofit treasurer will take charge is in day-to-day oversight. This primarily involves developing and implementing financial policies that guide your organization’s use of funds, which may include:

• A gift acceptance policy that defines the types of gifts (both monetary and in-kind) your nonprofit can and can’t accept.
• An expense reimbursement policy, which outlines when and how staff and volunteers can be reimbursed for spending their personal money on behalf of your mission.
• A compensation policy to ensure all of your employees, and especially organizational leaders, are paid fairly but not excessively.

All of your nonprofit’s financial policies should be compiled in a handbook to ensure they’re easily accessible to anyone at your organization who needs to reference them. Your treasurer should at least have final approval over this handbook, if not be the one in charge of putting it together.

Risk Management

At most nonprofits, the people most involved in creating and executing a risk management plan are the board of directors. As the main financial expert on your board, your treasurer will be in charge of the identification, assessment, and mitigation of financial risks such as:

• Fraud, whether it’s committed intentionally or unintentionally.
• Theft of your organization’s money or equipment.
• Non-compliance with federal and state regulations for nonprofit fundraising and reporting.

The treasurer might take on these responsibilities themselves, or they may delegate them to other board or staff members, especially if your organization forms a dedicated risk management committee. Either way, they have the authority to approve preventative measures and mitigation plans and oversee their execution.

Audit Preparation

Not all nonprofits are required to undergo external financial audits. But if your organization has to conduct one due to a stipulation in your bylaws, the amount of federal or state funding you receive, or a request by a grantmaker, your treasurer will be involved in:

• Researching potential auditors and narrowing down your top candidates.
• Gathering materials for the audit, such as bank reconciliations, investment statements, and details of grants received.
• Reviewing the auditor’s recommendations and overseeing their implementation.

If your nonprofit isn’t required to undergo regular audits, your treasurer may provide a recommendation as to whether it would be beneficial to conduct one anyway to improve your organization’s financial management practices. In this case, you might decide to conduct an internal audit instead, in which your treasurer will take the lead in the review and recommendation processes.

Reporting

While the responsibility of analyzing your nonprofit’s raw financial data typically falls to an accountant, your treasurer also plays a key role in reporting: compiling the analyzed data into a report and presenting it to the board and other stakeholders. The combination of the treasurer’s financial background and position within the board makes them the ideal person to summarize and format your data in a way that is understandable and actionable for leadership.

When creating their report, the treasurer will pull information from a variety of sources, including:

• Financial statements like your organization’s income statement, balance sheet, cash flow statement, and functional expense report.
• Budget vs. actual comparisons of your nonprofit’s revenue and expenses.
• Bank account statements, along with relevant reconciliation reports.
• Investment updates on endowments, donor advised funds, and brokerage accounts.

Your treasurer’s reports may be presented either monthly, quarterly, or annually at board meetings or other major gatherings of stakeholders. This recurrence is another contributing factor in promoting financial accountability at your organization.

Additionally, an accountant is also usually responsible for compiling your financial statements and filing your tax forms each year. But the treasurer’s position of oversight will also be useful in ensuring that your Form 990 and employer tax forms go out on time, as well as that your financial statements are accurate and properly issued according to your nonprofit’s reporting procedures.

NonProfit Financial Reporting policy template

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Nonprofit Financial Management Roles

In some ways, treasurers’ duties and abilities overlap with those of other nonprofit financial professionals. Because of this, you may be thinking: If my organization is small to mid-sized and there are so many people who have the expertise to financially manage it, why do I need to work with more than one financial professional?

There are a few answers to this question. The first is that each individual involved in financial management at your organization has a unique role to play in it. Here is a basic breakdown of the differences between the four major nonprofit financial management positions:

• Nonprofit treasurers focus on governance as members of the board of directors. While they’re sometimes directly involved in the planning and execution of various financial activities, their main job is to provide approval and oversight. They’re also the best equipped to report financial information to the rest of the board.
• Chief financial officers (CFOs) approach financial management from a strategic and operational perspective. They take the lead on financial planning, budget creation, cash flow forecasting, and providing advisory support to other staff members. Larger organizations usually have a full-time CFO on their executive leadership team, while smaller nonprofits often rely on cost-effective (but still robust!) fractional CFO services.
• Nonprofit bookkeepers take care of your organization’s day-to-day financial needs. They’re typically responsible for recording transactions in your nonprofit’s accounting software, writing checks, making deposits, and processing payroll. Because bookkeepers don’t require specialized certifications or degrees, your organization could delegate this responsibility to a knowledgeable staff member or even a volunteer.
• Nonprofit accountants are responsible for analyzing and reporting your organization’s financial data. They perform a wide range of tasks, from reconciling bank accounts to compiling financial statements and preparing tax forms. Because hiring a full-time Certified Public Accountant (CPA) can be expensive, many organizations choose to outsource this role to an accounting firm that specializes in working with nonprofits (like Jitasa!).

Besides the distinctions in roles and responsibilities, having multiple financial experts supporting your nonprofit puts you in a less risky position. Risks often arise when various individuals at your organization are too busy to check in with each other. When your nonprofit has at least three professionals—a CFO, a bookkeeper, and an accountant—actively working on different aspects of your finances while your treasurer provides oversight, you’ll have a team that will collaborate more effectively without being overwhelmed.

Plus, a diversified financial management team is more sustainable. Although your organization might be on the smaller side now, you likely hope to grow in the future. Your treasurer will not only play an essential role in reviewing and approving your growth plans but may also work on developing a board finance committee that provides the necessary level of governance for a larger organization. Your accounting, bookkeeping, and fractional CFO services will also be able to scale with you on the day-to-day execution side.

The core of nonprofit accounting is accountability, and your treasurer plays an important role in holding your organization accountable for how it uses its financial resources. As long as effective oversight accompanies transparent, efficient financial management processes, your nonprofit will be in a better position to retain support and further its mission.

For more information on how the nonprofit treasurer role fits into your organization’s financial strategy, check out these resources:

• Nonprofit Financial Management | Best Practices to Know. Explore the core areas of nonprofit financial management that treasurers oversee, from budgeting to revenue generation to policy development.
• Nonprofit Audits: A Complete Guide to Financial Auditing. Discover the ins and outs of the nonprofit auditing process, which treasurers play a key role in managing.
• Nonprofit Bookkeeper vs. Accountant: Who Should You Hire? Dive deeper into the differences between the roles of two key nonprofit financial professionals your treasurer will frequently collaborate with.

Learn how Jitasa's nonprofit accounting team can work with your treasurer for improved financial management.

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