When did your NFP CEO become the CFO?

In most cases, the added responsibility wasn’t intentional. Nobody changed the position description, and there wasn’t a meeting where the board handed you responsibility for financial management. It simply happened.

As CEO, you have ultimate responsibility for the organisation’s performance, and financial oversight is a part of the job. But there is an important difference between being responsible for financial outcomes and having the specialist skills and experience of a CFO.

A CFO is a senior financial professional. They bring formal accounting or finance qualifications, substantial commercial experience and a detailed understanding of financial management, governance, risk, compliance and reporting. Within a charity or NFP, they also need to understand the complexities of funding agreements, restricted and unrestricted funds, program costs and the financial obligations that come with managing other people’s money.

A CFO’s job isn’t only to tell you how much money the organisation has today. A quick look at the bank statement can tell you that. Their role is to help leadership understand what the organisation’s financial position could look like in six months, 12 months or several years and support the CEO in steering the organisation over that period in line with its strategy and goals.

Your organisation has received a new funding agreement. It might provide enough funding to employ another three people and expand an important program. A CFO looks beyond the headline funding amount. They model the actual cost of delivering the program, including salaries, superannuation, administration, technology, insurance and management overheads. They assess the impact on cash flow, how the program might interact with existing projects, and consider what happens when the funding period ends.

The same applies when a manager is over budget. Rather than simply identifying the variance, a CFO investigates why it occurred, whether it represents a short-term issue or an emerging trend, and what it could mean for the organisation’s year-end position.

All CEOs working in the charity and NFP sectors report to a board. A CFO must be able to articulate complex financial information into meaningful insights for directors. Questions such as why have employment costs increased? How much unrestricted cash is genuinely available? Which programs are financially sustainable? What happens if an important funding agreement isn’t renewed? require more than knowing how to read a profit and loss statement.

These and many other questions require forecasting, scenario modelling, cash flow management, budgeting, risk assessment and the ability to connect financial decisions with the organisation’s strategy.

While a capable CEO can develop a strong understanding of their organisation’s finances, in fact, they should; it doesn’t mean they should be expected to perform the role of a qualified and experienced financial executive. A CEO that also performs the role of a CFO does so by sacrificing time that should have been spent on directing the NFP’s mission, building its public profile and managing the executive team.

As mentioned at the beginning of this article, it rarely happens by design. The most common reason why a CEO finds themselves acting as CFO in addition to their other duties is that an organisation has grown faster than its finance function.

When you had 10 employees, the CEO could stay closely involved in almost every financial decision. There were fewer programs, fewer salaries and fewer people spending money. At 20, 30 or 50 employees, that becomes increasingly difficult. Even with growth, the underlying financial structure may remain largely unchanged.

This is the most common issue we see. The organisation’s focus on service delivery has created growth. Often, that growth comes quickly as the gap it is filling expands. Resources are stretched, and the mission parameters shift. Financial governance is often an afterthought and only comes up when questions arise. While it is a good problem to have, it is still an issue that must be addressed.

As your organisation grows, the complexities of the CEO role expand. Strategic direction, ensuring people and culture are developing, reporting, and meeting governance requirements, managing stakeholder and funding relationships, and overseeing service delivery and KPIs can quickly fill up a day, a week, or a month.

As CEO, you’re already staring at a library of spreadsheets, and the financial functions add an additional, time-consuming layer of responsibility.

A CFO’s primary function is to help leadership understand what the numbers mean and what they should do next. It ensures leaders have accurate and accessible information to answer questions. Can we afford to grow? What happens if funding changes? Which programs are financially sustainable? How much cash should we hold? Where are the risks? Are our goals achievable? When your organisation is experiencing growth, engaging a CFO is both a strategic and a necessary decision.

At Accounting For Good, we know that for many charities and NFPs, employing a full-time CFO isn’t necessary or financially viable, and that’s where our outsourced CFO model suits many organisations across the sector.

Our outsourced CFOs are highly experienced within the sector. We work alongside CEOs, leadership teams, and boards, providing the financial insight needed to make informed, strategically aligned decisions.

Best of all, we are only a phone call away, without occupying valuable office space or incurring the cost of a senior accounting specialist. When the time comes, reach out for a detailed proposal on how we can help you, because a CEO shouldn’t always have to be the CFO too.