22 May Does Your Non-Profit Need A CFO?
Your non-profit’s ability to pursue its mission depends greatly on its financial health and integrity. If your non-profit is growing and your executives are struggling to juggle financial responsibilities, it may be time to hire a chief financial officer (CFO).
Generally, the non-profit CFO (also known as the director of finance) is a senior-level position charged with oversight of accounting and finances. He or she works closely with the executive director, finance committee, and treasurer and serves as a business partner to your program heads. A CFO reports to the executive director or board of directors on the organization’s finances. He or she analyzes investments and capital, develops budgets, and devises 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 non-profits, CFOs often have wide responsibilities — possibly for accounting, human resources, facilities, legal affairs, administration, and information technology. In larger non-profits, CFOs usually have a narrower focus. They train their attention on accounting and finance issues, including risk management, investments, and financial reporting.
Making the decision
How do you know if you need a CFO? Weigh the following factors:
- Size of your organization
- Complexity & types of revenue sources
- Number of programs that require funding
- Strategic growth plans
Static organizations are less likely to need a CFO than non-profits with evolving programs and long-term plans that rely on investment growth, financing, and major capital expenditures.
The right candidate
At a minimum, you want a CFO with in-depth knowledge of the finance, accounting, and tax rules particular to non-profits. Someone who has worked only in the for-profit sector may find the differences difficult to navigate. Non-profit CFOs also need a familiarity with funding sources, grant management, and, if your non-profit expends $750,000 or more of federal assistance, single audit requirements. The ideal candidate 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 would probably like the CFO to have a genuine passion for your mission — nothing motivates employees like a belief in the cause.
If your budget is growing and financial matters are becoming more complicated, you may want to add a CFO to the mix. Otherwise, consider outsourcing CFO responsibilities to a CPA firm. Contact us for more information.