In “Today’s CFO strategic role: Changing the game plan for tomorrow
,” not-for-profit CFOs indicated that their responsibilities include organizational strategy. They also indicated that they are dedicating attention to data analytics and information technology to ensure that decisions are supported by sound financial criteria and analysis. In this survey, CFOs ranked their top priorities as strategic planning, performance management, risk management, IT and — as always — improving cash flow and reducing costs.
In support of these strategic priorities, not-for-profit CFOs are turning their attention to data analytics, recognizing that data is critical to achieving their organization’s mission; they consider it an essential asset in strategic planning and decision making. To make the most of what analytics has to offer, not-for-profit CFOs have begun adopting the applicable principles and best practices used by for-profit CFOs.
Acknowledging the role of IT in strategic planning, not-for-profit CFOs rate IT’s number one priority as improving operational performance, ranking it more than twice as high as cost savings, in contrast to the ranking of for-profit CFOs. Why are cost savings not higher in priority? It’s likely due to the importance NFP CFOs place on delivery of mission. If costs are reduced, CFOs are just performing their traditional duties. But when focusing on operational performance, they are seeking ways to enhance effectiveness, improve quality, and increase efficiency to benefit the organization internally and produce results for their constituents.
When it comes to investment in IT, CFOs’ main concern is cybersecurity/data privacy. Historically, not-for-profits have inadequately invested in this area for two reasons: 1) the ongoing tension between spending on mission and spending on back office, and 2) viewing their organizations as less of a target than other industries, such as financial services or retail. Organizations and their CFOs are realizing that this lack of investment makes their organizations much more vulnerable, as they have become an easier target. CFOs are committed to reducing this exposure.
CFOs also advocate investment in database systems and management, business intelligence/analytics, cloud computing, customer relationship management, and big data. They realize that, while advancing mission is still of utmost importance, their organization has to be run more like a business. As noted, data is an important means to better stewardship.
Challenges to leveraging IT are perceived as the lack of a cohesive IT investment strategy, issues in managing IT costs, depletion of funds for IT projects because of legacy system maintenance and the need to seamlessly integrate business functions.
As to risk management, CFOs place a high priority on operational costs, as expected, but they have additional top priorities — workforce management, cyber risk, vetting new growth opportunities and meeting constituent demand. Somewhat surprisingly, global, regulatory and culture challenges weren’t named near the top of the list. Not surprisingly, the main risk areas named were in finance, operations, and cyber/technology.
The view of the future is optimistic
Respondents were extremely positive in their outlook on the future. There was nearly unanimous consensus that in the coming year, salaries, benefits, headcount, revenue and access to credit would either be the same as last year or increase.
Respondents are also nearly unanimous in terms of anticipating increasing regulatory/compliance requirements and external risk. While they look at their operating environment very favorably, they also turn their attention to managing risk. CFOs know they have to be more mindful than ever of compliance and other external risks as they help to set organizational strategy.
National Managing Partner
Not-for-Profit and Higher Education
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