Budgeting and Financial Planning

The Finance Committee responsibilities for budgets and financial planning include:

1. Develop and approve an annualized operating budget timeline and process.
2. Follow the budgeting process to work with staff and in cooperation with other board committees, e.g., fundraising, planning, or human resources to develop the operating budget.
3. Approve the operating budget within the finance committee and present the budget to the full board of directors for approval.
4. Set long-range financial goals along with funding strategies to achieve them.
5. Develop multi-year operating and capital budgets that integrate strategic plan objectives and initiatives.
6. Present all financial goals and proposals to the board of directors for approval.
7. Monitor adherence to the budget.

Effective finance committees fully engage in an annualized budgeting process in cooperation with staff leaders and other board-level committees with budget impact. Unless an organization’s bylaws or local corporation codes expressly forbid it, it may be advantageous to include non-board members with financial expertise on the committee, as long as the committee itself is not empowered to take financial actions without a board vote.

In addition to developing an annual operating budget, the committee should also set long-term financial goals. These goals might include, for example, the creation of an operating reserve fund and the creation of a fund for maintaining a facility and/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.