Finance Committees (FC) are chartered to govern the financial activities and operations of a non-profit organization. This committee provides oversight of the entity’s financial affairs which includes financial planning, operational and capital budgeting, debt financing and risk management. These responsibilities are set forth in the creation of a charter, as noted in the charter of the medical non-profit, Grady Memorial Hospital, in Atlanta, Georgia. The committee’s overall purpose is to provide oversight to all financial affairs involving the organization.
The financial committee is responsible for reviewing and recommending for approval an annual operating and capital expenditure budget for the organization. This is performed annually, but can also be extended for one or more succeeding years as they seek to determine what funds are needed to complete the current goals of the organization and what capital will be required to satisfy future needs. Some committees also review stated policy regarding budget declarations and variances and recommend necessary changes or adjustments.
Debt, Financing and Refinancing
Members of the FC evaluate and monitor long and short-term indebtedness (financial obligations), debt structure, collateral, cash flows and the overall uses of funds. Recommendations are made to the board for approval of proposed debt financing (or refinancing), actions involving debt structure (rate amount and types), and professional costs (or fees associated with the acquisition of services from banks, investor, underwriters or any other third party). Periodic reviews of the organization’s credit rating and status are also performed.
Direction on cash management, investment policies and employee benefits is provided or performed using the advice of financial consulting firms, and recommendations from these activities are presented to the board for approval. The FC selects and terminates the services of third party financial companies such as financial advisors, consultants, investment banks and underwriters and periodically reviews the relationship with the aforementioned entities to assess performance and care.
Risk Management and Insurance
The FC committee reviews and recommends for approval the risk management policies and procedures. They also review insurance policies, giving special attention to the rating of carriers, premiums, retentions, and other aspects of coverage for the organization’s trade needs. Measures are taken to identify, monitor and control any financial or legal exposures that could compromise the integrity of the organization.