In the Honorary Treasurers Forum, we often refer to the treasurer as the unsung hero of the trustee board. They receive less of the glory, but they play an essential role in helping the trustee board to fulfil its obligation to provide financial oversight for the organisation.
The treasurer role is specified, along with that of the chair, by the Charity Commission in its guidance (CC3 The Essential Trustee) as an “officer” of the charity. The role of the treasurer is to monitor the financial administration of the charity and report to the board of trustees at regular intervals on its state of financial health, in line with best practice, and in compliance with the governing document and legal requirements.
The functions undertaken by a treasurer depend on the size and purpose of the charity. In larger charities, the treasurer may share the responsibilities of the role with a finance committee, and staff may carry out day-to-day finance functions. In smaller charities, the treasurer may be the book-keeper and undertake all of the accounting operations as a volunteer. In larger charities or grant-making organisations, the oversight of investment funds may be important, whereas in smaller charities the treasurer may be signing cheques or managing the online bank accounts.
Whatever the size and type of charity, there are some responsibilities which are common to all, and these are outlined in figure 1.
What characteristics and skills make an outstanding treasurer?
An outstanding treasurer is much more than just the numbers person. They need to have or to develop a broad spectrum of skills.
Having some level of confidence in financial skills is a pre-requisite. Boards often look to appoint accountants and finance professionals to the role, but in reality someone with good business finance knowledge can be equally effective. Whatever the background, it is vital to have an understanding of the terminology of charity finance and reporting.
The treasurer must be able to think strategically and be able to advise on the financial implications of the strategic plan. They also monitor the financial viability of the charity on an as-needed basis.
Ability to oversee and not manage
The treasurer in a larger charity with finance staff has to understand how to maintain a governance role; to have oversight of financial procedures but not to manage them. It’s the CEO’s role to manage staff. There is a difficult balance in understanding how to have confidence that financial processes are working correctly without interfering!
Possibly the most important skill for treasurers is how to present and explain management accounts to make them accessible to those trustees who are less financially skilled, giving them the confidence to discuss and challenge them. New treasurers may work with the finance staff to ensure that the finance reports are understandable – not too detailed, but detailed enough.
Treasurers often chair any finance committee in line with standing orders and terms of reference, and can make great vice-chairs.
Knowledge of the way charities work
Private sector finance professionals may find it hard to understand that the aim is not to build up reserves or to be the finance gatekeeper, but to spend money. Budgets can be built on the hope and expectation of income being donated to the charity (with a plan B if it doesn’t happen!). It can be helpful for them to buddy up with a seasoned treasurer to help understand what is reasonable and what is not sustainable in decision-making.
Ability to work collegiately
All trustees are volunteers and many of the operational staff may be volunteers too. The treasurer has to be able to work as part of a team and influence and motivate others.
HOW DOES THIS WORK IN PRACTICE?
Relationships with the chair and other trustees
The treasurer works alongside the chair to keep them informed of any material changes in the finances. They ensure the chair is fully briefed on key financial issues such as the budget, statutory accounts and financial policies. The chair looks to the treasurer for advice on financial matters in board meetings but also ensures that other trustees are not abdicating their responsibility to understand and question the financial statements.
Particularly in smaller charities, it is too easy for other trustees to overrely on the skills and knowledge of the treasurer. Far from enjoying the regard in which they are held, treasurers in this environment can feel exposed and singularly liable.
Helping all trustees to have financial confidence
All trustees, not just the treasurer, are responsible for the charity’s finances and should be able to understand, consider and comment on financial information. But many trustees simply do not have the confidence to be able to ask questions about the financial information presented at board meetings.
As part of the induction process, the treasurer (or finance staff) can ensure trustees have the right level of knowledge about charity finance to feel confident commenting on the finance reports during meetings. Trustees should be given past copies of the annual reports and finance papers from previous board meetings. It is helpful to give background to any major projects and matters or trends of a material nature which would be useful background for future discussion.
Then, on an ongoing basis, the treasurer can ensure that financial information is presented in a meaningful way that enables trustees to take decisions. The chair can also ensure that sufficient time is given to finances on the agenda, ensure that all board members are joining in the debate, and monitor whether trustees are engaged or have disconnected from the discussion.
Make a difference, become a treasurer
Many finance professionals baulk at the thought of being a treasurer. It sounds too much like a busman’s holiday. But the Charity Commission’s recent research into trusteeship Taken on Trust has shown that treasurers are often more motivated by their charity’s purpose than other trustees. For older treasurers, it is a great way to give something back by using their skills for charitable benefit, and is deemed to be hugely rewarding. For younger treasurers, there are significant opportunities to develop, learn new skills and build cross-sector experience.
This is why many major firms are now encouraging their staff to take up trustee roles. For finance professionals in the charity sector, it is a great opportunity to understand how boards work and to operate at a leadership level. So, become a hero, become a treasurer.
Figure 1: CC3 guidance on the role of the treasurer
The treasurer usually takes the lead at board level on:
- Making sure the charity keeps proper accounts;
- Reviewing the charity’s financial performance;
- Drawing up or reviewing policies for finance and investment;
- Ensuring that the charity has robust and effective financial controls in place;
- Liaising with finance staff and with the charity’s independent examiner or auditor;
- In a membership charity, reporting on financial matters to the members.
Do all charities have a trustee treasurer?
The short answer to this is “no”. Some charities have trustees who take the lead in finances but are not called “treasurer”; for example, they may be called “head of the finance committee”. Some charities don’t have a treasurer and instead share the responsibilities among everyone. Some have a treasurer who is not a trustee and attends board meetings in an ex-officio capacity.
So why appoint a trustee as a treasurer? On the positive side:
- One individual is focused on monitoring the financial administration of the charity, ensuring everything is done;
- They are a leader to present and facilitate discussion on finance issues at board meetings;
- They provide a single point of contact between the board and finance staff;
- They build a trusted relationship with the chair and can be accessed quickly for consultation in emergencies;
- They are an obvious candidate to chair finance committees.
On the negative side:
- They may allow other trustees to abdicate responsibility for financial matters;
- They may inhibit contributions from other finance professionals on the board;
- It can be difficult to recruit such a super-hero, and easier to split the responsibilities;
- Some charities pay a small honorarium to their book keeper and it may be against the governing documents to pay a trustee.