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How do a nonprofit CEO and COO recognize a great CFO? What are the qualifications of a CFO who can add extraordinary value to an organization? Successful CFOs of nonprofit organizations share the following characteristics:
1.CEO/COO confidant. The CFO must have an excellent working relationship with the CEO and COO. The CFO is the CEO’s and COO’s trusted advisor on a broad range of matters including finance, short and long term strategies, operations and management. Only by working closely with the CEO and COO can a CFO be an invaluable resource.
2. A thorough understanding of all aspects of financial management. A CFO should be familiar with accounting, financial reporting, audits, taxes, cash management, budgeting and risk management – either from having performed these functions directly or supervised them. It might seem counterintuitive, but the smaller the nonprofit organization, the more important that the CFO have a broad range of technical knowledge. In a larger organization, there are more likely to be staff with complementary skills to back up any gaps in the CFO’s experience. In nonprofit organizations where there is a finance staff, the CFO ensures that there is a strong team to oversee, including a competent controller or senior manager to handle the day- to- day accounting function.
3. A gray hair or two. Well, maybe not actual gray hair. But some experience is required, especially experience in financial management and in supervisory/managerial roles. Previous titles can be deceptive: in a small organization, a “controller” or “financial manager” might not have supervised any staff. The best experience for a CFO would also include some management responsibility outside of finance, for example as a program manager or even a COO.
4. Big picture view. A CFO must be more than a bean counter. To serve as a partner to the CEO and an adviser to the board, the CFO must have a strategic vision, understanding all aspects of the organization, its strategic plans, goals, and its external environment. Getting the numbers right is not enough; the CFO must understand, and be able to explain, what they mean.
5. Communication skills. Sounds trite, doesn’t it? But accountants, like many professionals in technical fields, are notoriously weak when it comes to communicating with words. To be effective, a CFO must deliver the right messages, to the right audiences, either orally or in writing. And in plain English, not accountants’ jargon -- often staff, volunteers, and even Board members have little or no background in finance.
6. A commitment to the mission. Like all senior executives, the CFO must fully understand, and believe in, the nonprofit organization’s goals – why does the organization exist? What is its role in society? Only by internalizing the Mission can the CFO ensure that the finances are the servant of the Mission, not the other way around.
7. Uncompromising ethics and integrity. This is not just a matter of keeping hands out of the cookie jar. It includes standing for what is right, even (or especially) when no one else agrees. Intellectual honesty - saying what you mean and meaning what you say.
8. A network of relationships. A successful CFO works closely with colleagues – not only peers in management, but staff at all levels of the organization, as well as volunteers and Board members. These relationships must be characterized by mutual trust and respect. Especially in the case of a new CFO, the external network can be just as important. Former colleagues, financial professionals including CPA firms, bankers, insurance, investment advisors, attorneys and others – any or all of these may be of value to the CFO for advice and counsel, or for assistance in identifying and incorporating opportunities for the organization.
9. A commitment to life-long learning. In addition to keeping up with the latest developments in accounting rules, tax regulations, and nonprofit law, we should expect a CFO to be current on world and national affairs and business news. The CFO should go far beyond what is required to maintain professional certification, and keep an open mind, a commitment to learn something new every day.
If you find a CFO candidate who matches this description, move that candidate to the top of the pile. And if you already have such a CFO, count your blessings!
Dempsey is a CFO/COO consultant for nonprofit organizations. Contact her at 703-999-5268 or firstname.lastname@example.org.