The CFO'S Perspective

As in any industry these days, technology utilization in nonprofit organizations is on the rise. Nonprofits are using technology to shape everything from how they communicate to how they fulfill their missions with greater efficiency and effectiveness than ever before.

In a Harvard Business Review article on the smart tech transformation occurring in nonprofits, Allison Fine and Beth Kanter summarize,

“The use of smart tech by social service agencies and other nonprofits exploded during the pandemic. For example, food banks deployed robots to pack meals; homeless services agencies used chatbots to give legal and mental health advice; and fundraising departments turned to AI-powered software to identify potential donors. At many nonprofits, smart tech is becoming integrated into internal workflows, fundraising, communications, finance operations, and service delivery efforts, freeing up staff to focus on deeper societal changes that need to be made — such as addressing the root causes of homelessness in addition to serving homeless people. While smart tech helped scores of nonprofits to pivot to suddenly remote and digital delivery of programs and services at the start of the pandemic, it may also enable them to turn the page on an era of frantic busyness and scarcity mindsets to one in which nonprofit organizations have the time to think and plan — and even dream.”

Have you ever had a conversation that went something like this?

CEO: “So, do you have an update on our insurance?”

CFO: “Well, I have good news and bad news.”

CEO: “Bad news first, please. Always.”

CFO: “I took a look at The Company’s coverages and talked with our broker. The bad news is that our insurance bill is going up, way up.”

CEO (interrupting): “By how much? We’re kind of tight right now.”

CFO: “The premium increase will be almost 40% over last year. We might want to shop it. But the good news is…”

CEO (interrupting again): “Let me guess - another invitation from the insurance broker to a charity golf event in the month of November?”

CFO: “Actually the good news is that this year we have identified some significant gaps in our coverage. We have the opportunity to close those gaps now to better protect The Company in the future from significant financial risk.”

CEO (looking unconvinced): “Oh?”

CFO: “With our new advisory board of directors, we will need D&O insurance. Also, the broker has been recommending cyber insurance for the last several years, but The Company continues to put off purchasing any kind of coverage in this area. I strongly recommend that we should cover ourselves in this area.”

It is not difficult to understand that a nonprofit organization needs money to accomplish its mission. And yet, in looking at nonprofits it is clear that they are so much more than the money they have to invest in programs and initiatives around a particular mission or cause. Nonprofits are made up of passionate people that care about making a difference and serving others with whatever resources they have available. But how much they need and how much donors are willing to give them hinges on understanding how they can use what they have to do what they do, which is called their Return on Investment (ROI).

Without knowing what kind of a return a nonprofit can achieve it cannot secure grants or attract donors effectively. So, how do you calculate nonprofit ROI?

While some economists and business analysts claim we are already in a recession, many more believe we will be in one by the end of the year. The general consensus is that whether we are already there, or it is coming soon, for-profit and non-profit organizations alike will be affected. The question is how will they be affected and what will those effects look like? Essentially, what should they expect and to what degree should they expect to be affected?

Obviously, nonprofit organizations will feel the effects of a recession differently than the private sector, but the types of issues they are dealing with right now are the same: changing consumer behavior (purchasing and donating), increased costs, labor market changes, and increased reputational risk. How will nonprofits be affected?

As 2023 begins many nonprofit leaders are facing the reality of operating after the government funds that were provided during the pandemic have dried up. Organizations that regularly operate with minimal or moderate budgets are finding that they are in a cash negative position. How they respond now will determine what the future holds for their missions, staff, and the people they serve.

As a finance team professional with years of experience navigating office politics, human relationships and life in general, I have the need to successfully complete difficult conversations every day. It is a skill that one acquires over time, especially after learning that it’s better to face problems head on.

It's easy to avoid the problems, bury your head in the sand, or pretend things are peachy, especially at work or in a new relationship. Avoidance only makes it worse for you and everyone around you - but mainly for you. When you go along because you're afraid of making it worse, you will slowly resent it and may leave your job or relationship because of it.

What if, instead, you faced these problems head-on, resulting in more positive working relationships and maybe even happier clients?

Current data from CFO Dive indicates that the hiring woes companies and nonprofit organizations are experiencing will continue well into 2023 (or even beyond). The question for nonprofit organizations is how do you overcome today’s challenges?

Luckily, there are several key trends emerging that are enabling nonprofits to hire well despite the market’s current challenges. These trends span areas from how pay is communicated to how employees work, and everything in between.

Grant management is one of the fundamental elements of effective financial management for a non-profit organization. There are many components of grant management, and while the degree of sophistication may vary from organization to organization, the fundamentals remain largely consistent.

So, why is grant management important?

The entire answer to this question depends on the organization, but here are the core reasons: