Five Good Ideas ®
Five Good Ideas on bringing your financial story to the board
Published on 24/10/2022
Boards of directors in the non-profit sector have responsibility for governance of organizations, and this includes financial decision making. How senior leadership and finance staff keep board members informed depends on good data, transparent communications, and trust. In this session, Michael Herrera, Chief Financial Officer at George Brown College, will share his five good ideas on how to build a healthy relationship between staff and the board for the financial wellbeing of their organization.
Five Good Ideas
1. Make sure you onboard new board members well
- Outline clear roles and responsibilities – and expectations
- Provide an orientation package – history of organization, key financial information, strategic plan and direction
- Have structured opportunities to meet and get to know other board members and key staff
- Ensure board members are engaged through committee or special initiative work
2. Ensure board agendas are clear, concise, and purposeful to enable meaningful discussion and dialogue
- Ensure there is a clear discussion or decision you are looking for
- Allow board members to provide insight into the topics
3. Remember – board members are volunteers and don’t have the same in depth of knowledge about the organization – nor are they expected to; and they have limited time to prepare for meetings
- Ensure meeting materials refer to previous decisions
- Ensure materials are distributed in advance
4. Provide financial information that is easy to understand, meaningful, and relevant
- Provide comparative information
- Provide visual aids like charts and graphs
- Provide historical and future trending
5. Develop a strong relationship with your Treasurer and Board Chair
- Discuss work plans in advance
- Share meeting materials in advance for feedback
- Ask for advice on how to approach topics
Six steps to being an awesome treasurer | CharityVillage
Interestingly, to the best of my knowledge, there is little if any training available or provided to those who volunteer their time and energy to look after the finances of these organizations.
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Presenting financials to boards | Airbase
Presenting financials to a board may, on the face of it, seem like a fairly straightforward task. Actually, it’s not. That’s because you’re not just presenting financials, you’re telling a story. And good storytelling is hard to do. I’ve learned that getting it right requires a combination of a strong narrative, unambiguous messaging, and clear visuals that effectively communicate the data. Knowing how to frame the story begins by understanding your audience. Because not all boards, and not all board members, are the same. Doing the groundwork to understand the board, its members, and their priorities, is a critical first step.
Seven tips on how to present your finance case to the board | Acuity (acuitymag.com)
Practical tips on how to present financial information to your board of directors.
Onboarding New Nonprofit Board Members: 4 Key Steps to Ensure a Successful Transition (nonprofitready.org)
When new members join a nonprofit board, it’s important to have a clear understanding of their roles and the expectations of them as a board member. Board members are responsible for ensuring the organization is fulfilling its mission and meeting its goals. To help new board members hit the ground running, there are several key steps you can take to ensure a successful transition.
Please note: This transcript has been edited for clarity.
Elizabeth McIsaac: While many of you are dialing in from across Canada, and we saw a nice widespread RSVP list, I’m speaking to you from Toronto and I’d like to begin today’s session by acknowledging the land where we live and work, and recognizing our responsibilities and relationships where we are. As we’re meeting and connecting virtually, I encourage you to acknowledge the place you occupy.
I acknowledge that I am, and Maytree is, on the traditional territory of many nations, including the Mississaugas of the Credit, the Anishnabeg, the Chippewa, the Haudenosaunee, and the Wendat peoples. And it is now home to many diverse First Nations, Inuit, and Metis peoples. We also acknowledge that Toronto is covered by Treaty 13 with Mississaugas of the Credit. The territory is also covered by the Dish With One Spoon Wampum Belt Covenant, which is an agreement between the Haudenosaunee and the Ojibwa and Allied Nations to peaceably share and care for the lands and resources around the Great Lakes.
Now, it’s my pleasure to introduce today’s session and speaker.
Boards of directors, the nonprofit sector have responsibility for governance of organizations and this includes financial decision-making. Very importantly, how senior leadership and finance staff keep board members informed depends on good data, transparent communications, and trust. In this session today, Michael Herrera will join us and share his five good ideas on how you can build a healthy relationship between staff and board for the financial wellbeing of your organization. I would add to that the overall wellbeing of your organization.
Michael has spent a career in service to the non-profit sector, having worked with social services, religious, and arts organizations. He’s currently the chief financial officer at George Brown College here in Toronto. Michael also serves on the board of directors for Crow’s Theatre, Theater Museum Canada, Toronto Arts Council, Toronto Arts Foundation, and Making The Shift, a youth homelessness social innovation lab with the mandate for transforming how we respond to youth homelessness through research and knowledge mobilization.
Clearly, he understands what’s involved with being a board member in this sector. For Michael’s full bio plus his ideas and resources, please download the handout that is in the chat. It is now my absolute pleasure to welcome Michael.
Michael Herrera: Thanks Elizabeth, and I’m very honored and grateful for being able to spend a few minutes with all of you to talk about some of my ideas on bringing the financial story to your board.
1. Make sure you onboard new board members well
My first idea really talks about what you need to do before you even have a board meeting and particularly focused on new board members. So my first good idea is to make sure that you onboard new board members well. Many times I join a board and I don’t know very much about the organization itself. One of the important things for me before I even go to a board meeting is to have an opportunity to understand what my role and my responsibilities are, and what the expectations are of me for that particular organization.
Different organizations or of different sizes and have different expectations of their board members. Some boards might be much more of an operating board and are asking that their board members play a much more active role in decision-making whereas other boards may be more strategic and therefore are looking for a different type of role for their board members.
So having that clarity of focus is really important. Part of the onboarding of newborn members would include a good orientation package which would have information such as the history of the organization, key financial information about the organization, as well as any strategic plans and directions that you may have.
Another really important part about onboarding your new board members to enable them to play a fulfilling role for your organization is to provide them with structured opportunities to meet and to get to know other board members and key staff. A lot of this information may be difficult to capture during formal board meetings. So to be able to provide these opportunities of learning the history and sharing information about previous decisions is really helpful.
2. Ensure board agendas are clear, concise, and purposeful to enable meaningful discussion and dialogue
My second good idea for you today is to always remember that board members or volunteers and don’t have either the same in-depth knowledge about the organization, nor do they have the time to necessarily recall or remember all of the different details that may have been presented in the past.
And although as board members, we try our very best to allocate the appropriate amount of time to prepare for board meetings. Sometimes I confess that I’m rushed in leading up to a board meeting and then I usually spend maybe a day or two prior preparing for the board meeting. With this in mind, it then becomes really helpful when you think about how you put together the meeting materials for your board meetings. These meeting materials should consider referring to previous decisions that were made as well as ensuring that the materials are distributed well in advance.
This will help ensure that the board members have enough opportunity to reflect upon information that has been circulated in the past as well as to make sure that they are properly prepared when it comes time for the upcoming board meeting.
3. Remember – board members are volunteers and don’t have the same in depth of knowledge about the organization – nor are they expected to; and they have limited time to prepare for meetings
Leading into this subject is my third good idea about ensuring that your board agendas are clear, concise, and purposeful to enable meaningful discussion and dialogue. That organizations have a clear work plan of what are the key topics that are going to be discussed throughout the year is really important so that board members can see when there are going to be important decisions to be made.
A work plan is also helpful as you do your planning about when information should be presented to the board. There have been times where I’ve sat on boards and a major topic or major decision comes up at a particular meeting and there hadn’t been any previous discussion about this subject in past meetings.
So what ended up happening was that the time that the management and the organization was hoping for a decision to be made, a lot of time was spent at that meeting with the board asking a lot of questions, and sometimes unfortunately not enough conversation taking place, and the decision having to be postponed to the following meeting.
As you think about when you put your board agendas together, think about making sure that you have enough time in planning when topics should be placed on a board agenda, whether a topic is for discussion in order for you to be able to get some feedback from the board, in order to help your processes along or whether you’re actually looking for a decision to be made.
The way I think about this is sometimes you would never go to a restaurant and give a person the bill at the end looking for them to pay. You would actually pace it out in a way that first you talk about here’s what the menu looks like, getting feedback about what a person wants to order, allow them the time to digest the information, and at the end when you actually need an approval, they’ve had enough time over previous meetings in order to provide any feedback and then it becomes an easy conversation for the approval.
Of course, this depends on the size of the particular request and the risk associated with the request. So these are factors that you need to take into account as well. As I said, I believe that you invite board members as key volunteers to spend time with your organization because you want to take advantage of their skills and their talents that they bring to your organization.
In order to best do that, then it’s going to be important for you to ensure that you have that information available to them in advance for them to think about and to provide a meaningful insight to you.
4. Provide financial information that is easy to understand, meaningful, and relevant
As a fourth good idea that I would like to share with you is thinking about providing financial information that is easy to understand, meaningful, and relevant.
Many times people will present information in great detail because they believe that the more detail that you provide, the more knowledgeable your organization is and control you have over your financial information. What I find challenging when looking at a great deal of detail is that I’m not exactly sure what the purpose is of looking at the detail and whether or not there’s some information that you would like my input on.
And so I make the assumption that if you’re sharing detail or specific numbers with me, it’s because you want me to actually understand that detailed information and that you want me to make a comment on that. That being said, you should always then think about easier ways to digest information.
Perhaps you can share the information in broad categories instead of at a line by line level of detail that gets presented in your internal management statements. Another way of sharing financial information is by using visual aids like charts and graphs. I find that not everyone likes looking at spreadsheets and sometimes it’s much easier to look at financial information if it’s been translated into a pie chart to represent for example, how your different revenue sources have changed or the trend of year over year changes or a five-year trend of how your expense mixes change.
All of these ways will make it much easier for your board to understand the critical information that you’re looking to convey.
In thinking about looking at trending information, I also think it’s important for you to consider providing multiple years or multiple periods of information in order to look at the trend.
Many times organizations only provide one year’s worth of information when they’re looking for approval for a budget, for a project, or for their budget. One of the challenges I find is that by only looking at one year, it’s difficult to remember whether or not that year is indicative of previous years, whether or not we are doing better than expected, or whether we’re on a trajectory that is negative.
Looking at historical and future trending and providing this in an easy to understand graph helps to frame for board members how the organization is faring and will also enable them to ask questions and provide some suggestions should there be a trend that is opposite of what you were hoping to achieve.
5. Develop a strong relationship with your Treasurer and Board Chair
One of the last things which I think becomes really important is developing a strong relationship with your treasurer and your board chair. In all of the organizations where I have worked at, I’ve always found it very important for me to have regular communications with the treasurer as I set my agenda for the meetings and the agenda topics that I’d like to have over the year to receive feedback from the treasurer on the particular presentations that I’m looking to present as well as to ask for some assistance if there is a new topic that we are looking to endeavor on discussing and how to best approach it.
My experience on sitting on the other side of the table is sometimes when I’m treasurer, the last thing I ever want to do is to receive information prior to a meeting having not seen it before and to have questions for management that I haven’t had an opportunity to ask in advance.
I believe that as a volunteer on any board, my role is to be as supportive to management as possible while at the same time ensuring that I fulfill my fiduciary responsibility as a board member. I never want to play a gotcha moment with management. And the best way for that not to happen is for me to be able to have a conversation in advance with management on what they’re looking to present for me to ask any questions in advance of the meeting to provide any feedback if there’s missing pieces of information. Or sometimes I might feel that information is not ready to be presented for a decision, but maybe information should be shared per feedback alone.
As Elizabeth had mentioned, I sit on a variety of boards and I also recognize that for every organization that I sit on the board of, it’s not a one-size-fits-all. Different organizations are of different sizes and have different risk profiles. So for example, I don’t have the same level of expectation on the materials that are being presented for an organization that is of a larger size and that are making some complicated decisions versus smaller entities that may only have a one or two person shop in order to manage the business.
Having that strong relationship with your treasurer and your board chair enables you to make sure that you are both on the same page about the level of information that should be presented. The treasurer and your board chair can also be your ally should some of the conversations at your board meetings start to go into a direction that aren’t appropriate based on the role of the board of the organization.
The great thing about having the strong relationship with your treasurer and your board chair is that you get to know them quite well. You get to anticipate the types of information that are important to them and you can share with them in advance some of the concerns that you may have in making sure that you are supporting the organization to the best of your ability.
I’m going to pause there and I thank you for the opportunity for me to share these five good ideas. I hope that these five good ideas enable you to think about the different ways that you can present information to your board members. But in addition to that to go beyond just the information you’re presenting but also think about how you can be supporting the board members as you onboard them, as you provide them with opportunities outside of board meetings to continuously learn about the organization, and then to think about the types of information that you present.
Elizabeth McIsaac: Thank you, Michael. That was great and as always more than five ideas. I was counting. I think what you just did really well is you demonstrated in practice the clarity in which you bring information, whether it’s from staff to board and across to treasure and so forth. It’s the clarity of ideas., it’s the clarity of what’s needed, and what story are you trying to communicate. So that was great. Thank you.
I’m going to remind people that we have a Q&A box at the bottom of the screen, but before I reach into there for any questions, I want to go a little bit further on some of what you talked about. First of all, I want to fully endorse your comment that not everyone likes looking at spreadsheets. And remembering that board members are volunteers also, so thinking about how best to use their volunteer spirit and time around things like numbers.
Hopefully, every board has a treasurer like yourself who actually thrives in the world of spreadsheets, but that’s not always the case. So I think some of your comments around relationship and getting to know people and what they’re looking for really helps. I’m going to go straight to the first question in the Q&A box, which is to what extent should you try and tell a financial story in plain language to support financial statements at board meetings? How effective do you feel a narrative is? How best can you present this narrative per se? What’s that balance there?
Michael Herrera: Thanks for that question. I’m a big believer of always providing a short summary of the narrative attached to the numbers. So for example, a lot of times we will present how we are performing against budget and then where we think the forecast is going to land. So for example, based on a revenue category, you would say that my revenue, and I’ll use the college as an example, tuition revenue might be predicted to be 5% higher than anticipated or 10% lower than anticipated. And then we would accompany the financial statements with a page or two of notes, which would provide the explanatory narrative about the reason why there’s a variance, which I think becomes really important.
In addition to that, depending on your organization, for example, when I worked at a national ballet or if you worked at a performing arts organization, there would always usually be a report separate from the financial statements which talks about ticket sales or subscribers because that’s an important part of your business. So all of this information should be linked between a report that someone else is giving in their particular area of expertise and then with the financial statements.
One of the organizations that Elizabeth and I support really focuses on research grants. And so how do we then ensure that we communicate with the board how we’re doing on the granting of those dollars as it pertains to our original target and the understanding about why we may be ahead of schedule or behind schedule? So all of these things I think are very important in making sure that it then becomes clear on not just what the numbers, the fact that we’re doing better or worse, but as it ties into the expectation of the board from previous information that is shared. Hopefully that is helpful.
Elizabeth McIsaac: I would totally agree with that, Michael. The other piece of that, and this is a non-financial person that has sat on boards, I give up my time. I’m on a board because I believe in the mission of the organization. And the more that the financials can translate into why I’m interested in the impact and how that tells the story of impact, it helps me connect better with the work and then also drive my attention to the financials as they relate to that. So it’s a good connector.
I think we’re still on a line of questions around people who may struggle with spreadsheets and financial statements. Do you have tips on what to look for? So someone who doesn’t spend their day in spreadsheets what should I be going for? Which line should I be looking for? What are the standouts that I should be paying attention to?
Michael Herrera: What I always think about is important when you’re looking at the spreadsheets is really to ask and for management to make sure that they prepare a column which also provides you with the variance between, for example, the budget and the actual forecast, both in absolute dollars but also as a percentage change. And then what I like to focus on is looking at the percentage change.
For example, if for instance, a percentage change is less than 5%, I don’t get too excited about that percentage change. But if the percentage change happens to be higher than 10, then that might be an indication that there’s something that wasn’t planned for that’s impacting our ability to deliver. And so that is one way of not getting lost in all the numbers, but really looking at how were we doing as a percentage of what the original target was.
As a volunteer, the first thing I always look at is the bottom line. Are we still on target of achieving what our bottom line is? And if that’s good, then I’ll do a quick perusal of the scan to see. There’s always going to be some areas where we’re doing better and worse, but as long as overall we’re doing well, that’s okay. If however it’s not going so well, then I start looking at the details about line by line about can I find which area we seem to not be doing so well? And then a company that as management, how much information you want to put into the narrative, right?
Because if there’s a huge swing, then you want to make sure that you explain that in the narrative in advance so that as a board member, when I’m looking at the narrative, I’m not going to ask the question because of course the first thing I’m going to ask is, why are we 20% below on XYZ?
And if you’ve already given me the answer, then the first thing I think about is, “Oh, they already know I’m going to ask that question, so I’m comfortable and confident that they know the answer.” A lot of times it’s not whether or not management knows the answer, because chances are they do, but they haven’t communicated it in advance. I always try to anticipate using my board hat when I’m management. If I was sitting on this board, what would be the types of questions that I would want to ask? And what would be the information that would be surprising to me that I wasn’t aware of?
And then I work backwards to say, “Okay, if I’m asking this question, it means that I haven’t received this information previously. What do I need to do to change what’s in my presentation to address that in advance?”
Elizabeth McIsaac: Excellent. So just a bit of clarification, what is the timeframe of the percentage change that you just referred to? Is that a percentage change that you look at from report to report as a whole year compared to the approved budget? What’s that sort of window?
Michael Herrera: Generally speaking, I’m really focused on a forecast to what the original budget is. So we know that there’s always going to be some timing differences between when something gets spent or when revenue is received. I’m always really paying attention that we set our original target was going to have a million dollars in revenue. Are we still going to make a million dollars in revenue? Even though the cash flow timing or the timing of when the revenue is going to happen might be slightly different.
Are we still on target of meeting that million? And if not, when will we know? And if we know that that’s not going to be met, then the questions would be what are we able to do in order to change that or to mitigate against that. Because if we know that in advance, then management might share that they’re going to then try to do some following actions to achieve that target.
They might make some decisions about delaying some expenses so that the offsetting expenses are going to be reduced, but at least then management can talk about what the plan is in order to deal with that particular challenge. I think it’s important that if simply the difference is a timing difference where monies didn’t come in this quarter, but they’re going to come in next quarter. I don’t get so fussed about that. I’m more interested about are we still going to hit our target at the end of the year or at the end of the project.
Elizabeth McIsaac: We have a question around technology. What is your preferred technology, board dashboard, board portal, custom off the shelf? What’s the best way to make this stuff work?
Michael Herrera: I would say I’m not the one who’s actually making it work. So whatever my team can do, that makes it easy for them. I would say for smaller organizations you could use something as simple as Excel, right? It doesn’t have to be that complicated and a lot of times the information that you’re presenting year over year is pretty standard. If you’re able to design a good working template in Excel and then you can just roll that template forward, that’s fantastic.
A lot of times there are the tools that you’re currently using, whether it be for your financial package or whatnot, that already has built in some opportunities to report that information using bars or graphs. And that’s the wonderful thing about Excel is that it is able to do so. I think that there are, of course the larger organizations might use other tools to track different information where you can tie in both your plans that can generate dashboards with red, yellow, green and whatnot.
I think whatever tool that you decide to use, make sure that it works for your particular organization and the size of your organization and with the digital competency of your organization. And at the end of the day, as a board member, I don’t really care as long as in those few reports that you send me, it’s easy to understand. And this is where less is more and how important it is that I just want to be able to quickly, what I call into placement or in one page understand where we’re at and if there’s any areas of risk that I need to pay particular attention to.
Elizabeth McIsaac: It comes back to expectations and understanding what the audience needs to hear and depending on the size and scope of the organization and the bandwidth of the individuals receiving it.
There’s a couple questions that kind of speak to one another that I’m going to combine. One is how do you deal with a board member who seems to be getting too much in the weeds? But I think that’s also paired a bit with how do you handle questions from the board that get into operations that are too operational and how do you help pivot the board to more strategic areas?
I think this is a reflection of a broader ongoing tension with nonprofit boards. Sometimes they want to get operational and sometimes that’s welcome because it’s a super small micro organization that needs boards to do that kind of work. And then there’s ones that are more policy boards that are trying to stay at the level of strategy and governance. Do you have suggestions on how to manage that?
Michael Herrera: For sure, and I think there are a multi-pronged approach that you can take. The first approach would be in making sure that what you’re presenting to the board is at the right level. As I talk about is that if you talk about information at a level of detail, which indicates to me that this level of detail is important for me to know that you want my input.
First you need to reflect about the information that you’re sharing is, is it the right level of detail? On the opposite side, it’s also important to be clear about whether information you’re sharing is for information only or do you want a decision, right? Because if something is just for information only, that also helps to frame as you prepare your briefing note or the person making the presentation that it’s very clear about this is to help the board understand a particular facet of the organization and it is not for decision.
Finally, having a good relationship with the treasurer and the board chair is really important because their role as chair when they’re chairing the finance committee or the board chair is chairing the overall board meeting is also to recognize when there’s a line of questioning that is inappropriate because then they can use their role as board chair to change the conversation or to politely stop that line of conversation.
In addition to that, there’s then the opportunity to have a quiet conversation with that particular board member as a reminder about what the role of the board is and what is appropriate lines of questions. Of course, we don’t necessarily want to hinder the exuberance of our board members, but at the same time, this is where it becomes really important to set clear expectations about what is the responsibility of the board members. And that way I’m a big believer that if you share detailed information, then you’re going to get questions about that detailed information.
Elizabeth McIsaac: Good advice. You talked in your first set of good ideas, I’m going to call them sets of good ideas, around supporting or onboarding new board members and the importance of that. I think that can’t be understated because it’s so critical to provide that context and really help them do a good job in their role. Do you have any advice on how to support new chairs?
As the financial person in the organization or as the executive director, if it’s a small organization and the ED does everything, what’s their best way of supporting a new board chair as it relates to the financial picture and the financial side of things? Do you have advice?
Michael Herrera: I do. So I would approach this once again in two ways. Assuming that you still have a good relationship with the past chair, and that the past chair is still involved in your organization, I would reach out to the past chair to ensure that the past chair also acts as a coach and a mentor to the new chair because they would’ve had the lived experience of being in the same seat as the new chair has.
So that can be seen then as a positive coaching opportunity. The other thing is that just like it’s always good to have pre-meetings with your treasurer and your board chair before meeting, I’m also a big proponent of having a debrief meeting after the fact so that you can address issues right away as it’s still fresh in people’s minds.
One of the things which I always do is I always prepare briefing notes for my chairs. And this is all about preparation so that they already have in their back pocket key messages that we want them to address. I always sit next to them. So if I need to accidentally tap them on the foot or send them a message on my cellphone, I can do that as well. You develop different ways that you can make nudges and quiet winks, whether it’s virtually or in person.
But I think that at the end of the day, I always say that sometimes every meeting doesn’t go as well as you thought it could have. And the best way then to do is it’s all learning opportunities for both you and your board chair and then to continuously look at ways to improve.
Elizabeth McIsaac: Someone immediately in the chat room said, “Can you share the structure of your briefing notes?” What does that look like? Because I’m also conscious of some organizations that preparing for a board meeting begins to consume a ton of energy on the part of the ED or the senior part of the staff. So what do you mean by a briefing note? Can you just give us a quick picture of what that looks like?
Michael Herrera: Yeah, so a briefing note for me tends to be if you take your agenda and then you just blow it up by adding a couple of sentences about it to say, “This is for information only being presented by this person. This one is for approval, needs to get approved, previously discussed at this meeting.” So it’s really just a couple of key bullet points to help trigger for the board chair or the chair of a committee about what the content is so that they don’t always have to be going back and forth in flipping their notes that there’s this one page that they know, here’s everything I need to know. It also may include who’s attending the meeting at the top, whose regrets and whatnot. It really is the cheat sheet for the board chair.
Elizabeth McIsaac: I call it my annotated agenda. It also contains the red flags. What is something that might come up, which way to maneuver or what to be aware of in terms of some of the lines of questions that may surface from this? It’s super helpful because then the chair is prepared.
Michael Herrera: Sure. And the more new your chair is, the more preparation you have to do because it’s not intuitive. I know that I’ve been fortunate in having had a lot of experience being on different boards, but I don’t necessarily have the experience on the organization. So after the fact, I’ll notice that I’m missing something or I’ll reach out to management where I’ll say in a gentle nudge, “I haven’t seen the package yet. Did I miss it?” Which is my way of saying, “You haven’t sent me something and I’m expecting it.”
As you think about it, you put together your own schedule, it helps to preset these meetings with your board chair, with your finance treasurer, just so that the package is going to go out a week before. I should have the package ready for discussion with them. Or even at least have the agenda and the topics of conversation a couple of days before the package goes out so that we can have that conversation. Make sure that if there’s any issues that need to be addressed or that something needs to be changed or pulled or whatnot, you have that discussion in advance.
Elizabeth McIsaac: So much of this is relationship expectations and good communications, mindful communications. We have a question around pillars of financial sustainability. Do you have any tips or suggestions on how to engage a board in a strategy discussion around a pillar of financial sustainability? How do you get the board there?
Michael Herrera: So interesting question.
We’ve just recently undergone the strategic plan for the college. And so one of the important things when you think about the importance of financial sustainability is that without this resource and without sustainability, the organization is unable to achieve its long term goals. I think in some ways it goes hand in hand with the concept of it is a requirement simply to be able to achieve your future goals.
One of the big challenges of course is that we’ve all experienced in the last two years is that we know that the best laid plans sometimes don’t come into fruition and that the history or the trends of the previous years may no longer be relevant. So it becomes really important then to then make sure that as an organization having that flexibility and nimbleness within that financial sustainability, which means that not allocating all of your reserves out so that if there are unforeseen challenges or opportunities that you could take advantage of, you actually have some resourcing available in order to deal with those particular issues.
In addition to that, I’m a big proponent of trying not to say no, but instead saying not now because these are great ideas and these are things that need to take place, but sometimes the pace has to be changed. Also being able to see information in a multi-year or in a trending format enables people to see that not now means it’s still going to get done. It just can’t be done now.
Elizabeth McIsaac: Good advice. The next one is, admittedly not really a question, but it’s a comment, and I think you can probably riff off it a little bit. So one challenge we face is related to turnover in treasurers who have different ideas on how to format financial statements and then year over year comparisons get all messed up because I guess it’s apples to oranges. I suppose that the ED just needs to get better at not being so flexible. There’s a few themes in there. One is what is the issue around high turnover of treasurers? Should there be standards that are organization bound rather than treasure specific? What are some of your thoughts related to all of that?
Michael Herrera: I think a couple of things. It depends on asking the question, how has this changed? Can you explain to me how this change will make the information more meaningful for decision making? Because everybody, depending on their particular background, has what I call a preference because of where they did their designation from or what their previous experience has been, depending on their industry or their organization.
What I try is really always asking the question, is the change that I’m making providing more meaningful information for decision-making? And if the answer is yes, then I think, oh, that makes a lot of sense and it’s a good change. If the answer is simply that I have a preference, a stylistic preference, I always have to remember that as treasurer, I’m not management. At the end of the day how things are presented so long as it still captures all the key pieces of information is important.
The other point I always like to point out is that every organization has multiple users and sometimes you have to conform your statements in accordance with your funder. And so that’s always another way of positioning it that if you have industry standards. So for example, in the post-secondary world, we all have to report to the province of Ontario and therefore all of our statements look a certain way.
Somebody might have an experience from a different post-secondary institution from a different province, which may be fantastic, but we still don’t want to create more work simply for preference.
I think these are some of the polite ways of asking questions of not saying no, but simply to say, “Can you help me understand how this will be beneficial and how this will improve the quality of information that is being asked?” Right?
At the same time, one of the opportunities that I know that I have brought to some organizations is by having involvement in an outside sector is that there’s just different information that we look at, at the same time always being open to the question without being defensive. That’s always the original stance whenever someone says, “Have you thought about this?”
The initial reaction is to say, “Oh, that’s just more work. I have to change it and we’ve always done it this way. Why are they asking me this question?” But to sort of pause and to say, “Okay, will this be actually helpful?” And maybe it’s not in the financial statements that you need to change the information, but maybe what they’re asking for is relevant and there’s a different way to receive the information, but not through the financial statements.
Elizabeth McIsaac: So some good guidelines there: Always bringing it back to audience and meaningful information for good decision-making.
Michael Herrera: For sure.
Elizabeth McIsaac: There was another thread in there, which is, we have high turnover of treasurer. Do you have any thoughts on how to keep a treasurer. Is there an ideal length of time that a treasurer should be in place? Is there a way of preventing high turnover? Are there any thoughts on that?
Michael Herrera: I don’t know. I think what I would always say is regardless of where your turnover rate is, this is about how good your orientation package is. Because if you have a strong orientation package, then it doesn’t matter your turnover rate that when a new treasurer starts. The new treasurer, “Thank you for joining us here is the physical or the virtual binder of all the key pieces of information that you can see.” And I think if a treasurer feels that they are making a positive contribution to the organization and if they feel that it’s not too onerous but it’s exciting in the work that they’re doing, they’re going to be happy to stay on.
When I think about organizations where my tenure has been shorter lived than in other organizations, sometimes it’s because I’m not as passionate about the work that’s being done. It could be that I don’t feel that there’s something for me to contribute because of the complexity of the work. And it could be that I’m just oversubscribed in some of my other obligations.
So it might be interesting if you seem to be having a lot of turnover to maybe delve into why that might be, right? Because if it’s something about how you’re managing your treasurer, then maybe there’s something that you could be doing in order to address that particular concern.
Elizabeth McIsaac: And this is just in my head, but unrelated. Is there a best practice? Should a treasurer come from the general membership of the directors or is it just as fine to bring someone in fresh to the board and straight into the position of treasurer? We always see a board chair coming up through the ranks and having a bit of experience with the organization before they take on that role. Is it similar with treasurer?
Michael Herrera: Sometimes you need the skill set and it’s about the skill set and not necessarily always the passion. In the perfect world, you would have someone who has come up through the membership and is passionate about the work and has the skill. In the worst case scenario, what tends to happen, you need the skill set. That’s the bare minimum. And so if you only have bare minimum that you get a skill set because you get someone referred to you then it becomes really important about the engagement you provide to that new treasurer so that they become passionate about the work.
So Elizabeth knows homelessness. I’m more of an arts and culture type of person in my background. And although I have a little bit of homelessness experience through my work at the United Way, it was not what I would consider to be me seeking out for the opportunity. So it means that the organization has to make an additional effort in making sure that all of our board members, especially those board members who are not intuitively knowledgeable about the work that you do, feel that connection.
You have to be able to make sure that you help them feel that connection outside of meetings because no one’s going to feel a connection in a two hour meeting. What are those other opportunities about getting them involved in the events or hearing about the fantastic work or getting to meet some of the recipients of the amazing work that your particular organization does outside of board meetings, right?
As someone has mentioned, and as I’ve mentioned, the financial story tells a story, but it is a story. But if the only story I ever get is through the financial statements and I don’t actually get to see, and I don’t get to experience, and I don’t get to hear from the people whose lives are being changed or transformed, then it’s not a fulsome relationship that the volunteers are getting.
Elizabeth McIsaac: Great way of framing that. We’ve spent a fair amount of time talking about taking care of the treasurer, making sure that they’ve got what they need. How does that balance with ensuring that the whole board is interested in the financial story, that the whole board is seeing what they need to see? Is there a way of balancing that out?
Michael Herrera: For sure. And I think this is how important it is to make sure that you present information in a way that is easy to understand, easy to comprehend, doesn’t give too much details, or in small print or in spreadsheets. It’s like if you were to give someone a book to read in a foreign language and you were to say, “I’m giving you this to read and you have to figure out what it means. I mean the print is really small and I’m not giving you a translation dictionary.”
It’s going to be all something that is like, “I’m just going to tune out.” So how do you then make sure? I’m going to try to make it a little bit more graphical. I’m going to have these conversations in smaller chunks. I’m going to tie it into the work that we’re doing. I’m going to translate it so it’s not just about dollars and cents, but it could also talk about in other meaningful data points, number of recipients, number of research grants, number of students. Whatever it is, number of audience members.
So whatever it is that you’re doing, you could translate that to not only the money and dollars and cents, but also to a different data point, which then people can easily understand, right? “Oh, I understand what it means in a theater company when we only have 60% of the house that’s filled and that’s a dollar implication; or I understand what it means when I’ve only issued out 90% of my grants and there’s still 10% of the grants that haven’t been issued out.”
And whatever it is that you do, there is that other piece of data that is not financial, that people have a better interaction and understanding of, which then can be translated to dollars and cents, but that people have a more meaningful understanding of.
Elizabeth McIsaac: Always remembering people learn in different ways, they receive information in different ways, and so having a balance of numbers and stories and visual and so forth. Michael, we’re coming to the end. It’s 1:53. I’ve got one more question before you do your pitch.
Michael Herrera: Well, I was going to say you have one more question. I posted something in the chat, which is my pitch.
Elizabeth McIsaac: Go for it.
Michael Herrera: So I’m a big supporter of United Way. I’m doing a fundraising event. I’m a big believer that if you don’t ask, you don’t get. And so if anyone is interested in supporting me in my 300 minutes of activities that I’m doing next month, please consider, and I’m appreciative. Thank you. Your last question?
Elizabeth McIsaac: Are you’re climbing the CN Tower?
Michael Herrera: No, they’re not doing that anymore. I have to do 300 minutes of some fun physical activity. It’ll be dancing or something obscene like that.
Elizabeth McIsaac: Will we have videotape proof of it?
Michael Herrera: Not all 300 minutes, but I’m sure there’ll be some video clips on TikTok or some ridiculous social media from that perspective.
Elizabeth McIsaac: Wonderful. Good for you.
Michael Herrera: I don’t think I can do 300 minutes of talking about board meetings or something like that. Putting together Excel spreadsheets for 300 minutes.
Elizabeth McIsaac: Good for you. Okay. So one final question, last piece of advice. Oh, someone has… John Canby, “I breathlessly await the video.”
Michael Herrera: There you go.
Elizabeth McIsaac: Okay. So one final piece of advice from you, because you’ve been doing this for a career. It’s been a career of telling a financial story, working with treasurers, being a treasurer, being the CFO, being the everything. What is your golden nugget piece of advice? What golden nugget would you share to support a new treasurer coming into the role?
Michael Herrera: I believe that in supporting a new treasurer coming into their new role is to make sure that you have ongoing dialogue in a way that really focuses on what is it that you do. What does the organization do for your purpose so that you can translate it into numbers? Everything can be translated to dollars and cents. Because for me, the financial statements are simply a different language in telling a story.
Here’s what I would say is a terrible experience.
You invite a new treasurer to join, they attend the AGM and they get appointed to be a treasurer. Then they attend their first board meeting. You haven’t taken an opportunity to introduce them around, but they’re just, “Here’s our new treasurer and here’s the new person. Ta-da.” They don’t really get a sense of what work you do. They only present financial statements, and the financial statements only talk about how we’re on target and we’re doing well.
And then here’s the budget when it’s time to present the budget and everything still balances so you don’t have to do very much. And then here’s the audited financial statements and it went well. I’ve gone through an entire year and I don’t understand what you do. I don’t feel passionate about the cause, and I can’t contribute to helping you move forward. I don’t have a sense of what you’ve done in the past, and I don’t have a sense of what you want to accomplish in the future.
To me, that is a terrible experience for any board member, but in particular the treasurer because chances are you’ve engaged the treasurer because of their designation and because of their financial background. Every other board member tends to be coming up through what the organization does, right? Because they happen to be involved in research or they happen to be involved in the art or whichever.
So sometimes you need to pay a little bit extra attention to the treasurer because they don’t have that previous experience to make sure that they’re engaged so that they can be as beneficial to your organization as possible.
Elizabeth McIsaac: Wonderful. Thank you, Michael. This was an incredibly informative conversation. Really helpful. I’ve taken away a number of new ideas, good ideas, and new ideas to apply to my work.
Michael Herrera joined George Brown College in 2019 as Chief Financial Officer. In this role, he provides comprehensive financial leadership and technical expertise relating to the operations of the college. Michael has spent a career in service to the non-profit sector, having worked with social services, religious and arts organizations. Prior to joining George Brown College, he spent nearly a decade with United Way Greater Toronto. He also held similar leadership positions at the Anglican Church of Canada, YMCA of Greater Toronto and the National Ballet of Canada. Michael currently serves on the board of directors for Crow’s Theatre, Theatre Museum Canada, Toronto Arts Council, Toronto Arts Foundation, and Making The Shift – a Youth Homelessness Social Innovation Lab with a mandate to transforming how we respond to youth homelessness through research and knowledge mobilization.