Strong and effective leadership is key in every organization for it to thrive. However, in today’s competitive landscape, crucial leadership roles, such as the chief financial officer (CFO), are expensive and not feasible for all organizations to staff full-time—and in situations where they can be staffed, finding the right individuals can be a daunting task. This is especially true for nonprofits, where efficient management of monetary resources is key, and turnover or staffing constraints are common. Many nonprofits are in similar situations, struggling to find qualified individuals to fill these leadership positions.
This is where hiring a fractional CFO can be especially useful. Fractional CFOs are finance professionals who focus on providing contractual services to help clients achieve their financial goals. Since they are employed on a part-time, contract, or retainer basis, they can provide the same guidance and leadership as full-time CFOs at a lower cost, offering an attractive option for some nonprofit organizations.
Let’s detail the ways in which nonprofits can benefit from this model.
Cost Savings & Effectiveness
One of the most obvious ways in which nonprofits can benefit from fractional CFO services is through cost reductions. Fractional CFOs can offer knowledge of strategic planning, financial reporting and analysis, and organizational oversight, at a fraction of the cost that comes with hiring full-time CFO services. This allows organizations to reallocate and redistribute their resources and time to other critical functional areas without sacrificing the value that comes with having a CFO. Fractional CFOs also have the added benefit of only working when the organization needs assistance and putting in hours that are truly CFO-level tasks.
Strategic Acumen
Nonprofits rely on their leadership to provide direction and alignment on their long-term goals. Leveraging fractional CFO services can help organizations’ leadership support these objectives and set responsible financial goals. For example, a fractional CFO may scrutinize financial health, develop ways to identify and mitigate bottlenecks, and measure goals, all while aligning the mission of the nonprofit with achieving success. Fractional CFOs also have the benefit of working with a variety of organizations and can potentially provide insights and an innovative solutions-based approach to help nonprofits develop future-focused finance strategies.
Oversight & Risk Management
Fractional CFOs may work with the organization to understand financial risks and help address them. They can provide oversight into critical financial processes, such as the budget, and assist in making sure budgets are adhered to and managed efficiently. This, in turn, can lead to improved financial reporting and analysis which is useful for better decision making. Fractional CFOs can also help implement and monitor financial controls within the organization, reducing the risk of fraud or mismanagement of resources.
By hiring a fractional CFO, organizations can receive the benefits of strategic leadership, financial oversight, and risk management, at a fraction of the cost. Finding fractional CFOs with nonprofit experience is especially helpful, as they know how to use the organizational mission as a guiding north star and chart a positive future course for your nonprofit.
To learn more, reach out to a professional at Forvis Mazars today.