Does your nonprofit need a CFO or a controller? That's what we’ll explore today. Well, the short answer is you need both a CFO and a controller. 

What Are the Similarities Between a CFO and a Controller? 

     How are these two positions similar? Well, first of all, they're both working towards the same goal, which is financially funding your nonprofit. Depending on the size of the organization, you may currently only have one of these positions, but both sets of skills are necessary. 

What’s the Difference Between a CFO and a Controller? 

The Nonprofit CFO

Executive Level

      A CFO is an executive level individual who is likely engaged in conversations with the Executive Director and the board on a very regular basis. They have insightful evaluations of the current financial realities. For the CFO, numbers talk and tell a story. They see those stories and they can articulate them easily by simply looking at summary financial statements.

Forward Looking

     The next quality that sets a CFO apart is that they are a very forward-looking and strategic team member. They're always helpful in looking for ways to achieve the vision and the goal of the nonprofit. 

The Nonprofit Controller

     So, what is the nonprofit controller’s role? (In some organizations, this may be called the accountant or even the bookkeeper.) While the titles my be interchangeable, this role typically includes similar attributes and responsibilities. 

Mid Level

     This is a mid-level leader, and may even be a lower level team member that moves up. 

Hands-On

     This role is hands- on. They're managing the transactions, policies and procedures. They're also responsible for the timing and accuracy of the financial reports. They are producing the financial reports that summarize the results.

      As you can see, both of these roles are very important and both are absolutely necessary. But there are normally three phases I see nonprofits go through that relate to these two positions.

3 Phases of Nonprofit Financial Leadership

Phase 1: Getting By

     I call this first phase the “get by” stage. This stage is very common in a newer startup nonprofit. You have someone like an office manager who starts to manage the bookkeeping, In that season you may be outsourcing to someone who helps with summarizing transactions and preparing financial reports. This phase is where many nonprofits start, and how they get by in the beginning. 

Phase 2: When Leadership Needs Outpace the Budget

     The second phase is when you get to a place where you realize, “Okay, we need staff who are focused on finances.” At this place, you’ve got someone who can do the financial reports, but they don't have the skills to do that strategic level, forward looking, vision work. So this is the point where nonprofits wonder, “How do we get a team member like that?” The challenge, of course, is always the budget, right? How do you attract someone with those skills to work inside of your nonprofit? The budget and the needs don't always align. 

Phase 3: When Hiring a CFO Becomes a Budget Reality

     The third phase is when you’ve grown large enough to attract, pay for, and to then hire your own CFO. So how do you know if you need a CFO on your team? Well, three things I think you need to consider. First is 

•  Complexity- When you have multiple funding sources, programs, and income streams, you're starting to get to a place where you’ll need someone who's thinking very strategically 
•  Seasons of Crisis or Growth- You’ve got investment management decisions, debt management, and staff strategies. Things are moving, and you need someone who can help you make those decisions and make them timely. 
•  Size- There’s no hard and fast rule when it comes to organization size, but I will say this: Typically when I see a nonprofit whose annual operating budget has reached  $1,000,000, they are needing these unique CFO skills at the table. 

     The complexity is real and the opportunities are endless. You don't want to miss them. Also, at this point in an organization’s growth, key stakeholders and board members start to want someone who they know is inside the organization, working for the organization. 

     Now, as I mentioned earlier, sometimes you're at a place where hiring that person may not be possible either from your budget standpoint, or from an inability to attract them due to the challenges or the sheer amount of the workload.

     So, this is exactly what I do! I serve in what's called a “Fractional CFO” role to multiple nonprofits. They hire me when they're in need of CFO skills but are not yet to the point of needing to hire their own. So, they get a CFO with all the skills and multiple decades of experience, but they only pay a fraction of what it would cost them to staff that, and they have access to me on a fractional basis. 

     That's a little bit about what I do! If you're interested in learning more about my Fractional CFO services, you can reach out through my website, www.terisaclark.com. I'd love to talk further with you about that. Or, if you’d like to get help with a specific question or situation you’re facing in your nonprofit, you can book a strategic consult with me here.