The Value of a Financial Expert

I was spoiled. Seriously, spoiled rotten. And I didn’t even know it.

The first 15 years of my career I worked in local government. Which meant I had a finance department at my disposal. I didn’t have to worry about any of the following:

• Detailed budgets created and approved – long before the fiscal year began.
• Forecasted budgets – three years out.
• Robust purchasing policies, and staff to help ensure all rules were followed.
• Monthly financial reports.
• Annual audits, to include single audits (when required).
• And so much more…

Now, that doesn’t mean my life as a grant manager was a breeze and no money mistakes were ever made. I still had to monitor spending closely, reverse charges erroneously charged to a grant account, hound program staff to spend grant funds and spend them correctly, and participate in said audits. But I had no idea the difference such support made until I started working with smaller nonprofits with limited staff and no official “finance” person on the payroll.

And I get it. When you are a lean machine, you can’t have all the bells and whistles. But I’d argue that having a finance guru in your corner makes the world of difference for every organization. We talked about just that on the latest episode of the Fundraising HayDay Podcast HERE.

We were joined by Stephen Newland, a fractional CFO and the founder of MoneyPath. Stephen has built a career helping nonprofits understand their financial health and future decisions based on their budget. And he’s quick to point out that smaller nonprofits don’t necessarily need a full-time finance employee to see the value of someone focused on their finances. Instead, having a part-time contractor can make a world of difference, particularly when it comes to budgeting and forecasting.

“There’s a stress that a lot of nonprofit leaders carry…but a lot of time it’s financial stress,” said Stephen. “When you have a little bit of clarity and a basic forecast and budget in place you don’t have to stress about the money. You can see a little bit into the future; you can see where things are headed. And it helps inform decisions.”

And we all get it. So many budgets, financial reports, and even audits are created to ensure an agency is in compliance with a whole host of laws and rules. But just checking off the “review” of your monthly financials at a board meeting means nothing if your board and staff do not understand what they are seeing.

I totally get it. If you don’t come from a financial background, budgets can be totally overwhelming. Financial reports, even more so. I still have to ask questions about the “accounting” lingo so many financial experts use. I understand revenue and expenses, but when you start throwing around terms like deferred revenue, balance sheets, and fixed assets, my eyes start to glaze over.

All the more reason to have a financial expert on your team, especially one who has the ability to turn these reports into useful documents that everyone understands. Better yet, how about a document that you can use to help chart the future course of your organization. Because it’s hard to decide if you can expand a program, hire a new employee, or buy that needed piece of equipment if you don’t understand the roadmap of your finances.

Take a listen to the episode. I sure learned a lot. Hope you do as well.