The Nonprofit “CFO and” Syndrome: Strength or Symptom?
The top financial staff person in a nonprofit may go by any number of titles. It is quite common for those titles to include an “and.” Whether the and is present or not, the duties overseen by nonprofit financial leaders often stretch beyond finance and accounting to include human resources, administration, information technology, facilities, and operations. Is the breadth of responsibility in these positions a testament to the strength of those who regularly hold financial leadership roles? Or are these broad combinations the symptom of sector-wide misunderstanding about what skills, training, aptitude, and interest most naturally align in the best nonprofit financial leaders?
Glance at any statewide nonprofit association job website and you are likely to see a listing with a range of titles and positions all aimed at the same candidates: Finance Director, Accounting Manager, Director of Finance and Administration, Vice President of Finance and Operations, Chief Financial Officer. Even the positions of Chief Operating Officer, Chief Administrative Officer, and Director of Operations may include finance under their purview. While a broad-ranging job description usually underlies these titles, does that serve nonprofits well? Do candidates with these sprawling sets of credentials and experience really exist?
The several paths to nonprofit CFO
The routes to becoming a nonprofit CFO are as varied as the titles. I am one example of a CFO who transitioned to finance after more than a decade in program roles, has undergraduate degrees far from finance (religion and women’s studies), and who spent several years doing nonprofit accounting before ever taking an accounting class. I did eventually go back to school to tally the accounting and business coursework necessary to sit for the CPA exams. Even though my path was winding, my formal training placed me on the accounting track to becoming a financial leader. I would not limit this path to those who actually become CPAs. It is a broader category that includes all those who have studied or majored in business and accounting. Their technical grounding is in accounting.
Another path to CFO is what I would label the management track. These financial leaders may have only studied the basics of accounting, and may not have had coursework that included nonprofit accounting specifically. Their exposure to finance may have been cursory on the way to a graduate degree. They may have picked up a stray accounting or business class while preparing to apply for an MBA program. For the most part though, their training is in broader leadership, planning, and strategy skills. Their grounding is in management, not accounting.
For many nonprofit financial leaders, their track to the CFO position involved neither the accounting nor the management track. Borne out of opportunity, willingness, and ingenuity, many nonprofit finance leaders are simply self-taught, hands-on learners, who stepped up to the task when their organizations had an unmet need. These leaders took the on-the-job training track. Their entry into and usefulness in their roles depends on their adaptability and willingness to continue learning. They may have no particular technical grounding. They build their success on experience and seasoned leadership acumen.
None of these pathways is exclusive of the others. Some nonprofit leaders have arrived at the CFO position by wandering down a combination of all three – or by taking a route not described here.
What combination of skills and experience is best?
Knowing that the current mix of talented leaders in nonprofit finance got there by traveling varied roads, how could we map out the best path to becoming a successful financial leader? Does every CFO need technical grounding in nonprofit accounting? Does every CFO need management grounding in an advanced degree? What combination of experiences would give you confidence that a self-taught financial leader could handle the top role in your organization?
The key to identifying the right blend of skills, training, and experience for your financial leader starts with aligning the role you are seeking to the needs of your nonprofit. Crafting a job description and giving it a proper title are as much art as science. If the core needs of your organization expand across finance to HR, IT, facilities, and operations, then first consider whether one person should be responsible for all of these functions. Just because you encounter it frequently does not mean that the grouping of these various responsibilities is intentional, thoughtful, or effective.
Leave room for financial leadership among the list of CFO skills
While organizations need skilled leadership of HR, IT, and facilities, seeking those skill sets should not detract from the search for sophisticated financial leadership. For nonprofits, effectively communicating financial information to a variety of audiences, developing and implementing innovative financial strategies, forecasting cash flow, and analyzing complicated financial questions should be high on the list of capabilities you seek in your CFO. Be sure not to crowd your job description so much with the ands that you edge out key financial competencies.
Creative ways to cover a disparate set of job duties
After reflection, you may still need to create a job description that is all-encompassing. If so, then consider whether you will require any financial leader you are seeking to have prior experience doing and/or leading all of the tasks you include. Having previous experience doing a thing or leading a thing is invaluable, for sure. However, you may choose alternative ways to cover the assorted core administrative functions you build into the position.
If the finance leader on your team has effective management skills, perhaps they could oversee outsourced personnel who would create and implement progressive personnel policies and practices. Maybe your finance leader could oversee an outsourced managed IT service or a talented contracted IT administrator. For those who advance to the CFO role without technical nonprofit accounting expertise, there is even the option to outsource accounting and finance capacity at whatever level necessary.
The CFO and position is what you make of it
If we avoid thinking that one person must excel at all facets of a multi-layered job description, then we can focus on what skills, qualities, and experience really are essential. Separating technical proficiency from strategy, leadership, and management abilities allows us to envision alternative ways to cover the sometimes-incongruous merger of responsibilities that we expect our CFOs to fulfill. Knowing that the nonprofit CFO and role is probably here to stay, both financial leaders themselves and the nonprofits who rely on them can do a better job of creatively solving for the right mix of aptitude, education, and practice that will ensure success.
Curtis Klotz is a CPA serving as director of nonprofit innovation at CLA. His writing is inspired by his work in CLA’s nonprofit consulting and business operations practice and more than 30 years of industry experience. Before joining CLA, Curtis was vice president of finance and CFO at Propel Nonprofits, where he was a frequent online contributor to Nonprofit Quarterly and other blogs. He was named Minneapolis/St. Paul Business Journal’s Nonprofit CFO of the Year in 2017, and is past chairperson of the Montana Nonprofit Association. Curtis graduated summa cum laude from St. Olaf College with majors in women’s studies and religion.
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