In many ways the stress on Nonprofit CFO's is a lot more than their For-Profit counterparts. This is because any finance scandal in the Nonprofit world means that public funds are at stake and, more importantly, the people that were supposed to be helped with those funds do not get served.
Even though there have been some eye-catching headlines in the past with regards to reporting and misuse, in general finance professionals in the Nonprofit sector are highly skilled and have a strong sense of values. Many are also extremely innovative because with limited funds they tend to re-invent traditional business models in order to maximize the money they have to fund their mission.
In a study by American Nonprofits, more than 900 individuals who characterized themselves as CFOs or equivalents were surveyed about their job. Here are some of the key findings related to what's keeping them up at night:
1. Not enough time to do their jobs. About 80% of the people surveyed had responsibilities beyond finance, such as Human Resources, IT, legal and office administration. You would think that with all of these extra responsibilities that tend to fall into the Finance department's lap that they would have a large team to tackle them all. That's not the case. Most organizations with less thatn $1Million in revenue rely on one person, while those that have between $3M-$5M have an average of 3 people in finance.
2. Dealing with technical aspects that are uncertain. Most Nonprofit CFOs have a good handle on how their money is being spent, but what they find challenging is fund accounting/reporting, preparing year-end projections, and budget preparation. These areas have a level of uncertainty and are difficult because they usually involve inputs from non-finance staff (who tend to not always comply with financial procedures).
3 Financial knowledge of other staff (Including the Executive Director and Board). No matter how strong the finance department is, the true financial strength of a Nonprofit organization comes from all stakeholders having access to key financial information when making decisions. When asked if co-workers understand the financial health of the organization, less than half (48%) said staff understand the financial health of their own programs, and only 22% understand the overall organization's financial state. Since staff are making decisions almost every day that probably have some impact on the budget, ensuring they understand the big picture is key, but isn't always easy. Since pulling data and creating reports can sometimes take days or even weeks, data is usually stale by the time it actual gets to the front line.
If you are a Nonprofit CFO, do you agree with these challenges? What are some of the challenges that we are missing? Let us know in the comments section below.
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