Why Non-Profits Need to Think Strategically

By Michael L. Cecere, CPA, MST
Gray, Gray & Gray, LLP

Non-profit organizations that exist to address the needs of society occupy a special place in the business universe. Whether the mission is to provide support for disadvantaged communities, enlighten lives through art and culture, fund medical research, further a cause, or any one of thousands of other worthy purposes, non-profits are an important part of the economy. It has never been easy, but the pandemic-related economic disruption has exponentially increased the level of difficulty for many non-profits.

Which is why it is more critical than ever for non-profit leaders to engage in strategic planning that looks beyond the next quarter to formulate a more robust and financially secure future for the organization. To ensure organizations have the funding to fulfill their mission, it makes sense to operate like a business and the best businesses think strategically.

Strategically oriented non-profit leaders must consider where the organization is now, where they want to take it, and what they need to do to take it there. These broad strategic areas lead to more specific questions, which may include operational and financial issues such as:

  • Can we accomplish our mission with our existing services?
  • Do we need to develop new offerings to meet changing needs?
  • Do we have the capacity and capability to handle an anticipated increase in service volume?
  • Will new team members be needed to serve new constituents?
  • What additional funding will be required? Where will it come from?

The final point – funding – can be the most challenging. It is not only a question of how to attract donors or secure contracts, but what is done with the money once the organization has it. Here is where management of a non-profit can differ significantly from that of a for-profit business. Dealing with issues such as limited access to capital, stifling oversight and reporting requirements, and government regulation can leave little time for a non-profit leader to devote to planning for the future.

Which makes recruitment of a strong CFO or Controller one of the more critical hires when building a team for the future. Building a strong financial team, both internally and externally, creates financial predictability and stability – a solid pillar on which to base strategic planning. The right CFO/Controller working in concert with an outside CPA with non-profit experience can help manage internal controls and processes, data collection, and reporting systems that make compliance less arduous.

Well-structured financial management can also provide the organization’s leadership with timely and accurate information for use in communicating with donors, benefactors and other stakeholders. An appeal for funding is more effective if it is based on precise numbers and realistic projections.

If strategic planning is to be the basis for a more enduring and impactful future for a non-profit, the financial management component must be the base on which those plans are built. The contribution of an experienced CFO/Controller, working in concert with an accounting firm that understands the challenges and nuances of non-profit accounting, can be an asset that pays dividends for the organization and the communities it serves.

Michael Cecere is a partner who leads the Non-Profit Practice Group at Gray, Gray & Gray, LLP, a Massachusetts-based consulting, business advisory and accounting firm. He can be reached at (781) 407-0300 or via email at mcecere@gggcpas.com.

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