Making the Treasurer and the Finance Director’s relationship work
What makes an effective a treasurer? Do charities really need a treasurer?
Judith Miller, Partner at Sayer Vincent, opened this session at the Charity Accountants Conference by discussing the suggestion that the role of honorary treasurer was not needed. Some argue that having a treasurer gets in the way of other trustees taking responsibility for finance.
Judith said, “There is no legal requirement to appoint a treasurer, unless your constitution requires one. As the Charity Commission guidance (the Essential Trustee: CC3) reminds us, the trustee board are collectively responsible for the charity this includes the finances. There is a risk that treasurers will take the lead on finances and other trustees simply agree with them, but if that’s the case both parties are not fulfilling their roles.”
Judith is currently the treasurer of the Small Charities Coalition and says that if her trustees said to her, “if you are happy with the accounts, then we are happy,” she would have failed in her role. She sees being an interpreter of the numbers for her fellow board members as a key part of her role. The role is also about acting an enabler effective discussions around the finances at board level.
She said, “A good treasurer is not just the steward of the money, but enables others to access and understand this area. They operate strategically and interpret and explain the figures and their implications to the board, whilst not getting in the way of the internal finance team.”
“Treasurers will often observe that it can be hard enough for busy trustees with a finance background to really understand what’s going on from a set of management accounts, let alone a trustee without any financial knowledge. While trustees can see how the organisation is faring compared to the budget and what’s been overspent, it can be hard to fully understand the implications, and this is where treasurers can add most value.”
“They can put the financial results into context for people, working alongside the finance team to add life to the numbers through presentations, visual images and graphs, and most importantly highlight how the financial results relate to performance and delivery so fellow board members can understand what is really happening, what’s working well and what could be done differently, as well as the longer term perspective.”
“Turning data into information that is invaluable for the board is critical. Treasurers can also help to champion a right culture around financial discussions, so there is a safe space where people feel comfortable asking what might seem a stupid question.”
Making relationships work
If a charity is small with limited internal finance resource, then the treasurer may need to have a more “hand on” role. In larger charities, the focus will be at a more much strategic level alongside the internal financial leadership. For treasurers to operate effectively, they need to have good working relationships principally with the internal finance lead – the finance director or finance manager. Mutual understanding of one another’s strengthens and where they can support each other is critical. Having good structures and processes around them is also important, such as sub-committees.
When a treasurer is appointed, they need to have an in-depth induction, so they fully understand the operating model and the risks and opportunities for the organisation.
With this insight, the treasurer can then contribute to the future development of the strategy, including the reserves policy. They may also help to develop a value for money culture, establish KPIs and contribute to risk management and assurance.
If the treasurer has a good working partnership with the finance lead, they can operate as a double act in meetings and support each other.
There are also several resources charities can given to treasurers to support them. These include:
• C25 Charity Finance: trustee essentials
• CC8 Internal controls for charities
• Honorary Treasurers’ Handbook – Sayer Vincent/Honorary Treasurers Forum
• Made simple guides – Sayer Vincent
• Rethinking Risk/Beyond Reserves – Sayer Vincent
Judith concluded by saying some may feel lonely in the treasurer role. It is a big responsibility and a treasurer may see financial issues before others and then relay the news to the board. She also highlighted that trustees and managers must not assume the treasurer has thought of everything or know everything. Constructive challenge on financial matters is as important as in other areas of governance.
She added that given the current financial situation many charities find themselves in, the role of a modern honorary treasurer as an interpreter and enabler is potentially more valuable than ever.