CFOs at nonprofit organizations generally make less money, work more hours, and have fewer resources than their counterparts who work in the profit-making sector. But they're not complaining. Many finance chiefs who have made the leap to tax-exempt companies say they are involved in an avocation, where traditional career metrics—such as salary increases and bonuses—don't tell the whole story.
"Working at a nonprofit is a lifestyle. It's not a job or a career," says Michael L. Campbell, executive director and chief financial officer of the Hartford Children's Theatre Inc. Indeed, if the drawbacks don't make you skittish, and the idea of being caretaker to a mission, rather than profit margins, appeals to you, then you may be in luck. The non-profit job market is expanding.
Over the next decade, nonprofit organizations will need to attract 640,000 new "senior leaders," according to advisory and executive search firm Bridgestar. That total is equal to about 2.4 times the number of executives currently working in the non-profit sector today, says the group.
The proliferation of job openings is not a sudden swell, however, but rather a trend that has been developing steadily over the past decade. Between 1994 and 2004, the number of U.S.-based nonprofit organizations increased by 27 percent, while the number of public charities jumped by 65 percent, according to the 2007 Nonprofit Almanac. Furthermore, all three major financial metrics used to measure the success of nonprofits—revenues, expenses and assets—grew by at least 56 percent, during that time period.
Several factors have pushed up the number of non-profits over the last decade, says a recent report issued by The Conference Board. They include an increase in donations as baby boomers age, a greater emphasis on social entrepreneurship and corporate social responsibility—in general—and the government's increased reliance on nonprofits to deliver public services. But don't be too quick to take a job at the museum you visited as a kid. Making the transition from a profit-making corporation to a non-profit organization is not easy, say those who already have made the trek. Indeed, if you don't have a passion for the mission, nonprofits don't want you.
Of CFOs and Gutters
Before making the switch to a nonprofit, it's best to take stock of what kind of impact you can make on the organization, and what—if any— decision-making authority you'll have as finance chief. One newly minted nonprofit CFO only lasted four months at a $30 million (in revenue) organization because he realized early on that he wasn't going to fit with the institution's financial style, says Karen DeMay, regional director of talent and recruiting for Bridgestar. (The CFO was not a Bridgestar client.) "It’s really important to know how financially savvy the staff is," says DeMay.
That is, many nonprofit employees don't have formal business training, and that means CFOs may spend a good deal of time explaining the tenets of corporate finance, and working toward mutual agreement, more often than they did while in the private sector. And while cash is king at any organization, CFOs at nonprofits devote more of their time monitoring the cash flow statement and juggling working capital than other duties. "The most difficult thing that I've dealt with in a nonprofit is the cash flow," says Jeff Zotter, director of finance and administration at Sequoia Community Initiatives in New Jersey, an organization that runs transitional homeless shelters for the mentally ill.
The main reason for the cash consternation is that resources are tight. So aside from keeping a keen eye on the cash flow statements, the CFO—as well as other executives—are called on to wear multiple hats. CFOs generally forgo the trappings of the corporate position—like a company car and driver and stock options—and operate in a more egalitarian environment. In other words, egos have to be checked at the door. "I've been known to clean the gutters at a facility before [an] event ... [and] I get our company vehicle serviced," says Campbell. "I’ll do that, and I'll come back and work out a large, multi-year funding program with a corporate sponsor."
You'll also be required to learn new office skills, the ones you left to deputies and assistants in the profit-making sector. "You may be getting a lesson on Outlook from an administrative assistant," warns Kathleen Yazbak, a managing director at Bridgestar. More important, barking at subordinates won't cut it at a nonprofit. "If I were a skilled finance professional who didn’t have a big heart, I never would have made it here," says Christy Lueders, senior vice president and CFO of the YMCA of Greater Seattle. "The process is just as important as the outcome. If you ran roughshod over people, [it] would just not be acceptable."
Board meetings take on a different dynamic too. Large, national nonprofits will likely have more directors with business backgrounds. (A directorship at a nonprofit is a good place for a private-sector CFO to gain exposure to the non-profit world.) But at smaller nonprofits, the CFO works with a volunteer board. In most cases, the directors are donating their expertise, contributing financially, and raising money for the organization. Cindy Scherer, director of finance for the Trust for Public Land, a national organization committed to preserving land for recreational use, says she's amazed by the time and effort her board invests in the organization. "I have to remind myself that they're not getting paid," she says.
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