Boston, MA -- (ReleaseWire) -- 07/24/2006 --In this era of increased scrutiny of nonprofit organizations’ financials and performance, higher accountability to the public trust, and the rapid growth and increased complexity of individual organizations in the sector, many nonprofits are focusing on the chief financial officer (CFO) function in their organizations. According to Bridgestar, a nonprofit initiative of the Bridgespan Group dedicated to attracting, connecting and supporting senior leaders for the sector, the challenge for hiring organizations and job candidates alike is to understand the roles, responsibilities and challenges for the position.
In the July issue of “Leadership Matters,” its monthly newsletter that picks a different theme designed as a conversation about how to build and sustain effective nonprofit organizations, Bridgestar has published a detailed State of the Nonprofit CFO, based on surveys, in-depth interviews, and focus groups with nonprofit leaders. The report found patterns among CFOs of similarly sized organizations across the country, in terms of the roles and responsibilities of the CFO, major challenges, and keys to success.
“Bridgestar’s survey found that CFOs’ responsibilities can widely differ, based on an organization’s size, budget and years of operation, with many handling non-finance functions. That’s why the position is often known as Chief Fixit Officers,” says David Simms, Managing Director, Bridgestar. “Nonprofits find that CFOs play an extremely important role, contributing to the organizations’ ability to accomplish their missions and achieve future viability. In this month’s ‘Leadership Matters,’ we set out to explain the position better in order to help organizations and job candidates be more successful. We hope that our findings will help organizations structure their leadership teams more effectively.”
According to Bridgestar, which provides talent-matching services specifically for senior management roles, including a free job board, and content and tools, individual CFOs represented a diversity of backgrounds, education, and tenures. Many, especially those in mid-sized to larger nonprofits, have worked in the for-profit sector and “bridged” into the nonprofit sector within the last 10 years; only a handful of CFOs were “homegrown” in the nonprofit sector. A large majority of the CFOs interviewed have their Master in Business Administration (MBA) degrees while only a quarter are Certified Public Accountants (CPAs).
In terms of responsibilities, when organizations with budgets under $10 million did have CFOs, they tended to wear a lot of hats, such as finance (including budgeting, cash flow, and accounting), IT, legal, HR, administration and operations including facilities – giving them more in common with COOs. In contrast, CFOs organizations with budgets over $40 million were more likely to focus exclusively on the finance function.
Given the mission of their organizations and the resource constraints nonprofits often face, CFOs told Bridgestar that one of the top challenges they face, especially those who come from the for-profit sector, is dealing with some of the ways in which the nonprofit sector operates. For example, having a positive bank balance doesn’t mean an organization is solvent or can use the money any way it needs to because restricted gifts must be used for specific purposes. CFOs may find themselves telling their staffs to cut back in one area while urging their staffs to spend in other areas or lose funding.
For those CFOs who “bridged” to the nonprofit sector, challenges included the consensus-driven culture, dealing with multiple stakeholders, working with non-financially oriented staff, and figuring out how to measure success in a culture that emphasizes mission over the financial bottom line.
Based on this research, Bridgestar found that the success of the CFO is dependent on conditions in two important areas: the mindset and skills of the CFO, and the level of support for the CFO position within the nonprofit organization. Additional success factors include:
• Competent – Good solid accounting skills and background, nuts and bolts experience in the operations of a business and/or nonprofit, a strategic thinker with a big-picture mentality.
• Committed – Passionate about the mission of the organization and understands the realities of the nonprofit sector.
• Communicative – Able to speak in non-financial language, can translate and teach financial literacy, relates well to the board of directors and multiple stakeholders, and is a strong writer and communicator.
• Creative – Flexible, thinks outside the box, figures out how to say “yes” and make things possible!
The current issue of “Leadership Matters,” which includes more detailed findings, is available at:
http://www.bridgestar.org/Learning/Newsletters/2006/July2006.aspx. Subscriptions are available to all Bridgestar members. For a complimentary subscription, please email subscribe@bridgestar.org.
About Bridgestar
Bridgestar, an initiative of the Bridgespan Group, is a nonprofit organization providing talent-matching services, content, and tools designed to help organizations build strong leadership teams and individuals pursue career paths as nonprofit leaders. Bridgestar’s goal is to attract, connect, and support senior talent, leading to greater organizational effectiveness and social impact.
State of the Nonprofit CFO: July Issue of Bridgestar’s “Leadership Matters” Explores the Roles, Responsibilities and Challenges of the Nonprofit CFO
Report is designed to inform both hiring organizations and job candidates