3 Roles of the Nonprofit CFO that Lead to Mission Success

The role of the nonprofit CFO has undergone a profound evolution. No longer confined to the more traditional, narrow lane of strictly managing an organization’s revenue and expense sheets, today’s nonprofit CFOs are increasingly asked to design a multifaceted approach that encompasses strategic vision, collaboration, and innovation. This transformation is not only a response to external pressures but also a proactive adaptation to the evolving demands of the sector, where financial stewardship is intricately linked with organizational strategy and social impact.

Understanding the Role and Mission of the Nonprofit CFO

Given the integral connection between financial and organizational success, you need to look beyond the normal job description of the role to understand it on a more personal basis. Responsibilities such as running the audit, preparing the fiscal year budget, paying bills, telling finance committees what the numbers mean, and identifying what’s at risk are all important. But there must also be a different way to understand the nonprofit CFO role, by asking what questions plague the minds, hearts, and souls of today’s nonprofit CFOs. These would include:

  • What legacy does the nonprofit CFO want to create?
  • What gives them intellectual satisfaction and makes them successful decision-makers?
  • What makes them proud to come to work and be part of a team?

Embedded within these philosophical ponderings are three pivotal roles of the modern nonprofit CFO: the Builder, the Strategic Decision-Maker, and the Cultural Trendsetter. These roles serve as guiding principles, shaping the CFO’s approach to financial leadership and influencing the organization’s trajectory towards financial sustainability and mission success. However, as the nonprofit landscape continues to evolve, these roles must also adapt to meet the changing needs and challenges faced by organizations today.

As highlighted by industry trends, nonprofits must stay abreast of technological advancements to remain competitive and efficient. This necessitates a shift towards a more strategic and visionary CFO—one who not only interprets financial data but also anticipates future trends and leverages innovative technologies to drive organizational success. The Builder CFO resonates deeply with this vision, as they are tasked not only with constructing sustainable financial structures but also with embracing technological innovation to enhance organizational efficiency and effectiveness.

The Strategic Decision-Maker CFO plays a crucial role in navigating the complexities of the nonprofit sector. Charged with making informed financial decisions that align with the organization’s mission and strategic objectives, this role requires a keen understanding of both internal dynamics and external factors impacting the organization. Strategic Decision-Maker CFOs leverage financial data and insights to drive strategic planning, resource allocation, and risk management efforts, ensuring the organization remains agile and responsive to emerging opportunities and challenges.

The imperative for transparency and accountability has never been greater in the nonprofit sector. Donors and stakeholders alike demand greater visibility into how their contributions are utilized, requiring a culture of openness and transparency within nonprofit organizations. In this context, the Cultural Trendsetter CFO plays a vital role in fostering an environment of transparency and trust, where finance, development, and programmatic teams work collaboratively towards shared mission goals.

In essence, the evolution of the nonprofit CFO reflects a broader shift in the sector towards embracing specialized expertise and strategic leadership. As we navigate the complexities of nonprofit finance, it becomes increasingly apparent that the role of the CFO is not just about managing finances but about pioneering a new frontier of leadership—one where financial sustainability converges harmoniously with organizational impact.

The Builder CFO: Leaving a Lasting Legacy

As a CFO, the Builder role allows you to determine the identifiable building blocks of organization and mission success, which often outlives your tenure in the organization. Ultimately, the Builder’s goal is to enable the organization to control its mission destiny—at least over those matters that it can control.

The Builder CFO takes pride in many strategic, analytical, transactional, and systems contributions, but three areas are most relevant to mission success. The Builder constructs a:

  • Sustainable financial structure that meets mission needs, goals, and aspirations over time
  • Sustainable and dynamic business model that finds the necessary revenues and efficiently and effectively manages expenditures over the fiscal years
  • Sustainable financial function, forward-looking technological approach, and people-driven organizational infrastructure that will support and contribute to organizational success

Tip: Build up and prioritize diverse revenue streams with multiple funding sources to cover core and innovative program costs. Work collaboratively and creatively to pursue new sources of earned revenues—government funders, foundations, events, major donors, board of directors, and individual donors.

Make the compelling case that investments in development, staffing, leadership, technology, and unrestricted net asset revenue streams will help achieve mission goals. Proactive, strategic planning and informed cash management maximize momentum and tell forward-thinking financial stories.

The Strategic Decision-Maker CFO: Paving the Way for Mission Success

To ensure the fiscal year financial and mission stories go as planned, the CFO cannot be a passive bystander. They must be an active participant and Strategic Decision-Maker who pushes the organization along the right path to financial and mission success.

This role is a test of the CFO’s professional judgment, logic, analytical capacity, and ability to solve problems. There are four areas where the CFO’s role as Strategic Decision-Maker are of existential importance:

  • Meeting short-term and long-term financial goals
  • Managing cash effectively
  • Investing in the mission in a timely manner
  • Increasing development capacity

Tip: Commit to making timely investments that lead to positive outcomes. Decisions should not be predicated by cash on hand. Identify cash reserves, fixed assets, and designated investments to keep the business office ahead of the Finance Committee curve.

The Cultural Trendsetter CFO: Building Bridges Across the Nonprofit Organization

As a Cultural Trendsetter, the CFO creates an environment in which finance and program are aligned, integrated, and transparent with one another so that both are working to achieve mission success. This role enables the CFO to feel part of a team as a leader, partner, and participant in the important work of the nonprofit.

The Cultural Trendsetter:

  • Establishes and nurtures mutually beneficial relationships
  • Emphasizes transparency and clarity of bottom-line impact to build trusting relationships
  • Effectively communicates finance and mission goals

An enjoyable partnership between the executive director, board of directors, and CFO is one of trust, where the CFO, given their seat at the leadership table, offers the solutions and drive necessary to achieve collaborative, mutually understood mission goals. As a trusted strategic advisor to the CEO, department directors, and the finance committee, the Cultural Trendsetter CFO fosters partnerships which inexorably push the organization forward.

Tip: Create mutually beneficial relationships across the organization. Structure relationships that are mutually beneficial for all parties and will ultimately benefit the entire organization in the long term. One of the questions that you should always ask when you’re interacting with your program and development teams is, “How can finance help your department grow and maximize impact?”

The Whole Nonprofit CFO is Greater Than the Sum of its Parts

The successful fulfillment of these roles—the Builder, Strategist, and Cultural Trendsetter—hinges on understanding the nonprofit’s needs, aspirations, and impact. In other words, the goals and strategic motivation of the finance function should reflect what the organization wants to do, when it wants to do it, and how they should do it to have the greatest impact.

Ultimately, it is incumbent on the nonprofit CFO and on the entire financial function to make mission success happen. It’s a lot of pressure, but a nonprofit CFO who is motivated to meet the challenge and opportunity will play a critical role in securing a legacy for the organization.

Want to learn more about the skills and experience CFOs need to help guide your nonprofit in today’s evolving landscape? Check out the Guide to Hiring a Modern CFO for Your Nonprofit.This article was originally posted in April 2018 and was updated in May 2024 with the help of Brian Buckley.