Friday, September 23, 2016
Innovation: A Must-Have Tool for Nonprofit CFOs
Posted by Armanino Nonprofit Team
Innovation is must-have equipment in the toolbox of CFOs operating in the nonprofit sphere. That’s the message from a panel of nonprofit executives at this year’s nonprofit symposium.
Finding sustainability is a constant challenge, said Sally Petersen, CFO of Second Harvest Food Bank of Santa Clara and San Mateo Counties. And sometimes the enemy is the status quo.
Petersen told of trying to work with the statistical concept of cost per pound, a standard industry measure of efficiency. She said it made sense nine years ago, when Petersen started at the nonprofit and all the food distributed came through the warehouses. But as the nonprofit’s mission evolved, the cost-per-pound model no longer fully measured the nonprofit’s contribution to feeding the community’s hungry residents. Services like nutrition, education, advocacy and the Food Connection hotline bring costs and benefits, but don’t fit in a cost-per-pound formula. Community-based organizations to grow participation in federal nutrition programs for children. These partnerships increase meals in the community, but don’t yield a cost-per-pound measurement comparable to warehoused food.
This year, Petersen took the bold step of dropping cost per pound from her finance report. She explained why and her board, made up of some of the best financial minds in Silicon Valley, didn’t bat an eye. She’s not home free yet. She’ll need to develop alternative metrics to measure the impact and effectiveness of programs that provide meals without physical food passing through the warehouse. Although confident she can develop a more relevant measurement tool, she encourages others to think this through strategically before making changes.
Her story echoed the recommendation of keynote speaker Vu Le, who urged nonprofits to engage funders as rational decision makers rather than as monolithic institutions. He is executive director of Rainier Valley Corps in Seattle and his blog, Nonprofit With Balls, has become required reading in the industry. Other speakers addressed their ongoing fights to balance current needs, building a rainy day fund and having capital to invest in taking advantage of new opportunities.
J. Mark Jenkins, Vice President of Finance with the Golden Gate National Parks Conservancy, told the story of an opportunity that came to the Conservancy after the 2012 budget had been approved. In connection with the 75th anniversary of the landmark bridge, the conservancy could build a visitor center, rebuild the historic roundhouse that had been a makeshift visitor center and create two scenic lookouts. The cost was $12 million, including the anniversary celebration and the challenge was finding a way to make the project pay for itself.
The Conservancy took the $12 million from its long-term investment portfolio, then set out on a fundraising campaign. That netted $4.5 million. The rest was treated as a loan which would be repaid from the net proceeds of the two cafes and the sale of merchandise at the visitors’ center. The plan is to return both the $12 million and a sum comparable to what it would have earned had it not been diverted to the plaza project. So far, so good, Jenkins reported.
The free half-day forums were held July 13 at the Hyatt Regency in San Francisco and July 14 at the Montage Beverly Hills. For a recap of this session, as well as others visit nonprofit-symposium.com.
Nonprofit organizations have specialized audit, tax and operational needs that require specialized service. Armanino has been committed to the nonprofit sector since 1953, and we now work with more than 500 nonprofit clients. This hands-on experience gives our staff of CPAs and former CFOs a deeper understanding of the issues nonprofits face, so we’re able to meet their needs and help them fulfill their missions in the most efficient, cost-effective way possible.