Finding the Right CFO for Your Nonprofit

One of the more challenging roles for a nonprofit to fill is their Chief Financial Officer. While smaller organizations might utilize board members or outsource some of their financial services, larger nonprofits usually seek an experienced search firm to help guide them through the hiring process to identify the right individual to serve in this critical full-time position. At The Moran Company, we partner with nonprofits to recruit talented finance professionals for key roles across the nation.

It’s important to find someone who not only possesses the right financial skills and acumen, but who can also act as strategic leader and advisor. The CFO needs to be able to successfully navigate a variety of responsibilities including accounting oversight, restricted funds management, complex regulatory requirements, and the annual budget and audit processes. Further, the right CFO will be able to engage mission-driven stakeholders through clear and timely explanations of the organization’s financial position as well as how monies are being spent to fulfill established goals and objectives. Finally, because nonprofits face unique challenges related to funding, the CFO needs to be able to quickly react to changing circumstances.

For-profit CFO searches usually prioritize a singular goal: maximizing shareholder value. But in the nonprofit world, the ‘bottom-line’ is a multi-dimensional puzzle. As a result, to find the right leader, you must look beyond the basics in your search.

Here are some key considerations for recruiting the right CFO for your nonprofit:

• Passion vs. Pedigree – While a CPA or MBA is valuable, it isn’t enough. A candidate who doesn’t fully understand or believe in the ‘why’ of the organization will eventually fail. The search must vet for mission alignment as rigorously as it does for financial acumen. In addition to considering candidates who already have strong nonprofit backgrounds, Boards should look for ‘bridge’ candidates, or those with corporate rigor who have a history of volunteerism or nonprofit board service. It is not unreasonable to think that an experienced for-profit CFO could transition into a nonprofit CFO role.
• Fund Stewardship vs. Profitability – While the for-profit world focuses on bottom line and shareholder value, the nonprofit focuses on net assets, fund accounting, and cash flow management. The CFO must manage unrestricted and restricted funds (those funds designated by donors for specific programs or projects) and ensure legal compliance. Further, because nonprofits are largely funded by grants and donations, cash flow management becomes a critical activity to ensure stability and support of ongoing operations.
• Regulatory and Grant Complexity and Compliance – Similarly, nonprofits face the unique rigors of Uniform Guidance (Single Audits), 990 filings, and specific grant reporting. Mismanaging a federal grant can lead to ‘claw backs’ that could significantly impact a nonprofits ability to operate. And technical expertise in grant lifecycle management and indirect cost recovery is critical for organizations with significant government funding or large restricted grants.
• Wearing Multiple Hats – In many mid-sized and even some large nonprofits, the CFO isn’t just the finance lead; they are often called upon to fill other roles. A nonprofit CFO frequently oversees other departments such as HR, IT, Legal, and Facilities. And sometimes the CFO is called upon to also act as the COO when the organization is not large enough to support both roles. In this way, the ideal candidate needs a generalist spirit as well as the ability to juggle multiple responsibilities. For example, a nonprofit CFO may be called upon to not only lead the annual audit review, but handle property lease negotiations, overhaul staff benefits, conduct contract reviews and negotiations, and implement cross department IT solutions.
• Translating Finance for Non-Financial Stakeholders – Nonprofit leaders and board members are often composed of passionate people who may not have a background in high-level finance. So first and foremost, the CFO must be an educator, able to quickly evaluate the level of knowledge and then explain financial principles and concepts to create shared understanding. Further, they need to explain in a way that does not cause panic, but rather promotes transparency, informs, and points the way if a strategic pivot is needed. The nonprofit CFO is a storyteller who can bridge the gap between the financials and the missions, bringing solutions and options to the table.
• Managing the Double-Bottom Line – A nonprofit CFO must balance fiscal sustainability with social impact. Sometimes the ‘profitable’ choice is the wrong choice for the mission. Boards are looking for a candidate who can develop multiple solutions to a problem, showing how different financial decisions will impact the actual people the organization serves. The CFO works in concert with the CEO and Board to maximize impact while ensuring the financial sustainability of the nonprofit.

It’s not easy to find a candidate to meet all these needs, especially in today’s environment of changing federal funding and challenging economic times which impact donor giving. The Moran Company has successfully placed CFOs at nonprofit organizations with annual budgets under $1 million as well as large organizations with annual budgets exceeding $250 million. Let us help you tailor a search to find your next organization’s next Chief Financial Officer. Simply contact us today for a free 30-minute consultation.

By Jamie Berry, MBA
Senior Search Consultant
The Moran Company
“We Find Great Nonprofit Executives”

About the Author: Jamie Berry is an executive leadership and finance professional with over 30 years of experience in the nonprofit and for-profit sectors. She previously served as the CEO of a national museum, where she led a multi-million-dollar renovation, and has held roles as a Chief Finance and Compliance Officer and adjunct professor. Jamie is a Senior Search Consultant for The Moran Company. Read more about our team.