Upgrade Your Nonprofit’s Financial Conversations

modern financial analysisImagine you’re a board member whose nonprofit hires a financial management consulting team. The consultants report to you that 100% of your reserves have been used to cover an operating deficit. Now imagine that you’re shocked by this revelation because you haven’t been getting timely financial information. What would you do?

This board made significant leadership changes and started having strategic discussions about the organization’s current and future financial health. They kept having those conversations even after the immediate crisis was over. The results? Not only have they have fully replaced their reserves, they’ve increased them, added staff and more than doubled the number of people they serve.

Another organization made the commitment to build a reserve fund equal to 6 months of expenses. They aren’t quite there, but have steadily increased their reserves. They keep this long-term goal in front of them when they review financials, approve the budget and engage in strategic planning.

We applaud the determination, resilience and creativity of nonprofit organizations like these. Despite the often difficult and uncertain financial landscape, some organizations are thriving. According to the Nonprofit Finance Fund’s 2013 State of the Sector survey of 5,983 NPOs:

• 40% ended 2012 with an operating surplus
• 20% were able to add to their reserves
• 41% increased the number of people served
• 49% added or expanded programs or services

You may think these organizations had a financial superhero on their side, or a stroke of good luck. For some that may be true. However, the survey results mirror our observations consulting with nonprofit organizations. We’ve seen some organizations falter and others wildly succeed.

The difference? The staff and boards of organizations that thrive consistently engage in meaningful financial conversations. They take action based on those conversations. Even if they find themselves with a little luck on their side, they find ways to capitalize on that good fortune.

Financial oversight and planning can be one of the most challenging responsibilities of nonprofit leadership. While reliable data is essential, your interpretation of that data and resulting actions are even more important. When reviewing financial information, it’s easy to get lost in the details or rush through the process to get to more exciting topics. But once you make a long-term commitment to strategically upgrade the quality of your financial discussions, you improve your planning and decision making, ultimately strengthening your organization’s long-term financial health.

Making the upgrade requires:

• Qualified staff who provide accurate, timely and meaningful financial information
• Engaged and prepared board members who understand their governance role
• Curiosity, healthy skepticism and a willingness to ask tough questions
• A shared commitment to accountability and action
• Collaborative, supportive relationships between staff and board
• Time dedicated to meaningful financial conversations

Does your organization have what it takes? Are you willing to strategically upgrade your organization’s financial conversations to strengthen future financial health?

To explore this topic more deeply, join us for 5 Questions to Ask for a Financially Healthier Organization at the Nonprofit Leadership of Tampa Bay on August 22nd. It is an interactive session that will lead you through five key financial questions and the most effective approach for generating meaningful conversation around these questions. To learn more about the program, visit http://www.nonprofitleadershipcenter.com/events/event_details.asp?id=309061&group=
To learn more about the Nonprofit Finance Fund 2013 State of the Sector Survey, visit http://survey.nonprofitfinancefund.org/2013.

R-E-S-P-E-C-T: Can Your Candidates Get a Little?

I heard a discouraging story this week. After a colleague’s initial interview, he was told he was the perfect fit for the position and would be scheduled for an interview with the executive team. After weeks went by with no communication, he learned through the grapevine that the position had been filled.

Another candidate received and accepted an offer letter, turned in her resignation and set a start date, only to be told when she showed up for her first day of work that she couldn’t begin because there was a glitch in her background check (nothing criminal, just a minor date discrepancy with a prior employer). NO communication in the month between “You’re Hired!” and “Oops! Maybe Not!”

Isolated incidents? Sadly, no. A quick perusal of job seeker forums reveals that lack of communication is a hot button for many candidates.

Why does it matter? Your communication and behavior throughout the process seal the impression your candidates, who could be future volunteers, donors or ambassadors, have of you and your organization. And a negative impression can go far beyond the candidate with job seeker forums and websites like www.glassdoor.com, where applicants review and rate their interview experiences.

In our own work hiring CFOs for nonprofits, we are always surprised by the positive responses we get from candidates to our frequent communications, even when we tell them they DIDN’T get the job and why. They appreciate the fact that we keep them informed so they aren’t playing the waiting game.

Here are 3 tips for making a positive impression during your CFO Search:

1. Communicate up front with qualified candidates about your search process and the estimated time for filling the position. For example, our screening process often includes in-depth screening interviews with us, followed by a written assessment, background screening and reference checks. If this all goes well, the candidate interviews with the leadership team, who makes the final hiring decision. Candidates know this process up front and the expected timing for a hiring decision.

2. If there is a major change in your hiring process or timing, notify active candidates as quickly as you can. Things happen. Priorities change. You may need to postpone hiring for a position or decide not to fill a position at all. Let candidates know.

3. If someone has interviewed for a position, let them know if they didn’t get the job as soon as you know. It’s just common courtesy. We know you can’t personally contact everyone who applies for a position, but if you thought enough of a candidate to bring them in for an interview, call or email and thank them for their time and interest.

Treat your candidates with simple courtesy and respect. Yes, it takes a little time, but the positive impression you make will last far longer.