Practical tips on financial governance for INGO trustees

To effectively oversee and engage with an organisation’s finances, trustees need sufficient financial understanding to scrutinise decisions, collaborate with finance directors and auditors, and maintain a clear, long-term perspective on financial risks.

This session covered:

How boards can engage with and understand financial information.
Best practices for planning a reserves policy and managing financial risks.
The balance of financial information trustees need to cultivate informed decision-making and organisational resilience.
The critical relationship between the finance director, board and auditor

Speakers

Maryam Mohsin, Head of Communications and Events, Bond
Edward Finch, Partner, Buzzacott
Graham MacKay, Chief Operating Officer, Business & Human Rights Resource Centre and Board of Trustees Chair, Emergency Nutrition Network

9 practical suggestions for stronger financial oversight

1.Establish a Finance Committee
Many Boards lack deep financial expertise. Often, just two or three trustees have real financial competence. This creates risk, especially in financially uncertain times.

Given the voluntary nature of the role and limited meeting frequency, detailed oversight by the full board is impractical. A more effective approach is to establish a finance committee composed of trustees who are both competent and interested. This focused group can work closely with the finance director (FD), providing clearer oversight, consistent language, deeper engagement and more rigorous scrutiny.

2. Ensure a shared financial language

Shared language ensures everyone interprets data consistently. Key financial policies, especially income recognition, must be clearly defined and aligned with systems.
Financial figures should be prudent, transparent, and methodical.

3. Build efficient structures and strong relationships

Strong governance is built on:

Clear committee structures.
Regular, purposeful engagement.
Trust-based relationships between trustees, the COO/FD, and auditors.

Boards must understand the FD’s risk appetite – whether prudent, risk-taking, or overconfident – and probe accordingly. Auditors should have direct access to trustees, promoting transparency and early issue identification.

4. Strengthen management accounts and strategic allocations.

Effective financial oversight depends on timely, forward-looking and credible reports. Management accounts should:

Be produced regularly.
Use the year-end forecast as a key reference point.
Align with statutory frameworks.

Cost allocation by staffing numbers is inadequate; allocating by project or purpose offers clearer insight and should be reflected in statutory accounts, even if unfamiliar to auditors.

5. Strike the right balance in financial reporting

Too much granular detail can be overwhelming and lead to unproductive discussions, while too much summary can obscure insight.

Structure the agenda to prioritise discussion and reflection, not just financial reporting.
Increase meeting frequency in times of uncertainty
Share preparatory questions (“homework”) in advance to boost meeting effectiveness.

A healthy board culture encourages open questioning—no query is too simple if it strengthens understanding.

6. Improve financial reporting and risk oversight

Trustees need the right balance of detail and summary to support sound decisions.

Focus areas should include:

Unrestricted income and reserves: are they sufficient and being replenished?
Forecasts vs. year-end outcomes: How are we tracking?
Scenario planning: what are our biggest risks, and how might they impact us financially?

Trustees should feel empowered to ask questions. Simple queries often unlock the most valuable insights.

7. Reframe the Reserves conversation

Trustees must look past basic reserves targets to a more strategic approach. They need to understand the composition and trajectory.

Are reserves true surpluses or time-bound unrestricted income?
Do we risk holding reserves that appear free but are already committed?
What ranges are appropriate, and what are our trigger points for action?

Trustees should plan over a multi-year horizon (typically more than 2–3 years), developing reserve ranges that can guide decisions. This might involve setting lower thresholds that trigger corrective action and upper limits beyond which further accumulation becomes difficult to justify.

Decisions should involve the entire board, not just the finance committee. Debate whether reserves should protect against shocks or support strategic investment.

Ask:

How will we adapt over the next few years?
What is the strategy for flexibility and resilience?
Should we invest in growing unrestricted income?
Are we agile enough to pivot when needed?

Understanding the going concern assumption is particularly important. Trustees must understand the business model, reserves strategy and liquidity, especially in volatile periods.

8. Understand regulatory expectations

Critical to effective governance is understanding and adhering to the Statement of Recommended Practice (SORP) and auditors’ expectations concerning trustee involvement. Financial oversight is a trustee duty, not an administrative function.

The audit process serves as an oversight mechanism, assessing both the quality of financial reporting and trustees’ active engagement.
Auditing standards expect trustees to understand core policies and systems, reflecting leadership competence, not just compliance. Trustees must demonstrate insight, particularly around viability and sustainability.

9. Ask better questions

Trustees aren’t expected to be accountants, but they are expected to engage and ask questions, understand risk and focus on long-term sustainability. They should:

Ask questions to clarify understanding – basic questions often uncover valuable insights.

Challenge financial information and avoid “blind trust” in management or auditors.
Engage with financial reporting, ensuring they understand the data well enough to make informed decisions rather than passively approving reports.

The core question is not just what do the numbers say, but what do they mean for our future?

Key questions for trustees

Are we confident in our income recognition and financial policies?
Are our management accounts focused on the right metrics and forecasts?
Do we understand our reserves – not just the balance, but composition and trajectory?
Do we have strong, transparent relationships with the FD and auditors?
Can our organisation adapt over the next 2–3 years? Do we have the financial and strategic agility to do so?