Nonprofit CFOs tend to wear more hats, and rely more on consensus building, than their counterparts in the for-profit world, says a new survey published by Bridgestar, an affiliate of nonprofit consultancy Bridgespan Group.
The survey, which polled nonprofit CFOs from organizations of all sizes, noted that within the past 10 years, many CFOs — especially those in midsize to larger organizations —worked in the for-profit sector before coming to their current job. Only a handful were “homegrown” in the nonprofit sector, noted the survey.
In terms of responsibilities, CFOs of organizations with budgets under $10 million wear many hats: they head up several areas, such as finance (including budgeting, cash flow, and accounting), information technology, legal, human resources, administration, and operations — including facilities. This broad range of responsibilities gives these finance chiefs more in common with chief operating officers than with CFOs at larger companies, said the report. In contrast, CFOs at nonprofits with budgets over $40 million are 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 is dealing with nonprofit economics. For example, because restricted gifts must be used for specific purposes, having a positive bank balance doesn’t mean an organization is solvent or can deploy the money freely. As a result, nonprofit CFOs may wind up instructing their staff to cut back in one area while urging them to spend in other areas, to make sure they do not lose restricted funding.
Challenges that accompany crossing over to the nonprofit sector include adapting to the consensus-driven culture, dealing with multiple stakeholders, working with nonfinancially oriented staff, and figuring out how to measure success in a culture that emphasizes mission over the financial bottom line.