Whether your not-for-profit organization needs a chief financial officer (CFO) depends on many factors, such as the size of your organization, the complexity and types of revenue sources, and the number of programs you have. Static organizations are less likely to need a CFO than those with evolving programs and long-term plans that rely on investment growth, financing and major capital expenditures. So if your organization is expanding quickly, it might be time to consider hiring a financial executive.
Accounting and Finance Oversight
Generally, not-for-profit CFOs (also known as directors of finance) are senior-level executives charged with oversight of accounting and finances. They work closely with executive directors, finance committees and treasurers and serve as business partners to program heads. Chief financial officers report to the executive director or board of directors on their organization’s finances. They analyze investments and capital, develop budgets and devise financial strategies.
The role and responsibilities vary significantly based on the organization’s size, as well as the complexity of its revenue sources. In smaller not-for-profits, CFOs often have wide responsibilities — possibly for accounting, human resources, facilities, legal affairs, administration and IT. In larger not-for-profits, CFOs usually have a narrower focus. They train their attention on accounting and finance issues, including risk management, investments and financial reporting.
Qualifications for the Job
At a minimum, you want a CFO with in-depth knowledge of the finance, accounting and tax rules particular to not-for-profit. Someone who has worked only in the for-profit sector may find the differences difficult to navigate. Not-for-profit CFOs also need a familiarity with funding sources and grant management. If your organization expends $750,000 or more of federal assistance, your CFO will need to oversee an independent financial audit (also known as a “single audit”), as well as possible state-mandated audits.
The ideal candidate for the job should have a certified public accountant (CPA) designation and, optimally, an MBA. In addition, the position requires strong communication skills, strategic thinking, financial reporting expertise and the creativity to deal with resource restraints.
Finally, you’d probably like the CFO to have a genuine passion for your mission — nothing motivates not-for-profit employees like a belief in the cause.
Finding CFO Candidates
Your not-for-profit’s ability to pursue its mission depends on its financial health and fiscal integrity. If your budget is swelling and your executives are struggling to manage financial tasks, it may be time to hire a chief financial officer. Contact us if you need suggestions for finding candidates.
For more information about how PKF Texas serves not-for-profit organizations, visit www.pkftexas.com/NotForProfit.