Why do we need a CFO?
The right CFO in place will optimize the returns of your organization’s activities by carefully managing all aspects of your finances.
The CFO role is strategic by nature, creating budgets, analyzing financial statements, and strategically interpreting the data. They provide an active partner to the Executive Director (ED) and bring a forward-looking and proactive stance to managing the organization’s finances.
Whether an organization begins to spiral downward or have high-speed growth, a CFO might be needed to help you respond when decisions are required in a quickly changing financial landscape.
When an Executive Director becomes burdened with too many hats, it limits opportunities. With a CFO in place, an Executive Director can feel empowered because they have a financial executive who knows how to solve problems and run the organization financially.
The right CFO will bring clarity when you lack detailed financial analysis that is critical to making sound business decisions.
The right CFO will use their expertise to:
- Bring a strategic, high-level perspective to the organization’s finance and accounting needs.
- Build the organization’s capacity to manage its finances as it grows in size and complexity.
- Reduce excessive workloads in the areas of finance, administration, real estate, technology or legal for the Executive Director (ED) and/or the Chief Operating Officer (COO).
- Balance or supplement the skills of the controller or other finance team members.
- Partner with the ED and COO to make decisions that benefit the organization from a financial perspective.
What does a non-profit CFO do?
As an organization’s finances gain complexity, it will have varying requirements for the CFO.
For small non-profits (budgets between $1.5M - $10M)
The CFO is typically responsible for multiple areas which can include: accounting, real estate, technology, legal and administration.
For large non-profits (budgets of $40M+)
The CFO focuses on creating and managing budgets, accounting and finance issues, including oversight of the organization’s investment strategy and endowment.
For mid-sized non-profits (budgets between $10M - $40M)
There may be a similarity to the responsibilities of either a small or a large non-profit organization. Responsibilities will depend on the complexity of the organization.
- For a non-profit with highly diverse programs or funding sources, the CFO role would be similar to a that of a large non-profit.
- For an organization with less complexity in funding and programming, the responsibilities would be similar to that of a small non-profit.
By contrast, a controller typically focuses on producing financial statements and managing the technical aspects of the organization’s accounting function.
Ideal Characteristics of a Prospective Non-Profit CFO.
- Has prior non-profit experience
- Understands non-profit budget models, contracts, and regulatory requirements
- Is knowledgeable and passionate about the organization’s mission
- Is detailed and precise with their work
- Listening and perspective taking skills are strong
- Communicates well, in a transparent fashion
- Exercises good judgment in the midst of ambiguity
How any size organization can afford a CFO.
While hiring a full-time CFO is a great solution for many mid-sized and all large non-profit organizations, many are too small to afford or need a full-time CFO.
Hiring a fractional or interim CFO can be the solution.
No one earns the title of CFO without building an extensive body of knowledge and experience. Bringing someone into the role on an interim or fractional basis gives the Executive Director and the organization immediate access to the many lessons learned over the course of their career, at significant cost savings.
CFO Selections provides interim, fractional, project-oriented, and permanent placement, CFOs in non-profit and for-profit organizations in western, eastern and southwest Washington and in the Portland metro area.
About the Author:
Becky Todd, Western Washington Practice Manager, CFO Selections
Becky is an experienced financial leader with over 20 years of experience in industries that include nonprofits, aviation, software, and retail. She has extensive expertise helping small to mid-size companies and organizations gain control over their accounting/finance operations and apply their financial assets to support the accomplishment of key organizational objectives.
As the Western Washington Practice Manager for CFO Selections, Becky ensures the alignment of the right CFO consultant to client organizations. Becky holds a Bachelor of Arts in Business Administration (Accounting) from the University of Washington. Becky can be reached at firstname.lastname@example.org.