When it comes to finances, stability looks good in the eye of most people, especially chief financial officers.
Stability can be a hindrance, however, if hidebound or worn-out systems are kept just for the sake of keeping them. Melanie Lockwood Herman, executive director of the Nonprofit Risk Management Center, said that financial systems and practices could remain sound as change occurs.
To highlight her ideas during a session at the recent 2014 Nonprofit Executive Summit in Santa Fe. N.M., she offered the changing face of finance, from Classic to Evolving to Inspired. For example:
- Structure. Classic: Combined finance and audit committee staffed by the usual suspects, finance staffing the same as always. Evolving: Recent changes to improve, such as new committees or committee roles. Finance staffing has evolved as the organization has grown. Inspired: Roles and responsibilities of the finance committee and audit committee reviewed periodically, clarity about which committee does what, why and how, finance staffing has evolved and staffers are seen as highly competent, finance and audit committee membership changes on a regular basis.
- Style. Classic: Finance committee is responsible for fiscal oversight, with rest of board off the hook, no board training on fiscal responsibilities, annual audit seen as litmus test. Evolving: Entire board receives training in finance. Finance committees and staff work in partnership, clarity about finance staff vs. fiscal oversight roles, no one complains about serving on the finance committee.