All Board Members Are Responsible For Financial Sustainability
Written by yoursportsresource on November 29, 2022
Many clubs operate thinking that it is the responsibility of the Treasurer to keep the club financially sustainable. This is an inaccurate assumption and one that can (and has) put clubs in a sticky situation.
The reality is that the Treasurer’s responsibility is to record, report, and advise the board when it comes to all financial matters. All the board members must take that information and make sound decisions for the sustainability of the club.
At the start of every year, the board should undertake two key financial activities:
Understand the previous year’s financial state
Preparing a budget for the current year
At the AGM or year-end, the final reports for the year should be produced by the Treasurer and Auditor (or reviewed by the Auditor). Usually, board members don’t take the time to understand these reports because they feel they have no impact, which is untrue. Every decision the board made in the previous year affected those numbers. Every event/competition the athletes went to, affected those numbers. And any project, pieces of work, and use of funds for staff and staff activities all affect those numbers and were done under the supervision of the Board.
The board needs to understand how the money was used and the outcome of those events. That way they can learn and understand what constitutes a good decision versus a bad one. Every board makes mistakes, however not learning from them is where the real danger comes in. And if every person on the board does not take the time to gain these understandings, then they can’t ensure they are living up to the Duty of Care that they are required to undertake as a non-profit board member.
As a reminder, the Duty of Care is to
“Take care of the non-profit by ensuring prudent use of all assets, including facility, people, and goodwill”.
Preparing the budget can only take place when you understand what the goals and objectives are for the year and with a clear understanding of the required needs for the year. A budget is when you project what is needed to reach your goals and needs and balance that against what you predict your revenues will be. Again, this is something that can be prepared by the Treasurer, but something must be created by the board, so everyone has a full understanding of how membership dues, sponsorship funds, grants, and any fundraising money is projected to be spent.
Following on from these two activities at the start of each year, at each subsequent monthly board meeting, it should be expected that all board members are clear, understand, and agree to the use and continued use of funds. At Your Sports Resource, we discuss how the concept of Leadership is maximizing the efforts of others and that for a club to be successful, the responsibility of leadership is bigger than one person. That starts with every board member having a clear view of how their decisions affect the sustainability of the club.
As a board member, if the financials are not on the agenda monthly or if they are and you feel like things are not as clear as they should be, then speak up. Remember the board serves the members, so ensuring the club is on the right path is never a wrong position. Ensure there is a robust discussion regarding the management of the club financials including how the board will keep abreast of the activities. Also, make sure you encourage the Treasurer to be the trusted advisor the board needs them to be for them to make the right decisions.