Organizational and financial strategy alignment is a must
By Sidni Shorter In Podcasts Posted November 13, 2013 0 Comments

Organizational and financial strategy alignment is a must

“Few things inspire terror in the hearts of administrators and board members as much as an unanticipated shortfall near the end of the fiscal year. Yet deficits happen—and often to groups that do not deserve them,” asserts author and consultant Richard Linzer.

This quotation couldn’t be more accurate, yet I am still amazed by the common practice of organizations continually holding strategy sessions without their financial staff members or outsourced team in the room. Many of the CEOs we work with at Execute Now! are very mission-focused and rightly so. But in numerous cases, their focus is at the expense of and in isolation of financial strategy.

There are several reasons why these organizational conversations around strategy take place without a financial lens.

  • Board and staff members typically find financial reports difficult to read.
  • Accurately creating financial reports requires a great deal of time and expertise and they often fail to support strategic decision making.
  • It’s easier to strategize about mission fulfillment without the constraints of financials.

In my last blog, I underscored the importance of donors proactively collaborating with agencies to focus on asking the right questions about impact and return on investment rather than about how little the organizations spend on overhead. The important message here is collaboration. Together, donors and nonprofits have the opportunity to completely eliminate the flawed question about administrative costs. The same message applies here with organizational and financial strategy leaders. Collaboration or alignment between the CEO and CFO or financial staff person is paramount.

What does this alignment look like? Financial staff members or outsourced team:

  • are included in regular strategy meetings so their reporting can anticipate and reflect the organizational direction.
  • play an active role in forecasting based on prospective programming and fundraising campaigns.
  • produce accurate reporting that incorporates footnotes to further enhance comprehension.
  • attend board meetings as requested or actively participate in the board’s financial committee to boost the board of directors’ understanding of the reports.

Over the past year, we’ve given much attention to alternative forms of fundraising, earned revenue and innovative ways of accruing working capital. Nonprofits must embrace the important task of evaluating these opportunities with their financial staff members or outsourced finance and accounting team in the room. By Erica McGeachy Crenshaw, President/CEO of Execute Now!

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