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Strategies: Better Financial Fiduciaries

By Net Assets posted 09-30-2020 09:19 AM


Financial Management |

A new book from NBOA helps independent school trustees not only understand school finances but also ask management better questions to drive more strategic discussions.

Article by Phil Tahey, independent consultant, and Ron Salluzzo, Attain, LLC

From the July/August 2020 Net Assets magazine

The following is not an uncommon scenario in higher education — is it the case at your school?

Members of the school’s board of trustees are committed and willing to help the institution in any way they can. Yet despite being leaders of their own companies or organizations in various industries, even members of the finance committee may struggle to comprehend the unique fundamentals of nonprofit educational finance and do not always fully understand the numbers presented to them at board meetings. Finance committee meetings, held only three or four times annually, address topics that are not critical to the institution. Committee members received plenty of data but little context or analysis.

Seeing an opportunity to elevate boards’ strategic discussions and decisions regarding schools’ fiscal health, we have partnered with NBOA and authored Effective Financial Governance for Independent School Trustees.” This follows a similar volume we wrote in 2018 for smaller private colleges, which often struggle financially and need effective oversight. After working with NBOA and NAIS for about four years on the Composite Financial Index to help school leaders make long-term strategic decisions about their financial future, we have now developed a finance primer for independent school trustees. This publication was reviewed by a dozen leaders in independent school governance and finance to ensure it addresses the top issues faced by boards today.

The book aims to help boards and finance committees understand the business model of a nonprofit K–12 independent school and enhance comprehension of their stewardship requirements. The book not only provides background knowledge but outlines questions for trustees, particularly those serving on financially-charged committees, to ask the school’s finance management team. It also references NBOA tools and resources to help both school management and the board ensure the financial health of their schools in perpetuity.

All board members, whether they are on the finance committee or not, are responsible for sound financial governance at their schools. This fiduciary responsibility is statutory, as defined in federal and state not-for-profit statutes and regulations. Beyond that, financially literate boards govern more effectively. We firmly believe that finances are either an enabler or an inhibitor of the school’s strategies, goals and action that are needed to attain the school’s mission and vision.

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Phil Tahey, CPA, is an independent consultant to higher education institutions with more than 40 years of experience and service to the higher education community. Ron Salluzzo is a partner in the higher education practice at Attain, LLC, an education consultancy. He is responsible for strategic financial services and enterprise risk services.
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