Seven Tips for the New Finance Lead of a Nonprofit

The role of a finance lead in a nonprofit organization is critical. Many start out working part time at first or, due to the shortage of knowledgeable training programs, this is their first experience with a nonprofit financial systems. If you are new to the nonprofit world, here are some tips to help you get started.

1. Understand the organization's mission and objectives.

It is crucial for a finance director to understand the nonprofit organization's mission and objectives. This knowledge will help you make informed decisions about budgeting, financial planning, and resource allocation. Read prior financial statements and 990s. Ask to follow program staff for a day to see operations. Review board training packets and previous financial reporting.

2. Establish clear financial policies and procedures.

Create a set of clear financial policies and procedures that all staff members understand and follow. These policies should include guidelines for budgeting, cash management, financial reporting, internal controls, accounting, and audit processes. If your organization doesn’t have an accounting manual, travel and reimbursement policy, investment and/or endowment spend policy yet, make a point to create those soon.

3. Monitor financial performance regularly.

The organization's financial performance needs your constant attention. Analyze variances to identify potential issues, anduse financial ratios and other performance metrics to track progress and make adjustments as needed. Dashboards on key metrics tied to strategic planning are helpful tools, and provide great visuals for those less financially savvy.

4. Build strong relationships with stakeholders.

You’re the financial lead, but it’s all hands on deck when it comes to nonprofits. Work to establish a solid rapport with board members, donors, and other stakeholders to ensure that they understand the organization's financial position and are confident in its financial management practices.

5. Use technology to streamline financial processes.

Consider how technology can help you streamline financial processes. The right tools can save time and even reduce the risk of errors in budgeting, reporting, and payment processing. Automate daily tasks and create checks and balances to free up your time for higher-level analytics. Create deadline checklists for filings and grant reporting deadlines. Secure data and create record-retention policies—technology is your friend.

6. Stay up to date on the rules.

Keep yourself current on financial regulations and compliance requirements that affect nonprofit organizations. The landscape changes more often than many people think. It’s your job to ensure that the organization is in compliance with all relevant laws and regulations.

7. Focus on transparency.

Be transparent about the organization's financial position and communicate financial information clearly and regularly to stakeholders. This can help build trust and credibility with donors and other stakeholders.