Chief Financial Officers (CFOs) of not-for-profit businesses face many of the same challenges as their peers in for-profit firms. But their role also needs to address some unique aspects of working in this sector.
Gail O'Donnell is the CFO of Campbell Page, which provides disability employment support and services.
“Whether you're working for a not-for-profit or you're in the commercial sector, these days CFOs are not just number crunchers - we wear lots of different hats," she says.
“I look after finance as well as IT, business intelligence, facilities, motor vehicles and risk. I also look after project management and contract assurance and outcomes management. So, I have to be an expert in a number of areas that don't just relate to finance. That's common across the commercial and the not-for-profit sector," she says.
Aside from being across such a multifaceted role, O'Donnell says remaining relevant to her stakeholders is a huge challenge.
“Balancing commercial realities with why we exist as a not-for-profit organisation is a challenge. I have to be cost conscious and be able to say no. There are lots of programs we want to do, but we can't afford them all," she says.
Keeping up with the latest advances in IT is another constant challenge for the business. Staying abreast of regulations - especially rules around protecting personal information - is also consistently at the top of the finance team's work-in-progress report.
Attracting talented people to the business can be another challenge, she says. “I can't do my job unless I've got good quality people. But because we're not for profit, we can't always pay the highest salary, so we have to have something else to attract people to our company," she says.
Not-for-profits have one big advantage over their commercial peers when it comes to recruiting: they offer meaningful work.
“People want to work for us because of our mission to help disadvantaged people. But we have to be able to develop and retain them, which can be tricky within the constraints of our cost structure," O'Donnell says.
Campbell Page offers staff the opportunity to work flexibly, which is one way to help attract good talent. “It's not always about the money, we also try to provide a career path," she says.
Ross Mackay, CFO at Jobs Australia, says being successful as a not-for-profit CFO is all about leveraging the business's competitive advantage.
“Many not-for-profits are competing against large, multinational, for-profit organisations, but they often need to be more cost conscious than their for-profit peers," he says.
“At the same time, they are competing for funding, competing for the best staff and making decisions about investing in the best technology to deliver a competitive advantage."
This rests on understanding which areas of the organisation might benefit from automation, but O'Donnell says that understanding the customer base also drives technology decisions.
“You have to understand where your customers come from, the customer journey for your organisation and why they come to your company," she explains.
Another emerging issue can be bringing the board of directors along the journey of the changing face of their business.
“Strategic planning can be three to five years out, but it's not something you do and put in a drawer and pull out in three years' time and see if you made it or not. It's important to continually refer back to the strategy to make sure you're on track. If you're not, you might need to adjust the strategy, especially given how quickly things change with new technologies," says O'Donnell.
Funding is a perennial issue for not-for-profits, especially those that rely heavily on government funding.
“You're at the whim of what's happening in politics currently and that can change virtually overnight. You need to be flexible and able to move quickly to mitigate costs and be able to change quickly," O'Donnell says.
Mackay agrees this is a huge issue for the sector. “CFOs need to have rolling forecast in their head so they can respond when there is a change in the conditions attached to their funding, or if a new player enters the market. Managing that uncertainty falls to the CFO."
Doing less with less
With budgetary constraints top of mind for most not-for-profit CFOs, the focus is often on doing less with less, rather than doing more with less. This means having a philosophy of taking on fewer tasks but doing them well.
“I have a to-do list that's six feet long. But the thing is, you can't do it all if you want to do it properly. So, we need to do less but do it better," says O'Donnell.
This comes down to developing systems in the business to prioritise what matters most. It's also very important to develop a strong team who are committed to the business and pursuing its mission.
Overall, the message for not-for-profit finance chiefs is to continue to stay across all parts of the business and focus on educating the team and the board about the changing landscape of the charity sector.
“It's important to hire people who have a willingness to take on different tasks or to change tasks," says O'Donnell. “We have rotated people through the business to give them more experience across the organisation. In the finance area, I train people across all the different functions, which benefits the company and the individual," she adds.
Says Mackay: “The CFO is the link between operations, the CEO and the board. So, you need to communicate across all those levels. Aside from that, ongoing and accurate forecasting is essential to ensure the business is abreast of upcoming changes and challenges and to mitigate any risks associated with those changes."
- Make technology decisions that deliver a competitive advantage.
- Be prepared for a change in the funding mix.
- Develop a culture where people want to contribute to the business.