Three Key Things to Build Trust
Sitting on a board of directors is like building any new relationship. Even if your friends and business partners admire the organization, you must ask questions and dig in to learn about it for yourself. Remember, the more you know, reallyknow, about an organization, the more confidence and respect you will have for the way it is operating. That respect and confidence will lead to more funds and the ability to fundraise because you will not just be depending upon hearsay, you will fall in love with it on its own merit.
In order to govern responsibly you must understand all facets of the organization. The fastest and most accurate vision of a charity is through their finances. Never assume that everything must be ‘right’ with the organization just because of who else is sitting in the boardroom. Fiscal excellence is the responsibility of the entire board and cannot be assumed. You must bring the same diligence and care to the fiscal oversight in your charity work that you bring to your corporate work.
Here are three rules of thumb to build confidence and trust in your organization.
1. Get copies of the tax returns and financial audits from previous years. These should be downloadable from the internet and if they’re not, suggest that they should be.
2. Study the budgets for the current and previous year.
3. Read the bylaws and their accounting manual.
Fiscal responsibility and transparency are a key component to good governance. With these three basic steps you will learn where the organization has come from and where it stands today. Since you’ve asked for these documents and have reviewed them, you will be able to discuss any questions or irregularities with the ED/CEO and that person will think of you as someone who is not only financially literate, but interested. You will be in the small circle of people that they will seek out if and when trouble starts to brew and that’s exactly where you want to be. Through this conversation you are building trust, first with the organization and then in turn with the community.
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This is absolutely dead on. A Board member must start out with a perspective of curious skepticism and be won over by the transparency and integrity in the numbers and the understanding of the financial statements exhibited by key managers. Thus the seeds of trust and confidence are born while the Board member fulfills his/her duty to the rest of the stake holders, for whom the non profit ultimately exists.