Effective leaders realize they can’t delegate finances to an accountant and expect to have the organization stay financially healthy.
A highlight of 2018 – and one of the things I’m most looking forward to in 2019 – is Propel Nonprofits’ Financial Leadership Cohort. This training program is built on the belief that anyone can be a financial leader. The cohort is structured for a dozen nonprofit executive directors or financial directors to meet once a month for six months to discuss everything from goal setting, budgeting, cash flow, using financial trend analyses for strategic planning, roles and responsibilities, and other topics related to financial management.
As a new-to-nonprofit-finance person myself, I learned alongside the 2018 cohort. At our gatherings there were tears, a-ha moments, laughter, and spreadsheets (of course). Friendships were formed, confidence was built, and insights were shared. Over the course of six months, I observed there are four key traits that make an effective financial leader:
- An embracing of financial health and management as critical to organizational health. Effective leaders realize they can’t delegate finances to an accountant and expect to have the organization stay financially healthy. They know finance is not separate from strategic planning and mission success, but an integral part of both. Good leaders understand that nonprofit finance both can and should be learned, and then used to shape goals and set strategies.
- An openness to learning and to admitting what they don’t know. The nonprofit sector is filled with “accidental CFOs.” In the 2018 Minnesota Nonprofit CFO survey, people in finance roles have degrees in accounting, sure, but also biology, English, and sociology. We shouldn’t expect those new to positions of leadership or management to know everything about nonprofit finance, but we should give them the tools (and time) to learn. The tone for vulnerability was set in our latest cohort when one newer ED admitted that their current business model wasn’t working and they weren’t sure how to fix it. That opened the door for others to admit fears and knowledge gaps so everyone could move forward together.
- A willingness to change. It’s easy to avoid things we fear and to fear things we don’t understand. As a result, rather than bettering our understanding, we keep doing things the same way – using the same budgeting process, showing our boards the same financial reports, carrying over the same budget projections. However, wise financial leaders understand that given the many changes confronting the sector, they need to be able to change how they operate.
- An understanding that financial leadership should be shared. One of my favorite parts about our Financial Leadership Cohort is that we invite another staff member and a board member to join for a couple sessions. A lot of nonprofit leaders are isolated in their roles, and when it comes to finances, even more so. However, because financial leaders understand how central financial health is to solid decision making and planning, they also understand that this information needs to be owned by the organization, not by one person. From the board to the executive director to the program staff, everyone has a role to play in budgeting, forecasting, and analyzing for long-term financial health. They also have those one or two confidants outside their organization who can lend perspective and examples and reduce the sense of isolation.
The cumulative impact of more leaders embracing the transformative power of financial knowledge and strategy is hard to measure. However, we know that this leadership cohort is one of the best tools we have at Propel in creating a nonprofit sector that is well led, well connected, well resourced, and ultimately, better able to use financial knowledge to power nonprofit missions.
To learn more about the Financial Leadership Cohort and to apply for the 2019 cohort, visit propelnonprofits.org/financial-leadership.