6 Reasons Finance Belongs in Your Nonprofit Board Room

Finance and accounting have moved from the back room to the board room. That’s the message from this week’s guest blogger, finance pro Paul Konigstein. While it should be obvious to most nonprofit board members how important finance is to any nonprofit, Paul makes the case below for those still in doubt.  Thanks Paul!

6 Reasons Finance Belongs in Your Nonprofit Board Room

The comic strip Dilbert portrays accountants as trolls toiling in a dark cave deep in the bowels of an office building. Similarly, a friend jokes that the best way to manage the controller is to keep him in his cubicle and periodically throw hamburgers over the partition.

Both these humorous images are a variation on the idea that accounting is a back room function. A recent survey from Robert Half Finance and Accounting suggests that this is no longer true. Finance and accounting have moved from the back room to the board room.

The survey asked more than 2,600 US finance and accounting professionals: “What part of working in the accounting and finance profession do you enjoy the most?” 58% chose either solving problems or making strategic recommendations, responsibilities more suited for the board room than the back room. Only 22% preferred working with numbers, a task what would keep one isolated in a cubicle.

“Accountants are key success drivers for their businesses, and they contribute more than many people presume,” says Paul McDonald, senior executive director for Robert Half. “Accounting and finance teams are responsible for accurate financial reporting, but they also help to ensure their organizations remain in regulatory compliance, identify growth opportunities and provide strategic guidance from the department level to the executive ranks.”

In addition to compliance, growth, and strategy, nonprofit finance and accounting professionals are at the forefront of insuring their organization’s sustainability in at least six different ways:

1. Analyzing whether grants and contracts cover their fair share of fixed costs
2. Negotiating with donors for greater indirect cost reimbursements
3. Projecting cash flow months and years into the future to make sure nonprofits can pay their bills
4. Leading senior management teams in setting priorities and making the tough trade offs necessary to balance budgets
5. Creating and obtaining consensus on operational policies which maximize dollars to mission
6. Partnering with program executives to make sure projects stay on budget

Nonprofits which do not have finance and accounting managers engaged in these six aspects of sustainability will inevitably encounter financial difficulty in the form of persistent deficits or lack of cash or eventually both. Show me a nonprofit which is struggling financially, and I will show you a financial manager who is shut out of the board room, either for lack of strategic skill or lack of senior management understanding of the vital role nonprofit finance and accounting professionals play in ensuring organizational sustainability.

 

Paul Konigstein is a Senior Consultant at Accounting Management Solutions, helping nonprofits improve their finance, accounting, and governance. Paul is equally comfortable as an interim Chief Financial Officer or as an adviser for a specific project. Before joining AMS, Paul spent over twenty years as a nonprofit financial executive with arts and culture, education, and international development organizations including Helen Keller International, the New York Hall of Science, and the Metropolitan Opera. Outside the office, Paul is the former Board Treasurer for The Animation Project, which transforms the lives of at risk youth using digital art technology as a therapeutic medium and a workforce development tool. BoardAssist brought Paul and The Animation Project together.