Policy Governance Week: Understanding the Board’s Financial Duties by Felicia Bohanon

Felicia Bohanon
Felicia Bohanon

Greetings. My name is Felicia Bohanon. I was very excited to join the Board as Treasurer after serving on the Financial Advisory Board (FAB) from 2012 – 2015. I served on the FAB during the time that AEA was making its transition to SmithBucklin, our current association management company. Having served on the FAB at that time provides me with a unique perspective concerning the changes in the role of the Treasurer and FAB under policy governance. 

One of the striking changes for me as Treasurer relates to payment of expenses. In 2012 the Treasurer was actually signing checks. Today the Treasurer remains as a signer on the checking account and is bonded but does not write checks. The ED signs all checks, which are created by the office in Chicago. After an invoice is generated and the expense is reviewed, a check is then sent to D.C. for the ED’s signature. The ED does not have a checkbook. Under PG, the FAB, Treasurer and Board leave day to day operations to the ED, except as requested, and focus on policy and the broader issues of AEA.

As the FAB’s role has pivoted under policy governance it continues to review the preparation of the annual budget and quarterly financial reports. It provides recommendations to the board concerning financial policies, as requested by the Board, via the Treasurer. Most recently the FAB has been involved in analyzing AEA’s policy around the use of reserve funds. In the next few months the FAB will make recommendations to Board, based on AEA’s bylaws, that ensure that AEA continues to have sufficient reserve funds, but also makes sure that AEA has needed cash flow for operations and programming to meet new demands as we increase our virtual presence and footprint.

An ongoing focus of the FAB is the education and training of the board about financial issues.  In working with me, five training modules were developed which include: an overview of fiduciary responsibilities, understanding cost allocation and the board’s role in fundraising. These trainings will continue to take place over the next year and are conducted by me at monthly and quarterly meetings.  The initial training on fundamental fiduciary duties examined board member responsibilities to AEA around duty of care, duty of loyalty, and duty of obedience. The training emphasized that Board members serve as stewards of AEA’s assets and other interests, that the board is responsible for the AEA’s decisions and activities, regardless of if the Board member is present or absent at any particular meeting and the importance of internal controls.  Here is a Rad Resource from Zamora Business Accounting, PC, on Reading and Understanding Nonprofit Financial Statements. It was also shared with the Board.

This week, AEA365 is celebrating Policy Governance during which our AEA Board members and Executive Director will help readers understand this approach to association management. Do you have questions, concerns, kudos, or content to extend this aea365 contribution? Please add them in the comments section for this post on the aea365 webpage so that we may enrich our community of practice. Would you like to submit an aea365 Tip? Please send a note of interest to aea365@eval.org. aea365 is sponsored by the American Evaluation Association and provides a Tip-a-Day by and for evaluators.

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