Does Your Treasurer Have to be a CPA? No!
I get asked from time to time whether your nonprofit’s treasurer needs to be CPA (Certified Public Accountant). Many people seem to think that their treasure has to be a CPA (a Certified Professional Account), but no legal requirement exists for your treasurer to be a CPA.
In fact, setting that requirement and expectation can make it very hard time to find anybody to serve as treasurer for your nonprofit.
Let's explore what a good nonprofit treasurers actually looks like.
What is the treasurer’s job?
The treasurer's core job is to help the board to do its financial due diligence. While the whole board has financial responsibility, the treasurer leads this on behalf of the whole board and does a significant part of the heavy lifting.
Above all, the treasurer helps the board to access and understand the nonprofit’s financial situation so that the board can make informed, strategic decisions.
The accountant shortage
We need to keep in mind the national CPA and accountant shortage that we've experienced for the last few years. Even five or ten years ago, it was hard to find any accounting professional, much less a CPA (a specialized certification), to work at your nonprofit or to serve in a volunteer position.
That search has become even harder as more people retire from the profession or otherwise leave it faster than new professionals enter the job market.
A CPA can be more than you need
Having a CPA as a treasurer can be like using a sledgehammer to crack a nut. For most nonprofits, that person can bring more expertise than you really need to do the job well.
By all means, if you already have a CPA as treasurer or if you can find one who is willing to serve, that's wonderful! Go for it!
But why spend extra energy looking for someone with skills that the role doesn’t require?
A CPA certification could even be a disadvantage
A CPA can actually be far from ideal as your treasurer.
What in the world do I mean by that?
A CPA certification is a very specialized certification and it does not prepare one for all kinds of accounting. Instead, it helps one get ready to do very specific kinds of accounting such as tax and audit. Those are valuable, important skills but they rarely come into play in the role of a nonprofit treasurer. So, if your only or main criteria for a treasurer is that they be a CPA, you could end up with a terrible match.
Doing nonprofit accounting well actually looks like something very different from what most people learn when they are studying for and taking the CPA exam. Accounting in a small or mid-sized nonprofit needs to focus on preparing the data and financial reports for the board and management to make strategic financial decisions. That can look very different from setting the data up for optimal tax or audit reporting.
So, although significant overlap exists in these areas, we also see important differences.
Instead, look for Mission Alignment
The top qualifications for your treasurer will depend on such things as your mission, the size of your budget, the number of years you've been operating, and the like. If you're an all-volunteer organization or have a budget under $1 million, you especially don't need to hold out for a CPA or somebody else with specialized training.
When looking for anybody on your board of directors, but especially an officer like treasurer, look for somebody who has an affinity for your mission or at least a strong connection to the organization.
Understanding your mission, and ideally having loyalty to your mission, are key things to look for in every board member. When you let that be superficial, you end up with a person on your board who may not understand or appreciate the nuances of the mission or be able to help you make strategic decisions aligned with it. If that person is also an officer, such as treasurer, then that can lead to even more trouble.
How can you measure loyalty and understanding of mission? You can ask:
What prior interest have they demonstrated in our mission area?
Have they volunteered with us or similar organizations before?
Do they have a family member enrolled as a member or a client at your organization?
Or are they in one form or another a member of your community whether a donor, or an activist, or a former client?
And look for basic skills
If you have nonprofit with a small or even medium-sized budget, you can do very well by simply getting a treasurer who:
Cares about the mission
Is generally comfortable with numbers
Is comfortable balancing their own checkbook
Is willing to donate a few hours a month to lend a hand
Plays well with others
Remember, the core part of a treasurer’s duty is to be able to take the financial information and just be able to explain it in plain English to the rest of the board.
Even better: find a Fifth Grade Math Teacher!
Here's another area where having a CPA certification could actually be more of a hindrance than a help: many CPAs, but not all, default to speaking in jargon. That can actually make them less effective as a treasurer than a fifth grade math teacher, who has years of practice making math and numbers accessible, and even engaging, to non-experts.
So, in all seriousness, an elementary or junior high math teacher should have excellent skills as a treasurer.
Pro Tip 1: Avoid Misers
Also many CPAs, and for that matter many accountants and finance types, tend towards fiscal cautiousness. We can find it difficult to spend money or have an abundance mindset. A few of us are even hard-core misers!
You need a treasurer who can remember that the mission comes first.
Yes, the organization cannot behave irresponsibly with money, but it also should not hide all the money under the mattress.
I have seen this too many times to count and I personally have to be careful about my own default instinct to save money. Savings and the long-term financial security of the organization are important, but always in service to the mission and not as an end in themselves.
Pro Tip 2: Support the Treasurer
To mitigate against the blind spots that your treasurer may have, you can engage a nonprofit accounting specialist, such as a fractional CFO, to provide an independent perspective on the accounting and the organization’s financial health.
Note: this is different from an external audit, which focuses on reformatting your data so that it conforms with Generally Accepted Accounting Principles.
Bottom line: when recruiting a treasurer, treat a CPA credential as a “nice to have” rather than a “must have.” Strong mission alignment, basic math skills, and the ability make financial information engaging to your board are the most important qualifications.
Additional reading