September “Leadership Matters” Features “CFO Fitness Quiz: Are You Tough Enough for the Caring Secto
Managing nonprofit organizations is challenging and rewarding work, requiring executives to possess specific leadership qualities as well as professional expertise – sometimes beyond what is expected, or needed, for a similar position in the private sector.
[ClickPress, Thu Sep 20 2007] Managing nonprofit organizations is challenging and rewarding work, requiring executives to possess specific leadership qualities as well as professional expertise – sometimes beyond what is expected, or needed, for a similar position in the private sector.
Bridgestar, a nonprofit initiative of the Bridgespan Group dedicated to attracting, connecting, and supporting executive leaders for the sector, provides insight into this topic in the current “Leadership Matters.” The featured article, “CFO Quiz: Are You Tough Enough for the Caring Sector?,” was researched and written as a collaborative effort between Clara Miller, president and chief executive officer of the Nonprofit Finance Fund, and the Bridgestar knowledge team.
“Although the demands on nonprofit organizations are increasing, the roles and responsibilities of nonprofit leaders are often underestimated and misunderstood. While some CFOs and other corporate leaders may wonder if they are overqualified for nonprofit leadership roles, we have found that it’s just the opposite – that professionals require additional qualities to be effective in the nonprofit sector,” said David Simms, managing partner, Bridgestar. “In addition to the expertise in their field, these executives need to be able to build consensus and must have the creativity to solve problems within the resource-constraints of nonprofit organizations.”
The September article primarily focuses on nonprofit financial management, and is part of Bridgestar’s growing portfolio of content focused on the recruitment and development of executive talent for the nonprofit sector; however, the qualities and qualifications required for these positions are applicable to other nonprofit leadership roles.
The insights found in the current issue are based on in-depth discussions and focus groups with 25 nonprofit CFOs and 15 executives from nonprofit organizations that focus on the finance function, as well as the authors’ decades of experience in the nonprofit sector. These qualities include the following:
• Strong puzzle-solving capabilities. Because the Financial Accounting Standards Board (FASB) rules for nonprofit organizations require that organizations treat all revenue the same, regardless if it is earned income, multi-year grants, capital contribution or equity-like contributions, it is often difficult to manage cash flow, and assess an organization’s health. Additionally, because certain funds are earmarked for certain expenses, CFOs need to be able to piece together the disparate timeframes and sources for an organization’s revenue and explain how they work to the organization.
• Ability to effectively manage a subsidy business and triple bottom lines. Virtually every nonprofit has a structural deficit, defined as the gap between revenue from the core business of the nonprofit and total expenses. To be effective, the CFO must be able to maintain a delicate and difficult balance between mission and money. The CFO must be able to articulate and quantify the costs and benefits of engaging in these various “subsidy businesses” for both board and staff.
• Nerves of steel and imagination that can make cash elastic. Nonprofit CFOs must deal with significant cash constraints and be able to stretch cash. Nonprofit CFOs must also be creative about solving problems. “You’re going to have to do things in the nonprofit world without the budget you’d have in the for-profit world, said Chrisy Lueders, senior vice president and CFO of the YMCA of Greater Seattle. “You’ll never have enough resources, never have enough staff, so you’ll have to be resourceful and creative about how you attack things – which things you choose to get done and which things are left behind.”
• Ability to tell the finance story in program terms and the program story in financial terms. The CFO needs to be able to communicate financial information to staff and board in program terms, and help staff understand the program story in financial terms. “As CFO you have to be able to talk to program and development people in a way that builds trust and confidence,” said Jan Dahms, vice president of accounting and controls at Teach for America.
• Ability to explain and address capital structure issues. A CFO can greatly contribute to the organization’s understanding of the relationship between its mission, its business model and the appropriate capital structure.
• Consensus-building skills. A key component in building trust in nonprofit organizations is the ability to build consensus with disparate staff, volunteers and board members to move an agenda forward. CFOs who have moved to the nonprofit sector often face the challenge of adapting to the consensus-driven decision-making that characterizes nonprofits.
• A big heart. It’s difficult to work at a nonprofit organization without being passionate about the mission. To be effective among colleagues and the wider nonprofit community, CFOs need a sincere passion for the mission and respect for people.
Each month, “Leadership Matters” selects a different theme about how to build and sustain effective nonprofit organizations. Available to Bridgestar members (or, for a complimentary subscription, please email firstname.lastname@example.org), “Leadership Matters” is part of a robust portfolio of offerings that includes a job board that lists more than 200 executive positions across a range of service areas including the environment, human services, elder services, human rights, and youth services. Bridgestar has assisted many organizations in finding new leaders through its talent-matching services, which include executive recruiting and related advisory activities.
The current issue of “Leadership Matters” is available to Bridgestar members at: https://www.bridgestar.org/Resources/Newsletters/2007/September2007.aspx. For a complimentary subscription, please email email@example.com.
Bridgestar (www.bridgestar.org), an initiative of the Bridgespan Group, is a nonprofit organization providing talent-matching services, content, and tools designed to help organizations build strong leadership teams and individuals pursue career paths as nonprofit leaders. Bridgestar’s goal is to attract, connect, and support senior talent, leading to greater organizational effectiveness and social impact.