Our 501(c)(3) has had the same treasurer since 1986. She is the only person who signs checks and is fighting adding anyone to the account. We do not get monthly reports and there are some questions about some things, but we cannot seem to get a straight answer. Everyone is aware of the situation but she was just reelected. Are there federal laws governing how the money is to be handled?
This situation contains some of the classic signs of trouble, a long-term treasurer who apparently fights sharing responsibility and oversight and won’t answer questions clearly. It sounds as though you don’t have separation of functions and internal controls, and I am guessing that you don’t have an outside accountant audit or even review your books.
You ought to get some outside help immediately to review the finances and help you institute a system in which you can be confident that money is being handled properly. You can tell the board that there comes a time when overlooking such clues could be a breach of fiduciary duty and lead to personal liability. Even if everything is fine, and I don’t want to jump to contrary conclusions, you ought to have additional people who can sign checks. If your treasurer got hit by the proverbial truck tomorrow, you couldn’t function financially.
I am not aware of any federal laws that affirmatively govern the way your money is to be handled, except that it has to be spent generally for charitable purposes and in accord with governmental restrictions, if applicable. I am aware of the federal laws against embezzlement, however.