Training Non-Profit Managers in Finance

 

 

What is the biggest myth when comparing the differences between non-profit and for-profit organizations? Non-profits don't make money, right?

This could not be more false.

Non-profit organizations and managers are constantly on the look to increase value, increase revenues, maximize potentials for revenue, and decrease costs the same way that a manager in a corporation must look for ways to maximize company, shareholder and owner profits.

There are differences of course; For-profit companies may use a little different approach to financials and a different tax code to some degree, and accounting managers in the opposing sectors may use a different set of core indicators when defining success, however believe it or not many non-profit leaders have to hone the highest level of financial acumen in order to achieve any rate of sustained success just like their counterparts.

So here is a question to you board members and CEO's of NFP's: Do you expect others in your organization to manage all the finances without your direct input or knowledge?

No?

Then why would you ask your regional and mid level management staff to manage their program without input into their financials, or knowledge of how to analyze them? After all, you should be empowering them to be the "CEO's" of their team or program, right?

Basic kills in financial management start in the critical areas of cash and asset management, bookkeeping, and basic financial analysis. This is where you should help your up and coming leaders learn how to manage their programs actual revenue and expenses.

Let me be clear....I know that you know, that for your organization to thrive in the long term, your financial controls must insure the highest level of integrity in the bookkeeping and business management process. But if you are truly looking at the long term, then you as a leader and manager should be encouraging and giving the opportunity to teach your up and comers as quickly as possible how to generate financial statements and analyze and interpret those statements to really understand the financial conditions of the business they are being asked to run.

Financial analysis can show one "reality" of the situation of a business or organization, and can be an eye opener to a new not for profit supervisor, and seen as such, good financial management is one of the most important proactive practices in management.

Far too many employees that work in the non-profit sector that find themselves in a new position of management due to a promotion, also find themselves in a precarious situation of not understanding how to run a business or analyze a financial statement.

So do yourself a favor; get your front line and middle management staff enrolled in a bookkeeping or business finance class as soon as you can



 

References:

Bookkeeping Basics: What Every Nonprofit Bookkeeper Needs to Know. Authenticity Coaching Circles and Authenticity Training Circles are services marks of Authenticity Consulting, LLC, of Minneapolis, Minnesota, Free Management Library is a service mark of Authenticity Consulting, LLC, in Minneapolis, Minnesota, Copyright, 2003, Authenticity Consulting, LLC.

Field Guide to Nonprofit Program, Design, Marketing, and Evaluation. Authenticity Coaching Circles and Authenticity Training Circles are services marks of Authenticity Consulting, LLC, of Minneapolis, Minnesota, Free Management Library is a service mark of Authenticity Consulting, LLC, in Minneapolis, Minnesota, Copyright, 2000, Authenticity Consulting, LLC.

Embrace Your Incompetence!

I have written before, and I will again, that the word incompetent should never be used to describe an entire person. It should never be used as an insult and we should never shy away from understanding it or using it in the proper context.

Yes, it has been misused by many around the world to label people we don't like, mistrust, or we are disappointed in. It has been misused to forge a viewpoint that a person has low wits, low intelligence, few beneficial talents, and often worthless.

Those that use it to define a whole person, or whole skill set, are "incompetent" it their utilization of the word.

So how should we use it?

Before judging ones competence lets take a step back and first define what we are trying to communicate in the first place. Each and every one of us is full of strengths and weaknesses. Teams are built around strengths in order to mitigate weaknesses. Battles were won by resourcefully using terrain, men, equipment, and strategy to overcome barriers and limitations. Profits are gained by limiting expenses and enhancing revenues often by utilizing all resources efficiently as possible. Even in individual sports, coaches are needed, and teams are built behind the scene to enhance results. Being fully equipped does not always mean we ourselves carry all the skills necessary to accomplish an end goal.

Can anyone of us claim to be competent in all things? Can even championship teams claim no faults? Very few have had unbeaten records, and even fewer didn’t need a little luck also.

The Florida Marlins professional baseball team was disbanded the very next year after winning the World Series. Why in the world would they do that you may ask? After all they were the best in the world. Why not make another run? Simple answer...they ran that team at a deficit. They over spent. That’s right, that didn't have the money to do it again. Genius or incompetence? Well, that truly depends on your perspective.

And that is my point in all this. Embracing your specific incompetence should be a rallying cry to your own self-motivation to either improve yourself, so you become competent in the skill you want to perform, or build a team with members who have strengths you don't. It should be as simple as that.

One fundamental necessity of a proven leader is to know their limitations, and find members of a team that can complement the others on your team in areas of deficit so that the team can operate optimally. Thus it is essential that we understand what our individual weaknesses are, and where our teams might be lacking, then embrace those incompetencies in order to either improve our skill deficit, or find others that have the skill or talent and the know-how and willingness to use it.