Based on the webinar by the Nonprofit Quarterly, “Creating High Functioning Nonprofits: Who Should Have What Financial Information?”
You may have heard the saying “A plan without numbers is just a bunch of good ideas.” Although this may not be true in all cases, it is very true when it comes to strategic and financial planning. The importance of managing financial information cannot be overstated because if it’s not done properly it could lead to serious problems for your organization. This makes it essential that department managers and the executive leadership team are all on the same page when it comes to aligning your strategic and financial planning.
How you could be putting your nonprofit organization at risk…
Strategic planning is a vital part of any growing organization because it forces you to think about your organization’s future. Yet financial planning, which is equally as important to strategic planning, tends to be easily overlooked for various reasons. These include limited accessibility to the financial information that is needed or inability to comprehend the information provided. This ineffective communication of financial information can lead to disconnect between departments, misaligned strategic goals, and ultimately puts your organization at risk of improperly managing scarce resources.
What is shared financial management?
Financial management, a task assumed to be the sole responsibility of a CFO and the Finance team, is actually a shared responsibility. Each part of a nonprofit organization from the Development team to the Program team contributes a unique element of knowledge and expertise to the discussion on financial management. The Development team manages and maintains relationships with your funding source, while the Program team develops and executes programs for the people your organization serves. A complete illustration of the most effective way to use funds cannot be fully realized unless each team contributes their own insight to this discussion.
Who is responsible for what financial information?
As previously mentioned, financial management is a shared responsibility, which means that everyone is responsible for ensuring that an organization has accurate and properly documented financial information. Department Managers are usually responsible for documenting spending and authorizing purchases since they know what resources their team needs. While the Finance team is responsible for recording and reporting data to ensure that the information needed to make informed decisions is always accurate and up-to-date. Together, they share the responsibility of monitoring this information to make sure that reliable information is always accessible.
How to ensure that your organization is financially aware:
The only way to make sure that everyone in your organization is more financially aware is to keep the financial discussion open and ongoing. This can be done by ensuring that financial information is reviewed and discussed regularly so that everyone has a thorough understanding of your organization’s financial plan. Additionally, a manager must be able to effectively understand and interpret financial information. This means that financial reports highlight the most relevant information and present it in a way that is easy to understand.
Want to hear what CFOs of other nonprofit organization have to say about financial management?
Join us on December 15th at 2pm EST where our webinar, Nonprofit CFO Panel: Reducing Financial RIsk, will feature financial executives from various nonprofits sharing their experience with managing financial risk at their organization.