4 Ways to Unlock the Potential of Your Nonprofit Finance Team to Become World Class

A good finance team will make sure bills are paid on time, reports are accurate, and the Board of Directors has access to the current financial statements. A world-class finance team will do all that and be a key part of your strategic planning, helping you identify opportunities and risks based on past performance and future scenario planning.

A good finance team will help you stay where you are. A world-class finance department will help you evolve.

If you want to build—and keep—a world-class nonprofit finance team, you need to set a culture of transparency and learning that extends from the top.

In a conversation with Angela Coaxum, a partner with Your Part-Time Controller, LLC, she shared four ways nonprofit leadership can support a strong finance team.

1. Value the Level of Experience Needed

Just because a person loves talking with people doesn’t make them a good fundraiser. Similarly, just because someone is good with numbers doesn’t make them a nonprofit CFO. Your best-in-class finance team requires different levels of skills and experience depending on their role.

Bookkeepers are many organizations’ first finance hire. Bookkeepers are instrumental in keeping the finance wheels turning by making sure bills are paid and deposits are tracked. But a bookkeeper is not a CFO. If you need someone to help with transactions, hire a bookkeeper. If you need someone to help with forecasting, strategy, and financial strategy, hire a CFO.

How do you know the skill level of someone applying for your finance team, and if they are task-based or strategic? Encourage applicants to complete a basic accounting test during the hiring process. This can also help you see past the experience on their resume and make decisions based on what the person knows. You’ll also want to talk with references to understand a potential hire’s strengths, and because this person will have access to your organization’s finances, be sure to perform a background check on every financial hire.

You want your team members to grow as your organization grows. With the right guidance and training, someone who joined your team as a staff accountant may develop into a strong finance leader.

Building a world-class finance team can be a slow process. If you don’t have the time to find and manage a strong finance team, outsource. Working with an outsourced finance team can show you what to expect when you have your in-house finance team in place.

2. Set the Example

The ethical environment of your organization cascades down from leadership. If the Executive Director or Board Chair doesn’t follow the internal controls for expense reimbursement, it makes it harder for your team to enforce those controls for the rest of the organization.

As a leader, act in the way that you’d want your team members to act when it comes to finances. Make sure transactions are appropriately documented and you are above reproach. Help enforce established internal controls and policies, actively and by setting a strong example.

You should help set the tone on overall risk management. Show your team how you approach new opportunities with a balance of healthy skepticism and realistic enthusiasm. Similarly, create an environment that welcomes respectful questions about the overall strategy of the organization. That includes the finance department. And help the finance team to expect and get in front of those questions.

3. Provide Nonprofit Financial Management Training for Your Board

Your board should include one or two people with financial expertise, even if it’s not within the nonprofit arena. It’s helpful to have people who understand general accounting and finance terms and best practices.

But like many aspects of your organization, nonprofit finance has some marked differences from for-profit finance. Because of that, you’ll need to provide a level-set for everyone on your board. Regardless of the level of financial expertise represented among its members, you should coordinate nonprofit financial management training for your board.

When a new member joins the board, provide an orientation to familiarize them with the reports they will see regularly and show them how to access financial information through your fund accounting system. Providing view-only access to your fund accounting dashboards allows board members to acclimate to nonprofit financials. Also help them understand their fiduciary duty as a member of your Board.

For current members, incorporate training into a bi-annual or annual board meeting. Use this time to review fiduciary duties, do a deep dive into reports and how to read them, and provide an overview of the finance roles within the organization. This training can be led by the Executive Director with help from the finance team or by the CFO with active support and input from the Executive Director.

4. Know—and Don’t Delegate—Your Compliance Responsibilities

Having a strong finance department will not absolve you of your compliance and fiduciary responsibilities, but your strong finance team will make those responsibilities easier to manage.

Follow the appropriate separation of duties so you don’t require your direct reports to approve your expenses. Even if you’ve followed all the proper policies and internal controls, it puts your direct reports in an awkward position. Expense approvals and reimbursements should always work up.

Be a partner in compliance by understanding the reporting, audit, registration and remittance requirements that apply to your organization, such as sales taxes, charitable solicitation registration, and reports to donors. A strong finance and program team will likely surface those details, but as a leader, it is your responsibility to stay informed and updated on any changes and to make sure your team is prepared for any updates that need to be made to your policies.

Support Your Team with the Right Technology

Without a strong fund accounting system, even a world-class finance team can get lost in a sea of spreadsheets and silos. Give your team the tools to create accurate budget scenarios and actionable reports that show you potential risks and exciting opportunities. To see how a built-for-you fund accounting system can set your finance team up for success, check out the on-demand product tour for Blackbaud Financial Edge NXT®