Speakers reveal the many hats of the nonprofit CFO

By:
Chris Gaetano
Published Date:
Feb 6, 2017

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Years ago, the nonprofit CFO’s role was mainly operational: overseeing functions such as accounting, budgeting and investments. But today’s CFO must be on top of governance, information technology, funding, compliance regulations, risk mitigation, insurance, employee benefits, time management and contracts, said Ronald F. Ries, a partner at WeiserMazars LLP and a panelist at the Foundation for Accounting Education’s 39th Annual Nonprofit Conference on Jan. 12. 

The CFO is expected not only to keep operations running smoothly but also to implement strategic initiatives and be a trusted adviser to top leadership, such as the CEO, Ries said. “The CFO is really being asked to provide expert information not only on the numbers but [also on] how to analyze them, and really be a key member of the team.” 

“I think there is a constant tug-of-war between the transactional and transformative: transactional meaning ‘I need to get stuff done, and on a daily basis, to hit my deadlines,’ but transformative [meaning] ‘how do I get my organization to the next level, how do I keep my organization relevant?’” said another speaker, Amy West, the CFO of AHRC New York City. AHRC is an organization that advocates on behalf of people with intellectual and other developmental disabilities.

There are secondary challenges, however, that can make it difficult to implement strategic initiatives. According to West, funding is increasingly tied to certain conditions and restrictions—for example, that donations go directly to programmatic, rather than administrative, areas. Right now, she said, there’s little to no funding for administrative overhead or infrastructure. This lack of funding, in turn, bleeds into other fiscal issues that seem to affect nonprofits in particular.

“We’re seeing many for-profit organizations with inadequate reserves, lack of a rainy-day fund—major organizations have a rainy-day fund of 20 days or less,” she said.

Organizations, she explained, need to get out of the mindset that all funding is good funding: If a donation comes with too many restrictions attached, West said they should be confident enough to say ‘no.’

She added that the not-for-profit world is too attached to underfunded programs. Organizations don’t do enough analysis on how to sustain programs that constantly lose money, she said: CFOs need to make it clear that their organizations won’t tolerate unsustainable programs, no matter how much people may like them.

So, what exactly should a CFO do to meet these challenges? West said that what’s vital is making sure that the organization has the right people. She noted that this can be a challenge for nonprofits, which, traditionally, don’t have that much money. West is a firm believer in “you get what you pay for.” Keeping good staff can be especially trying today, when young people are known for job-hopping, she said.

“Benefits in lieu of salary is a way to go. There are also nonmonetary benefits. You need to be creative. Invest in your staff. A lot of organizations do exit interviews; good organizations should also do “stay” interviews: understand why people stay in your organization,” she said.

But not everyone can stay, and Ries said that CFOs also need to think very seriously about succession planning. Something that organizations see too often is a key person departing and leaving everyone in the lurch, as they desperately try to adjust.

“One of the things we see so often is, suddenly, you have an accounts payable person, and they walk out the door. … The next thing is, ‘Who takes that person’s job?’ Every critical job function needs a backup, and it takes a lot of effort to do that,” he said.

Ries also said that it’s important for CFOs to plan over several time horizons. It’s not enough to think about what needs to be done that week. CFOs need to ask what they need to do in three months, six months or even a year, and make those plans part of the agenda for the C-suite and the board. It’s important, he said, to stay ahead of the curve as much as possible.

Finally, he urged, a CFO should try to maintain a sense of humor and a positive outlook. It’s important that there be a sense of confidence coming from the CFO’s office, which bolsters the team as a whole. The CFO, he said, should strive to be upbeat, given how many points now intersect at that position.

“The CFO is the go-to person internally, the go-to person for the board, and certainly … the go-to person for outsiders. And the attitude the CFO brings to all those levels and colleagues sets the whole tone for the organization,” he said. 

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