Finance Committee Sample Charter

Committee Role

The Finance Committee (Committee) of [Name of Ministry] will help the board fulfill its fiscal and oversight responsibilities. As one of the permanent committees of the board, the Finance Committee will

  1. review and recommend approval of the annual financial budget prepared by the staff;

  2. ensure that all financial reports (including the annual Form 990) prepared by the staff are accurate and timely

  3. regularly review financial results;

  4. annually, sit with the independent CPA (unless the board appoints a specific audit committee tasked with the same function) to review the results of the last financial audit and the contents of the auditor's prepared management letter.  

  5. oversee the management of organization-wide financial assets.

Committee Membership

The board should seek to include as members of the Committee those who possess skills in the disciplines of accounting, finance, and business practices. It is also anticipated that an ex-officio member of the Committee will include the highest-ranking finance professional employed by the organization. The committee should consist of at least three members whose terms of office should be staggered.

Committee appointments shall be approved annually by the full board upon recommendation of the nominating, governance, or other similar committee.

Key Operating Principles

The Committee shall fulfill its responsibilities within the context of the following operating principles:

  1. Review and Approval of an Annual Operating Budget

    Annually, the Committee will review the proposed annual operating budget for the ensuing fiscal year as presented by management. After review and amendment, if necessary, the Committee will recommend a final operating budget to the full board for approval. The approved operating budget formally confers spending authority for operating costs to management, subject to the policies and procedures adopted by the board. The Committee may provide guidance on modifications to the budget for new projects that happen to occur during the year based on any particular methodology (e.g., provided that the necessary spending is particularly funded or provided that the overall budget is balanced or within particular parameters).

  2. Review of the Financial Results

    Quarterly, members of the Committee will receive and review financial statements consisting of the then-current: 1) statement of financial position, 2) statement of activities, 3) cash flow statement; and 4) key financial performance benchmarks that the Committee deems relevant from time-to-time. These financial statements will be accompanied by a narrative from management highlighting any financial issues and, where necessary, management actions taken.

  3. Maintenance and Policy Recommendation

    Annually, the Committee will review any specific board policies regarding financial management and will make recommendations to the board of directors as necessary. These policies may include the level and terms of indebtedness, cash management, investment policy, risk management, financial monitoring and reporting, employee benefit plans, signatory authority for expenditures, and other policies for inclusion in the Board Policy Manual that the committee determines to be advisable for appropriate financial management.

  4. Timely/Accurate Financial Information

    The Committee will continually review and advise management regarding the form, content, and frequency of all published financial information related to the organization.

Other Responsibilities

  • Review and update the Committee’s charter.

  • Oversee administration of the organization’s conflict of interest policy, including the review and approval of significant conflicts of interest and related party transactions.

Ensure that the organization is operating at the highest level of financial transparency that is commensurate for the size of the organization.

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This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.