The experts in
not for profit

Does your not for profit need a CFO?

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A not for profit organisation relies on quality financial management in order to pursue its purpose and achieve its objectives within the community. It’s not uncommon for NFPs to employ a bookkeeper to perform the basic tasks and to produce simple financial reports… some even juggle the accounting duties between members of the management team.

While this might be a cost-effective option in the short term… as it grows, the organisation’s financial health and integrity require greater focus.

The financial responsibilities can quickly become highly complicated and difficult for a bookkeeper or junior accountant to manage. This is when you might start to think – does your not for profit need a chief financial officer (CFO)?

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What is a CFO?

A CFO is part of the senior management team and they are fundamentally responsible for the financial management of an organisation. They provide financial insights and support the governance of the NFP.

They should be able to drive business improvement and maximise opportunities, while also identifying areas of weakness and recommending corrective actions. Their strategic ability is usually drawn from extensive experience.

Calculator on financial statement and balance sheeet

Core responsibilities

Working closely with the CEO to achieve strategic goals, a CFO is often required to provide recommendations on:

  • Expenditure and budgets
  • Staffing levels
  • Expanding or reducing products and services
  • Merging with or acquiring other organisations
  • Restructuring or pivoting business operations
  • Investments, risk management and sourcing capital.

Other responsibilities include financial reporting, preparing budgets and forecasts, tax planning and delivering efficiencies within the organisation. Plus, a CFO should also be involved with policy management and overall compliance.

Depending on the size of the non profit, a CFO might also be involved in human resources and possibly even IT or other areas, but the larger the organisation the tighter their focus on accounting and finance issues.

Close-up of two businesspeople calculating financial statement at desk

How do you decide?

It can be difficult to decide whether you need a CFO, but some of the influencing factors will be: the size of your NFP, the complexity of your revenue sources, the number of programs you currently have and the challenges faced with your funding.

Plus, you also need to examine your growth strategy… if you anticipate significant growth in the coming years, then it could be time to assess your needs.

Essentially, a static organisation is less likely to need a CFO than an NFP with continually evolving programs and long-term plans that rely on increased investment, financing and major spending.

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Consider outsourcing

Before you place the recruitment ad, there is one more thing you need to consider… and that is outsourcing.

Employing a CFO will undoubtedly require paying a six figure salary, and we know that for many not for profits that can be a roadblock. But that doesn’t mean you need to miss out on the expertise and strategic guidance. An option that many NFPs are embracing is employing the services of an outsourced CFO.

This type of service provides you with the critical support you need to make sure your organisation is well-managed, while also meeting your budgetary requirements.

Here at Accounting For Good, our CFO service complements your team and provides you with a depth of experience gained over many years in hundreds of non profit organisations.

We can help you to forecast, plan and report effectively, and our CA and CPA qualified staff have the qualifications and expertise to satisfy your Board and regulators. Contact us to find out more about our NFP accounting expert services. Read more not for profit accounting articles.

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