Whether your not-for-profit organization needs a chief financial officer (CFO) depends on many factors, such as the size of your organization, the complexity and types of revenue sources, and the number of programs you have. Static organizations are less likely to need a CFO than those with evolving programs and long-term plans that rely on investment growth, financing, and major capital expenditures. So if your organization is expanding quickly, it might be time to consider hiring a financial executive.
Accounting and finance oversight
Generally, nonprofit CFOs (also known as directors of finance) are senior-level executives charged with oversight of accounting and finances. They work closely with executive directors, finance committees, and treasurers and serve as business partners to program heads. CFOs report to the executive director or board of directors on their organization’s finances. They analyze investments and capital, develop budgets and devise financial strategies.
The CFO’s role and responsibilities vary significantly based on the organization’s size, as well as the complexity of its revenue sources. In smaller nonprofits, CFOs often have wide responsibilities — possibly for accounting, human resources, facilities, legal affairs, administration, and IT. In larger nonprofits, CFOs usually have a narrower focus. They train their attention on accounting and finance issues, including risk management, investments, and financial reporting.
Qualifications for the job
At a minimum, you want a CFO with in-depth knowledge of the finance, accounting, and tax rules particular to nonprofits. Someone who has worked only in the for-profit sector may find the differences difficult to navigate. Nonprofit CFOs also need a familiarity with funding sources and grant management. If your organization expends $750,000 or more of federal assistance, your CFO will need to oversee an independent financial audit (also known as a “single audit”), as well as possible state-mandated audits.
The ideal candidate for the job should have a certified public accountant (CPA) designation and, optimally, an MBA. In addition, the position requires strong communication skills, strategic thinking, financial reporting expertise, and the creativity to deal with resource restraints. Finally, you’d probably like the CFO to have a genuine passion for your mission — nothing motivates nonprofit employees like a belief in the cause.
Finding candidates or other solutions
Your nonprofit’s ability to pursue its mission depends on its financial health and fiscal integrity. If your budget is swelling and your executives are struggling to manage financial tasks, it may be time to hire a CFO. Contact us if you need suggestions for finding candidates. Consider Cordia’s outsourced accounting services if hiring a CFO is not the best option at the moment. Our team can provide high-value business advisory services including CFO and Controllership services, as needed to support your growth.