Underresourced and Sometimes Ignored: Key Reasons Your Nonprofit’s Finance Function May Struggle

September 25, 2019

“Do other organizations struggle with the same issues?” Nonprofit finance and accounting department leaders are often concerned that no one else is dealing with inefficient processes, ineffective systems, and difficult staffing circumstances. This is simply not the case; you are not alone.

Truth be told, the accounting department is often one of the last to receive attention in the form of investments in staff and systems. As organizations grow, they depend on the finance leaders to make do with the systems in place. These leaders end up patching together nonintegrated software and spreadsheets, using processes outside the accounting system, and leading teams with nontraditional roles. If the finance leader and team lack the skills and willingness to adapt, the department can lose its integrity and become ineffective. 

These struggles make it challenging for finance teams to meet the needs of their organizations. However, a holistic assessment of people, processes, and technology within the finance function can lay a solid foundation for instituting effective practices that will support the long-term financial and operational health of the organization. The following discussion focuses on the first aspect of the assessment: the people.

Within the finance department, examine three areas to better understand the challenges and consider the following questions to identify areas for improvement:

  • Department structure. What is the reporting structure within the team? Is there a more effective and efficient way to structure the department? How does the team engage with and support other departments? Are these successful interactions? Does the proportion of time and effort spent on each function match its priority for your organization?
  • Culture. Is the culture within the department healthy? Does the team make time to meet and discuss issues and plans? Does the team have a common understanding of the culture they want to achieve? Are goals for the team set and prioritized throughout the year? Do individuals connect their efforts to the broader mission of the organization?
  • Roles and responsibilities. Are there roles missing within the department? Do staff members get new titles or responsibilities to fill gaps without the requisite training or education? Are there tasks that are not currently assigned? Are there skillsets that are missing? Do all staff members understand their own roles and responsibilities within the broader context? Do staff have an opportunity to expand their roles and build their skills over time?

Often the act of stepping back to carefully assess how the team is structured, who is doing what, and where there are opportunities for improvement can itself can have an impact. It can be a good way to build team culture if done in an inclusive way.

Making small changes in how a team operates can also affect team culture. For instance, many finance departments have shown dramatic improvements in culture by instituting a brief weekly team meeting. Gathering everyone together to share the goals and objectives for the week, while also offering an opportunity for camaraderie, may seem simple but can result in a stronger sense of place for team members.

Professional development is another common area for potential improvement. Finance teams often de-prioritize their own professional development as they look for ways to keep costs low. While this may seem like a near-term win, it can have a detrimental long-term effect on individual performance, development, and turnover. Providing opportunities for professional development can infuse new ideas, innovation, and technology into the finance department. In addition, having finance staff share what they learn can reinforce knowledge and improve presentation skills across the entire team.

No matter how small your team or budget, your finance department does not have to struggle. Taking the time to assess the current state and look for opportunities to improve your team’s structure, culture, and individual roles and responsibilities can go a long way toward strengthening this critical team’s productivity and their success in supporting the organization’s mission.