The Best Nonprofit CFOs Go Beyond the Numbers
Chief financial officers (CFOs) occupy a unique position of leadership within a nonprofit organization’s senior management team. Often, CFOs are viewed only as protectors of financial assets, immersed in the numbers and devoid of strategic thought. CFOs must work harder to shed these images and venture beyond the numbers to be thought leaders, advocates for strategic change, and catalysts for innovation to help organizations grow and advance their mission.
CFOs shoulder a difficult balancing act between their usual function of monitoring and delegating the use and allocation of limited financial resources and their other important role to help grow the organization and advance the mission. These scales will never be perfectly balanced because of constantly changing conditions, demographics, and even peoples’ feelings and sensitivities about causes and their work efforts. On top of that, CFOs are continually tasked with predicting the future through a never-ending production of budgets, projections, forecasts, and “what if” modeling.
This balancing act is further complicated by the natural comfort zone that most CFOs have with “their” numbers. They feel at home with the rhythm of assembling schedules, analyzing financial reports, and generating rolling projections. These reports do not argue with the producer, get angry when outcomes are not what is expected, or talk back or challenge the messenger. Thus, it is comforting to close the door and immerse oneself in the numbers.
However, CFOs that are willing to reach outside their comfort zone can be an influential and powerful voice of the C-suite (senior management team), and looked up to as a trusted advisor, thoughtful advocate for change, and an influencer to advance mission. To embrace these roles, CFOs must endeavor to be more visible and adapt their methods of communication.
The following three tactics can help CFOs to elevate their sphere of influence: (1) C-suite integration, (2) effective financial messaging and communications, and (3) strategic financial planning.
C-suite Integration
C-suite integration is a good starting point for CFOs to change perceptions and enhance their leadership profile. First, strive to be more active within the C-suite. Not just active, but to be proactive (a voice for innovation and change) rather than reactive (following orders, gathering data, and responding to requests for information).
Of particular emphasis, the CFO needs to push for opportunities to provide more active support to the CEO by forming a close consultive partnership for sharing ideas and knowledge. CFOs that only react to requests for information from the CEO (counting it as a good day when the CEO is away and not bothering them) are feeding negative perceptions and will appear isolated and disinterested.
In addition, CFOs need to up their game with other connections within the C-suite, making sure to find opportunities to connect with as many senior management positions as possible such as by adding pre-month-end closing meetings to the C-suite meeting schedule. Naturally, some positions will lend themselves to more regular communications with the CFO, such as HR (human resources), IT (information technology), and COO (chief operating officer). But it is just as important for CFOs to reach out to other senior management positions such as government relations, marketing, and community outreach. These expanded outreach efforts will help CFOs to better understand and connect with mission fulfillment and organizational culture.
Also, the CFO needs to strive to use non-number-driven communications instead of just leaning on financial reports to start a discussion. Over-reliance on financial reports tends to make interactions appear confrontational and performance-based. Instead, look for opportunities to start a conversation based on mission alignment, opportunities for growth, and supporting change.
Effective Financial Messaging and Communications
The art of effective financial messaging and communications is the next area CFOs need to master. Most finance professionals believe financial reporting formats are static and unchanging. Applying a three-dimensional messaging approach will help the CFO to diversify financial messaging through multiple formats and methods:
Reporting (financial statements, financial dashboards, graphical representations, supporting schedules).
Written (consent agendas, finance memos, annual reports, treasurer reports).
Verbal (Board presentations, committee presentations, annual meeting, and other public presentations).
Using these different formats and methods will help the CFO to tailor financial messaging to match user needs as well as their level of understanding (a financial report that is hard to read and understand is a financial report that will not be used). Financial dashboards, written finance memos, and verbal communications should be periodically adapted to meet changing needs and conditions.
Strategic Financial Planning
To be transformative, the CFO needs to be strategic with financial planning. The numbers by themselves will have no meaning if the CFO cannot connect the numbers to mission, sustainability, and the future. CFOs should strive to move discussions toward “Is the program in alignment with our mission and meeting constituent needs?” and away from “Are results missing budget parameters and net negative?”
CFOs can spur innovation by steering the focus to the future rather than relying only on past historical analysis. Contemplating what could be and taking advantage of changing trends and constituent needs will bring a heightened sense of strategic planning focus to financial forecasts and modeling. For example, budget building will take on a new perspective when outcomes are viewed through the lens of impact on mission delivery, relevance, and constituent satisfaction.
Planning Tip – CFOs should be more involved with the search for new treasurers. Most treasurers will serve a term of office of only 1 to 3 years, resulting in relatively rapid turnover. Some tactics CFOs can use to improve this process include encouraging an early start to the search for a new treasurer, suggesting the addition of an assistant treasurer position, working with the current treasurer and finance committee to identify possible future candidates, and inviting candidates to be a guest observer at a finance committee meeting. Without a proactive CFO pushing these efforts, the search for the next treasurer is often neglected until the end of the service term of the current treasurer, leading to fewer options and weaker candidates.
The title of CFO is viewed with great confidence by most people. Consequently, the CFO can be a strong and trusted voice to advocate for innovative change and help organizations to secure future funding, promote new programs, and expand into new markets. The best CFO’s can be excellent trusted ambassadors for the organization and its reputation. More CFOs should step up and embrace these roles and lead with their powerful voice.
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