Do you have the right finance team to help your organization soar?

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A lot of times when I tell my prospective clients (or even family members for that matter!) that I’m a CFO, I get a blank stare.

Chief Financial Officer, I clarify.

Still a blank stare.

Today I am breaking down all of the financial professionals in your nonprofit organization and what they do for you. I’ll show you how a CFO is the missing piece to your arsenal of numbers people.

Bookkeeper. Your bookkeeper manages the daily transactions in your organization. She enters your bills, invoices your donors, reconciles your bank accounts, and makes sure the true numbers are accurate and booked to the correct categories. The bookkeeper often comes with lots of experience in a particular software like Quickbooks Online.

Accountant. This is your tax expert; they understand the ins and outs of the 990, the nonprofit tax return, and they are the ones who conduct your annual audit.

Financial advisor. If your organization has invested funds, your nonprofit likely has a financial advisor who provides insight on how and where to invest your money, based on your internal investment policy (which is reviewed and approved by the board). Your financial advisor should be a fiduciary.

But what about when you have a question on your nonprofit’s financials? Like, can we afford to make a big investment into a new program area next year? How do we reach our $1M annual revenue goal? How do I know which programs are most profitable? Where am we spending too much money?

Chief Financial Officer. Your CFO is your nonprofit finance expert. We review your numbers and draw insights and trends from those numbers, giving you more information to make better decisions for your organization. Our one and only interest is providing more insight into YOUR NONPROFIT. We focus on budgeting, forecasting, cash flow and more. Without a CFO, you have virtually no way to make your numbers work for you strategically.

Your CFO focuses on how to make your nonprofit strong and sustainable based on your numbers.

Think about your own organization: do you have this critical missing puzzle piece in place?

Want more info on what a CFO is and does? Read our FAQs here>>> then hop on a call with our team to see if we’re a good fit to support your nonprofit!

Do you know who your “Dream Clients” are? I’m sure you do. What about your “Dream Collaborators”? As a consultant, I know who my dream clients are (ambitious entrepreneurs and growing nonprofits!), but it’s important for you to know if we’re a dream collaboration!

How can you know if we’re a good match? Think about these things before you hire any freelancer or contractor:

What does their track record look like?

Any consultant you are considering should not only be able to pitch well, but provide examples of work they have done on similar issues or with companies similar to yours in size.

(As an example, I’ve worked with for-profits and nonprofits ranging from $100k to $20M in size, and have dealt with financial and investment issues across the board.)

What is their cost structure?

Don’t look ONLY at who offers you the cheapest rate. Experienced consultants or freelancers may bill higher, but because they resolve your issue more quickly you’ll ultimately pay less. A consultant with less experience may bill at a lower rate, but may avoid providing an end date or try to draw the work out indefinitely which will cost you far more in the long run.

(I started working with nonprofits a decade ago, and although most of my clients work with me long-term, they always know what to expect from me and when.)

How do they communicate?

Effective consultants are expert communicators. They will really listen to your concerns and provide an unbiased observation about your issues and the various possible solutions. If your consultant doesn’t communicate well, it will impede your ability to integrate them into your team AND your ability to understand what it is that they are doing for you.

(My preferred methods of communication are occasional check-ins via phone or video call and email, which I almost always respond to within a day. A few clients even text me!)

Do they explore the challenges you are facing and establish Key Performance Indicators?

It is tempting to assume you know how to solve a problem once you know what the problem is. With that said, consultants you approach with your issue should try to find the best solution or solutions after reviewing the underlying causes of the problem. Together, once a solution or series of solutions are determined, you and the consultant should decide on the metric(s) of success.

(I cannot stress enough how important it is for everyone to be on the same page – it’s part of why communication is essential! It’s also necessary for consultants to be creative AND effective at resolving your problems.)

Are they transparent with you the way you are with them?

To get the most out of any consultant or freelancer relationship you need to be able to share the good and the bad of your situation. If you are struggling to understand your finances or your accounting team needs help, the consultant needs to know. That requires honesty on your part. In that same way, they need to be open and honest about their experience and capabilities before they begin any work for you. Trust is a two-way street.

(My clients must be willing to help me understand their business environment before I begin work for them. I start every engagement with a call to dig deep into your business so I know where to focus my work. We get so much more out of our time together if I understand any issues up front!)

So what do you think? Could we be a perfect, dream collaboration?

Set up a call on my calendar or check out my FAQs!

One of the best parts of my job is the fact that every single company or organization I work with is in some stage of growth. Expanding programs, increasing revenue, diversifying scope of services – it all means growth and change. I’ve never been one to sit still for very long so thinking about what’s next excites me.

As organizations grow, we realize we can’t do it all alone and need to bring on help. In fact, I am at that point in my own business – anyone looking for bookkeeping work? I am an awesome manager! Back on topic…

How do you know if your business is ready for an employee on your payroll? Or should you just stick with using contractors?

Let’s first go to the IRS for their guidelines. In short, it all comes down to control.

• Does the company control what and how the worker does her job? You have an EMPLOYEE.
• Or does the worker control her work process, schedule, and equipment? Does she have multiple clients? This is a CONTRACTOR.

It’s important to ask yourself these questions upfront, as the IRS imposes strict penalties for classifying an employee as a contractor (which many small businesses do because it’s a LOT cheaper to hire contractors!).

Unfortunately, even the IRS admits that there’s no magic formula or hard and fast rule about hiring employees versus contractors, so here are a few more considerations:

EMPLOYEES:

• Much more permanent. This can mean increased loyalty to the company, flexibility to take on more than just their job description, and improved workflow due to less turnover. There is the understanding that the assignment is long term and gives an opportunity to build a solid relationship between employer and employee.
• Much more expensive. In addition to salary, employers are responsible for paying workers’ comp, unemployment taxes, Social Security, Medicare, and health insurance (and potentially other benefits!).

CONTRACTORS:

• Increased flexibility. You aren’t tied to a monthly payroll and can hire contractors only as you need them. If the business has a slow month, you don’t have to incur any costs for the contractors or deal with the messy business of letting someone go.
• Decreased cost. The business owner is not responsible for the contractors’ taxes and benefits, computer equipment, professional development, etc.
• Decreased control. You don’t have control over the contractor’s schedule, work flow, or pay rates. You may experience more turnover as contractors find other clients or increase their rates.

And finally, what do your FINANCIALS tell you about your ability to hire an employee versus a contractor?

• Profit margin. Is your profit margin above or below 50%? If it’s consistently below 50% then you might not be ready for the financial responsibility of a permanent employee.
• Cash reserve. How many months’ operating cash do you have in the bank? If it’s less than three, you might want to reconsider an employee since payroll will need to be run regularly.
• Revenue. How consistent are your revenue and cash receipts? Do you have months that hover dangerously close to zero? Your business and revenue streams should be well-established and consistent before taking on the responsibility of an employee on payroll.

I hope that clarifies the question on whether to hire an employee or a contractor. Either way, bringing on additional help is a great indicator that your business is growing and thriving!

We all know Jim Collins and Good to Great, right? If so, then we know how important bringing the right people into the organization is. If not, go here to catch up then meet me back here!

I recently found this article, How to Hire Like a Superboss, on Harvard Business Review, one of my favorite lunchtime reads. It talks about bosses hiring and finding employees in non-traditional ways; in other words, outside of HR, no resumes or cover letters in sight.

I like it.

Who a person is, how they will perform, what types of ideas they create, is really hard to effectively capture on paper for the interviewer. It’s also hard to appropriately convey when you’re trapped in an uncomfortable heels in a stuffy room full of strangers grilling you on your grad school coursework. I’ve been in interviews where the interviewers went in a circle around the table, recited a pre-rehearsed question, listened to my answer, then the next person asked their pre-rehearsed question. I wanted to get up and scream, Stop! Can’t we just talk? This isn’t me! Let me tell you about WHO I AM! I left that interview feeling like they didn’t get to know me one bit and like I had no clue about the culture of the organization, other than robotic.

I think we need a balance though. We need something between simply liking someone and hiring them then figuring out later what they can do (um, let’s first define the business need for hiring them, please!) and a terribly formal, rote interview process where we learn virtually nothing about the candidate except canned answers to boring questions.

Here are some tips to help you get the right people on the bus:

Treat the interview like a conversation.

Create a list of questions to guide you but let the conversation go where it goes. Don’t obsess with taking notes on every single answer; look your candidates in the eye, ask probing follow-up questions and try to learn who they are. Their grad school transcript will not be indicative of their success in the organization; let’s assume they’ve made it this far because on paper they are absolutely qualified. Can you imagine communicating with them daily? Working on a high-impact project together? Watching them interact with your board or other stakeholders? How do you feel about all this?

Ask the right questions.

Speaking of questions, don’t ask stupid ones (or illegal ones!). If you were stuck in a jar, what kind of fruit would you want in there with you? is ridiculous and tells you nothing about the person. Don’t try to be funny or clever. Here are some great pointers on asking the right questions. I especially love the forward-thinking questions: outline your plan for this job or forecast the evolution of this job.

Be mindful of formality but don’t be uptight.

The nonprofit field can vary wildly in terms of formality. I’ve seen everything from the Monday through Friday suit and tie crowd to leggings and hoodies all be acceptable. As an interviewer, I expect job candidates to put effort into their appearance and show me you care about the job. I do not expect, however, ultimate formality. I’m not deducting mental points if you don’t have a leather folio (I actually despite those things!) or perfectly coordinated belt, shoes and bag. Be yourself and dress like you care, that’s all!

Invite other departments/groups to participate.

When it comes to hiring, more minds can be better than just one. Notice I said “can be better” – please do not have a search committee of ten people. That will be chaos. It’s important to get other departments’ perspectives on how this person would fit into the organization since it’s unlikely she will work alone 100% of the time. How does this finance person come across to non-finance people? Does his communication come across as effective or arrogant?

How does your organization handle the recruiting process? Need help creating a process? Or maybe just filling a role or two? Call me; I can help!

More resources:

• How to Assess a Job Candidate Who Doesn’t Fit the Mold – another great article from the Harvard Business Review
• Why the best hire may not have the perfect resume – an excellent TED talk.