Balancing the Mission Checkbook

Financial Management is a Teachable Skill

Kate Barr July 10, 2017
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One of our foundational beliefs at NAF is that the nonprofit sector is chock full of potential for financial savvy.

For too long, financial professionals (CPAs, bankers, and even many nonprofit board members) have behaved as if nonprofit finance is so complicated and advanced that most people working at nonprofits can’t learn it. These professionals often display a disappointing lack of confidence in the ability of nonprofit leaders and staff members to attain basic financial literacy. Their condescension is misplaced—I can personally attest that nonprofit leaders are capable not only of basic financial literacy, but also of sophisticated mastery.

Our years of experience working with leaders at nonprofits—whether at social service providers, schools, theaters, or advocacy organizations—have shown us time and time again that the people who staff nonprofits are incredibly smart and savvy. But the very nature of nonprofit work means that generating profit is generally not among their driving motivations—so the skill of financial management may have simply been under-stressed in their experience and education.

In short, if there is a gap in financial savvy at these organizations, it can be attributed to lack of focus, practice, and guidance—not a lack of ability.

Remember those old-school correspondence courses that taught people how to draw? They took total novices through the basics, first by having them trace over existing pictures, then gradually moving them toward creating their own, while weaving in lessons on perspective, shape, and color.

Most of the people who went through that course probably didn’t wind up on the walls of any museums or galleries, but that’s not the point. They got to experience the satisfaction of learning and practicing a skill. They didn’t simply declare themselves firmly in the category of people who “can’t draw.” They rightfully recognized they just hadn’t yet learned how.

It’s a similar scenario with many nonprofit leaders and staff and financial management. There is no category of people who can’t master sound fiscal practices. There are just people who have yet to learn how. It’s not some innate ability given only to gods and withheld from mortals. It’s just a skill. A learnable skill.

We see our role at NAF as being translators, interpreters, and coaches. Through training workshops, one-to-one meetings, and practical and accessible resources, we build the skill of financial literacy and management in nonprofit leaders and administrators.

Time and time again, we’ve seen our coaching and consultation lead not only to the development of solid financial skills in an organization, but also to the unleashing of true rockstar nonprofit management talent (such as with Juxtaposition Arts’ CEO DeAnna Cummings, who was recently selected as a fellow at Washington, D.C.’s prestigious DeVos Institute of Arts Management).

We’re constantly exploring new ways to engage nonprofit administrators by inviting them to take the first step in building their financial management skills. In the last year we’ve added new options by making animated videos on a series of core financial concepts.

This video unpacks the idea of Cost Allocation—a foundational concept for running a nonprofit and making it sustainable. Knowing what it truly costs to deliver their work enables nonprofits to make decisions about fundraising, pricing, budgeting, and balancing competing priorities.

This video dispels a few big myths about nonprofit finance, particularly the idea that overhead is bad or should be minimized at all costs.

Our aim, as always, is to give nonprofits the tools to gain insight and make decisions that will make their organizations stronger. Because we have total and complete faith in their ability to do so.
 

Kate Barr believes that every nonprofit financial question relates to strategy, structure and mission impact. She enjoys interpreting financial information to find stories numbers can tell. She loves writing, teaching, and talking with interesting people.