The list of skills and experience necessary to be a successful nonprofit CFO is long and varied, which can make it seem like a Goldilocks type of situation at first glance. And yet, maybe that isn’t a bad thing! In our line of work, we typically call it something else: balance.

Let’s discuss some of the ways in which this kind of balance is not only helpful for a nonprofit CFO, but critical to their success.

No vs Yes

There’s an adage that the CFO is the one who always says “No” in an organization. There is some truth to this, but it doesn’t tell the full story.

The CFO assumes a governance role that includes finance but also extends well beyond. They often contribute to overall risk management to ensure all activities align with the organization's mission while mitigating financial, operational, and reputational risks. Inherently, with this responsibility comes a lot of “No” responses, hence the stereotype.

On the flip side, a good CFO can find a way to say “Yes” as well. They can dig in, brainstorm and research the issue at hand and identify any possible paths to accommodate the risk. It’s very easy to say “No” because it requires very little effort. Getting to a “Yes” may take more thought, more collaboration, and more time. A good CFO will take the more difficult path to say “Yes” when it’s most important.

Compliance vs Creativity

Nonprofit CFOs must have a deep understanding of regulatory compliance and governance standards that apply to their organizations. In addition, CFOs need to work closely with the Board of Directors, auditors, and legal counsel to ensure that internal controls are effective, policies are up-to-date, and financial practices are keeping the organization safe. This requires using a risk management lens to view the situation. Not many others use the same lens, therefore making this a vital component of a CFO doing their core job.

However, a good CFO will contribute to an overall organization’s success best if they can be creative in finding an out of the box solution or change a policy to accommodate an important organizational goal. Like saying “Yes,” this may take more work, but it’s worth it! Coming up with a creative solution, rather than always providing the compliance-focused answer, will propel an organization forward versus holding it back. (And for those CFO skeptics out there, of course this creative solution must still consider compliance and ethics.)

Technical vs Soft Skills

As with many leadership positions, a nonprofit CFO is often challenged to possess both the technical skills of the job and the soft skills of the job. The specific role certainly may lean one way or the other depending on the size and complexity of the organization, but regardless, both are important to their success.

Nonprofit organizations often operate with tight budgets and multiple funding streams, such as grants, donations, and program revenue. This complexity requires CFOs to develop comprehensive financial strategies. Analytical skills are essential for assessing financial performance, identifying trends, and developing contingency plans to address potential financial challenges.

On the other hand, technical skills can’t be their only strong suit. Communicating financial information to various stakeholders, including the Board of Directors, staff, donors, and external partners is equally important because some of them will not have a background in finance. Therefore, the CFO must be able to translate complex financial data into understandable terms for these stakeholders.

Additionally, soft skills are needed to manage and motivate a finance team while collaborating effectively with other department heads and the executive team. The CFO must lead by example to promote a culture of transparency, accountability, and continuous improvement.

Strategic vs Tactical

Like the vast differences in size and complexity among nonprofit organizations, so too are the vast differences in CFO roles at a small nonprofit versus a large nonprofit. Frequently, large nonprofit CFO roles are something like 80% strategic and 20% tactical, while a small nonprofit CFO role might look more like the inverse – 20% strategic and 80% tactical. One of the most difficult and valuable skills CFOs must be able to handle is the ability to toggle seamlessly between a strategic focus and a tactical focus.

Technically speaking, nonprofit CFOs must have strong financial acumen, particularly in areas like revenue recognition, fund accounting, and cost allocation. In many smaller nonprofit organizations, this tactical effort may extend into reconciling accounts, supervising the month-end close and beyond. Strategically, a good CFO should be immediately able to analyze this information and interpret it towards helping management and the Board of Directors make good decisions.

Of course, we’ve just begun to cover the many facets of responsibility placed upon a nonprofit CFO. It’s a big job and takes years of experience to master. At CFO Selections, our skilled and experienced nonprofit CFOs can help provide the right amount of ‘Balance’ to your organization’s finance and accounting department, whether that is a fractional CFO role or a mentoring relationship for an existing nonprofit CFO. Contact us today to find out more!

About the Author
Todd Kimball – Partner, CFO Selections

Todd Kimball is a senior accounting professional with over 20 years of experience in the nonprofit and government sectors. His expertise has generated a consistent track record of finance and accounting solutions that work. He excels at solving the most challenging not-for-profit accounting issues, creating process efficiencies, motivating and utilizing staff to their full potential, implementing internal controls and providing sound technical expertise to move organizations forward.

As a Partner with CFO Selections, Todd leads the nonprofit practice in Oregon and SW Washington. Todd is an Oregon state Certified Public Accountant and a graduate of George Fox University with a BA in Accounting and Finance.