Armanino Blog

May You Lead in Interesting Times

by Paul O Grady
July 13, 2017

We are, indeed, living in interesting times. Today’s shifting political climate, changing and complex regulations, decreased funding and increased need for services have created a pervasive anxiety in many nonprofit sectors. As the ones tasked with managing risk, nonprofit finance leaders are ideally positioned to lead their organizations back to more stable ground.

In her keynote presentation at the Armanino Nonprofit Symposium 2017, nonprofit advisor and staffing expert Laura Gassner Otting said that finance leaders can view these interesting times as a curse or an opportunity. She quoted Robert Kennedy’s 1966 speech at the University of Cape Town:

Like it or not we live in interesting times. They are times of danger and uncertainty; but they are also more open to the creative energy of men than any other time in history. And everyone here will ultimately be judged—will ultimately judge himself— on the effort he has contributed to building a new world society and the extent to which his ideals and goals have shaped that effort.

In today’s environment of change and insecurity, nonprofit finance professionals are looked to for leadership from within their organizations and from the communities they serve. These stakeholders are seeking guidance in several areas:

  • Tracking outcomes. More and more donors expect nonprofits to measure the social return on their investment (SROI), even though few nonprofits have the resources to track such outcomes. You can’t just look at how many students graduated, for example, you also need to look at whether graduates got jobs, and how that helped the economy.
  • Maintaining cash flow. Reductions and significant delays in funding are leading to erratic cash flow and difficulty covering overhead.
  • Managing compliance. The FASB’s complete overhaul of nonprofit financial reporting, combined with new rules regarding revenue recognition and lease accounting, are overwhelming nonprofit finance teams.

3 Ways to Answer the Call
Nonprofit finance leaders can help their organizations navigate these choppy waters by doing three things, Otting said.

#1 - Take back the conversation. Nonprofit donors often confuse doing good with feeling good, so sometimes you need to change the conversation. After the shooting at Sandy Hook Elementary, for example, well-meaning souls sent 65,000 teddy bears to Newtown, Connecticut. Some of those teddy bears found their way into the hands of small children, but most ended up in an incinerator.

“We have to teach [donors] that feeling good and doing good are not always the same thing,” said Otting. “When they find themselves patting themselves on the back for doing something, when it’s not necessarily the right thing, that has to fall to us to change the conversation about what we’re asking them to do.”

Sometimes changing the conversation means changing who is involved in the conversation. The CFO or finance director might need to fight for a seat at the table. “Finance is going to have a bigger and bigger role in helping to make smart decisions about programs and HR and marketing, and that’s because we have to change the metrics,” said Otting.

Nonprofits need to start tracking the kinds of metrics that can inform smart, data-driven decisions.  Instead of wondering how many beds a homeless shelter is filling overnight, what does that mean for changing the face of long-term homelessness, for example?

“How can we take those metrics and build them into every piece of our organization?” said Otting. “The opportunity now is to inform the conversation, so that we’re talking to our funders, to our decision makers, to our policy makers about what actually matters inside the organization.”

#2 - Attract and retain top talent. A revolving door of talent is exceptionally costly to an organization, so nonprofit leaders need to understand what attracts recruits and what keeps them there. Otting said that people join and stay with a nonprofit because of eight primary motivating factors (see sidebar).

Smaller nonprofits might believe that they can’t compete for top talent, but every organization can tout some combination of those eight motivators. Otting recommended that leaders have a conversation with staff about why they are there. Ask what brought them to the organization to begin with, and what's tethering them to it.

#3 - Embrace your “fundamental state of leadership.” Nonprofit organizations and the causes they serve demand that their leaders operate at their best. Otting said that to get to a place where you’re worrying about compliance and cash flow, yet still bringing your best all the time, you need to think back to a moment when you were firing on all cylinders.

Maybe you were bringing in a huge donor, or doing a giant presentation to the board. Maybe you were helping a loved one through a really difficult situation. Who you were at that moment—the skills and energy you used—is your fundamental state of leadership. Otting said that nonprofit leaders should think about their own fundamental state of leadership, write it down, and paste it to their computer screen or mirror, or anywhere else that they’ll see it regularly.

“And then I want you to lean into it,” said Otting. “If you are that person at 10:00 on a Tuesday, then you know how to be that person when all hell breaks loose, when things are not going so well. It becomes your muscle memory. It becomes who you are as a leader.”

8 Motivating Factors for Nonprofit Recruits

  1. Mission
  2. Leadership of organization
  3. Prestige
  4. New skills acquisition
  5. Challenge and trajectory of organization
  6. Scope and scale of impact
  7. Personal reasons
  8. Money

July 13, 2017

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