BY Annie Krapek, Program Coordinator at Nonprofits Assistance Fund
In 2014, the Foundation began working with staff at the Nonprofits Assistance Fund on the development of a program that would help those individuals in nonprofits who have responsibility for managing their organization’s finances but may not have a background in financial management. The final program design was a 6-month cohort with leaders from 9 nonprofits. The following blog reflects on key learnings from that experience. The blog is reprinted here with the permission of Nonprofits Assistance Fund.
One of Nonprofits Assistance Fund’s goals is to build financial leadership in the nonprofit sector, and we know that financial leaders come from many backgrounds. When I first joined a board of directors three years ago, I probably couldn’t have told you the name of an income statement or balance sheet, much less the difference between the two. During my first year on the board, my goal during the finance portion of the meeting was to not say anything stupid. But with time and practice, I’ve started to grow into my role as an accidental financial leader. Many of you may relate to this – you started working in nonprofits without any formal finance training because of a love of the organization’s mission and somehow ended up digging in financial spreadsheets and managing budgets along the way.
Over the past six months, Nonprofits Assistance Fund convened a Financial Leadership Cohort designed to empower a small group of accidental financial leaders to feel confident in this role. By building their skills and confidence, we hoped to chip away at the fear of finance in the nonprofit sector and to develop financial leaders who would share their skills at their organizations and with their peers. Participants ranged from executive directors to office managers from across fields of service including the arts, youth services and human services. Through six half-day sessions combined with one-on-one meetings with mentor/ coaches, participants went to work building their own financial leadership. During the final session, cohort members shared reflections on their financial leadership and thoughts on how to build financial leadership in the nonprofit sector. Here are a few of their key takeaways:
- Financial management does not equal financial leadership. While strong financial management skills like collecting financial data, producing financial reports, and solving near-term financial issues are important skills, financial leadership goes well beyond this. When asked to describe financial leadership, words like unemotional or strict can come to mind. However, financial leadership requires many of the same skills we admire in all great leaders, including the ability to collaborate, to innovate, to implement and to surround oneself with a talented team. By using these skills, individuals can step into their role as financial leaders and guide their organization to long-term sustainability.
- Financial leadership can feel lonely. It can feel intimidating to admit you don’t understand a financial concept, and talking openly about your organization’s financial weaknesses can feel risky. Countless nonprofit leaders have lost sleep worrying about finances during a time of hardship. The truth is that financial leadership can be a lonely journey. By providing resources and creating spaces for nonprofit leaders to openly share their financial situations and safely ask questions we can create a community of financial leaders throughout the sector.
- Make your finances tell your story. Most of us work in nonprofits because of our passion for building a strong community and a better world. Yet, nonprofit leaders can end up spending more time defending their budgets than focusing on what impact that budget will have. Our finances are more than just numbers, they are a reflection of the impact we have in the community. A cohort participant noted that when we shift the conversation from “Did we spend too much?” to “What impact did this spending have?” we are moving to a more aspirational form of financial leadership. Your finances are a way to tell the story of the great work your organization is doing and engage your stakeholders.
- Communication is key. Financial leadership is about much more than understanding the numbers. Whether you need your board to understand your business model or to show your staff the importance of staying on budget, strong communication skills are an essential element to moving from financial management to financial leadership. As one participant said, “There is a lot more to [financial leadership] than business models and accounting. It’s about how I take this into a board meeting. What’s my script? How do I present it?” Learning how to communicate about finance is an essential element of financial leadership.
- Claim your power. At NAF, we believe that mission and money are intimately connected and that the financial decisions we make everyday shape our organization’s impact. In a world full of competing priorities, it can be tempting to leave the finances to your accountant or treasurer. But by opting out of financial discussions and decisions, you are missing the opportunity to shape your organization’s work. As a cohort member powerfully said, “Finance is where the power is and we need to claim our power.”
These insights from the cohort participants are an affirmation of NAF’s belief that everyone can be a financial leader. Like all kinds of leadership, financial leadership is a highly personal journey that takes time and practice. We’re proud of the great work that this year’s cohort participants have done and are looking forward to seeing where this journey takes them and their organizations. This journey was possible because of the support of the Jay and Rose Phillips Family Foundation of Minnesota.
Annie Krapek coordinates the preparation and delivery of Nonprofit Assistance Fund’s training workshops and assists staff in developing financial management resources.