One of the constant requirements of nonprofit management is to strike the correct balance between boards of directors and management in financial matters. The purpose of this chapter is to suggest a way to do this so that members of each group don't run into one another trying to do their jobs or, worse, leave something uncovered because each thought the other was going to handle it.
We suggest a simple guideline for all those pesky questions about roles and responsibilities: Assets are for boards, activities are for managers. To say it another way, boards of directors need to focus primarily on the balance sheet, while managers need to focus on profits and losses (note that the technical terms for these two reports are the statement of financial position and the statement of activities, respectively).
Here's why. In legal and moral terms, the enduring assets and liabilities of an organization are the board of directors' responsibility. Their fiduciary duty is an explicit charge to oversee these things of value wisely. By contrast, the day-to-day affairs of procuring revenue and incurring costs are the province of managers. This conceptual razor slices the world of nonprofit accountability into two neat pieces that can be easily understood by everyone, from financial wizards to the numbers-challenged.
An important nuance here is that executives, as distinct from managers, share leadership responsibilities with the board. ...