Chairing the Finance Committee

Providing financial oversight for your chorus is a critical role with many facets—learn about the challenges and rewards of effective stewardship.

One of the most gratifying experiences I've had as a financial management consultant for small and midsized nonprofit organizations has been to participate in the activation of a new or formerly dormant finance committee in which the treasurer and committee are fully functioning in partnership with the staff leader. If you are embarking on a similar course with your chorus, here is what you need to know about the roles of the finance committee and its leader.

First, the Finance Committee

The finance committee chair is most often the board treasurer, whose specific duties are usually described in the organization's bylaws. In practice these can vary considerably from a hands-on role, in the case of the "working board" model, to a more supervisory role where transactions are largely handled by staff.

Another significant part of a treasurer's duties is to work with and possibly lead the finance committee. Before recruiting a chair of the finance committee, or accepting the position yourself, it may be helpful to review the committee's roles, which are primarily to provide financial oversight for the organization. Typical task areas for small and midsized choruses include budgeting and financial planning, reporting, and the creation of internal controls and accountability policies. An outline of responsibilities appears below.

Budgeting and Financial Planning

  • Develop an annual operating budget with staff
  • Approve the budget within the finance committee
  • Monitor adherence to the budget
  • Set long-range financial goals along with funding strategies to achieve them
  • Develop multi-year operating budgets that integrate strategic plan objectives and initiatives
  • Present all financial goals and proposals to the board of directors for approval

The finance committee is charged with ensuring the financial sustainability of the organization. Effective committees fully engage in an annualized budgeting process in cooperation with the staff administrative leader and senior staff. Unless an organization's bylaws expressly forbid it, it may be advantageous to include non-board members with financial expertise on the committee.

In addition to developing an annual budget, the committee must also set long-term financial goals such as the creation of a working capital or cash reserve and the creation of a fund for maintaining or replacing equipment. If the organization has a strategic plan, the finance committee will work with the staff to determine the financial implications of the plan and will plot them into a multi-year organizational budget that will financially support the implementation of the strategies.


  • Develop useful and readable report formats with staff
  • Work with staff to draw up a list of desired reports, noting the level of detail, frequency, deadlines, and recipients regarding these reports
  • Work with staff to understand the implications of the reports
  • Present the financial reports to the full board

Effective finance committees demand and produce highly contextual reports that clearly communicate the organization's financial (cash) position, its adherence to the budget, its allocation of resources toward the accomplishment of its mission, and its support of any donor-imposed restrictions on contributions. Having a list of reporting expectations permits the staff to allocate enough time to produce accurate, high quality reports and not to be caught off guard by ad hoc requests. In addition, these reports should help to focus the board's discussion about expected outcomes and potential strategies for overcoming setbacks or changes in the financial environment.

Internal Controls and Accountability Policies

  • Create, approve, and update policies to ensure that the assets of the organization are protected
  • Ensure that policies and procedures for financial transactions are documented in a manual
  • Ensure that approved financial policies and procedures are followed

Although the entire board carries fiduciary responsibility for the organization, the finance committee serves as a leader in this area, making sure that appropriate internal control procedures for all financial transactions are documented in a manual and followed by staff. The committee should also play a role in determining and updating bank account signatories, as well as overseeing that legal and governmental filing deadlines are met and that tax deposits are made on time.

Finance committees are also often charged with ensuring the compliance to and/or development of other policies that further serve to protect the organization and manage its exposure to risk. These include establishing policies for:

  • Personnel
  • Executive compensation packages
  • Long-term contracts or leases
  • Loans or lines of credit
  • Internet use and computer security
  • Capital purchases
  • Disposition of donated stock
  • Insurance requirements and reviews
  • Record retention
  • Gift acceptance

Cover Audits and Investments

Depending on many factors such as the size of the board, the size of the budget, and the magnitude and complexity of existing financial assets, the finance committee may be called upon to perform the duties of two other committees that are usually separate in larger organizations: the audit committee and the investment committee. The basic auditing and investment responsibilities include:

Audit committee

  • Recruit and select an auditor
  • Review the audit draft presented by the auditor
  • Present the audit report to the full board of directors (if the auditor does not do this)
  • Review the management letter from the auditor and ensure follow-up on any issues mentioned

Investment committee

  • Draft an investment policy detailing objectives of investments, guidelines on portfolio mixes based on a predetermined level of risk tolerance, authorizations for executing transactions, and the disposition of earned income
  • Ensure that provisions of the policy are followed
  • Review the policy at least annually and update if necessary

If an organization has cash assets exceeding four months of operating expenses, the finance committee should draft guidelines for the staff administrative leader to follow for making low-risk, short-term investments. These should be designed to maximize earned revenue from existing cash without interfering with operating cash flow needs.

Role of the Chair

Now that we've examined what the finance committee does, the role of the chair is, therefore, to make sure that the committee does its job. Specific duties of the chair include serving as the principal liaison between the committee and the full board, as well as working with the staff leader to set an agenda for each committee meeting, to decide who will notify members about the meeting, and to ensure that handouts and reports are prepared and sent to committee members in advance.

An annualized task list is a useful tool for organizing the committee's work. This could take the form of a month-by-month timeline or calendar that integrates budgeting and financial planning deadlines, governmental and legal filing deadlines, internal report deadlines, dates to review and update policies and procedures, and dates of finance committee meetings and full board meetings.

The treasurer or finance committee chair does not always have to be a professional "numbers person," but good judgment, logic, curiosity, accountability, and commitment to the long-term financial stability of the chorus are vital traits.

The presence of a fully engaged and effective finance committee is a sure indication that an organization is committed to good stewardship and is actively building and preserving the financial resources necessary to support the accomplishment of its mission, both for the short- and the long-term. Though it is a challenging undertaking, chairing the finance committee is a rewarding opportunity to provide an enormous service to your chorus. Now that you know what is expected of you, I hope you will accept the challenge!

This article is adapted from The Voice, Winter 2007-2008.