This guest post is from Sue Waterbury, vice-president of DRG.

You're looking for grants. Why should you read on?

A strong relationship with your CFO is important because:

  • Foundations will want to know if you have the infrastructure to be able to report accurately on the grants.
  • They will want detailed information about what the money is being used for, which requires coordination with program and finance.
  • Understanding the financial health of your organization will allow funders to evaluate if you are capable of meeting your programming or operational goals.

Funders are concerned about how nonprofits look at risk, cash flow and debt ratios. The stronger your partnership and communication are with the head of finance, the more honest you can be with the funder about your organization 's needs, which will help you gain foundation support.

The skill set that is necessary to be an efficient nonprofit chief financial officer (CFO) has broadened in response to the changing landscape of the nonprofit sector. A CFO that is merely equipped to manage your organization's finances isn't enough to stimulate impact and growth. The CFO's ability to convey messages about the organization's financial health plays a central role in its success.

Whether your nonprofit seeks a strategic CFO to lead it through its next period of advancement or help tackle its financial setbacks, one of the most valuable qualities your new CFO can possess in today's collaborative nonprofit environment, is an aptitude for communicating the health of your organization that transcends numerical data. The CFO is not just your organization's financial advisor. He or she is also your internal spokesperson.

Connecting staff through financial data

Since financial data can be daunting to members of your executive staff who are not knowledgeable in finance or accounting, it's important to bring aboard a CFO who is able to translate your organization's metrics with language that is clear and not heavily drenched in technical jargon. This ensures that everyone on your team is on the same page about the goals of the organization and what is achieved based on the numbers.

The CFO, though not typically thought of as a "unifier," is working across the organization and interacting with various professionals on your staff, from programming directors to fundraisers. Through a constructive partnership with the CFO, the CEO or executive director of your nonprofit can effectively deliver the organization's story, mission and work to key stakeholders. Development leaders can also benefit from a strong relationship with the CFO.

Insights about an organization's financial prospects can help development staff cultivate a fundraising strategy that aligns with its specific needs. Fundraising professionals are also able discuss the needs of the organization to donors more amply through positive exchanges with the CFO, which might in turn give donors further confidence in the organization 's ability to achieve its mission and goals.

In some cases, donations may be complicated or involve legacy gifts, which might require the CFO to correspond with donors directly - making strong verbal, written and interpersonal communication skills all the more imperative.

Creating a bigger picture

Instead of simply performing the technical functions of his or her role, a CFO who possesses effective problem-solving and communication skills will consider the data's implications. With the CFO's input, members of your executive staff can engage in long-term planning to lead your organization into the future.

If your organization is planning to acquire or sell a building, your board and members of your executive team will need to consider many things beyond costs. As your organization's internal spokesperson, the CFO can provide keen perspectives that will allow you to make an informed decision. Combined with the figures that are gathered, he or she might explore whether it's the right time to make such a move and how it may affect endowment or funding moving forward. Open communication about financial data empowers the organization to recognize the bigger picture.

Too often nonprofits forget their Form 990 allows outsiders to draw various conclusions about their legitimacy, financial stability and how successful they are at meeting their mission. These outsiders may include potential hires, partners and donors. As the cash flow of nonprofits becomes more accessible and the push for transparency in the sector continues to grow, CFOs can no longer afford to hide behind numbers.

SUE WATERBURY is vice-president of DRG. Her areas of expertise are in helping international relief, poverty, and health and human services organizations recruit new leadership in the areas of development, finance and executive management. Prior to her work in executive search, she spent more than 20 years working in the financial sector. Read more about Sue.

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