The outsourced Finance Manager as Insider

How does your nonprofit organisation make financial decisions? 

Whether we admit it or not, nonprofit organisations are competing with each other for limited resources, whether they be top staff, government or philanthropic funding, or members. To ensure sustainability (ie 'healthy survival'), nonprofit decision-makers need to be strategic about the financial decisions they make. They need to be aware of the resource environment they operate in, and how realistic it is for them to be able to secure the resources they need for the plans they have.

We see nonprofit decision-makers which fall in to one of three groups..

  • Reactive, so that they respond to whatever is sent their way, 
  • Opportunistic, where they hunt out opportunities, chase down leads and pursue resources assertively, or
  • Proactive,  where they have determined a path, and targeted their goals and work doggedly to the plan

Most organisations are actually a combination of the three, but importantly the pursuit of resources must continue to be in line with the mission of the organisation. And the strategic direction which is built around this pursuit must include a financial strategy to ensure the resources and the growth strategy are aligned. 

At this point, the role of the finance personnel is key, whether it is the Treasurer, the accountant or the internal or external CFO. The finance manager is responsible for designing the financial plan and strategy for the organisation, and then getting sign off from the CEO (who in turn gets it approved by the Board).

To get this plan together, the finance manager participates in budget development, program planning and resourcing, and fundraising... in other words with all the main functions of the organisation. They need to be across the way the organisation works, and understand - in a holistic way - the movement of resources and functional activities of all the key departments, especially programs, administration, governance, marketing. This role fluctuates through the financial year cycle, and it is not always practical to employ a full-time Finance Manager for a role which pulses from hyper active to sedate. For many organisations using an outsourced CFO or senior Financial Manager leaves the provider to pickup the costs of downtime.

While larger organisations have a person dedicated to overseeing the financial and strategic functions, even they can benefit from an outside perspective and gain the ability to create even more options.

The benefit of working with an external source for the Finance Manager is that it provides an organisation with access to a broader range of experience and action-oriented expertise on a contracted basis, and good outsource accounting providers ensure their finance managers also have access to a team of various skills, which become available to the organisation. The sum is greater than the whole. The issue of “not knowing what you don’t know” can’t be solved overnight. Organisations should invest in an on-going strategic financial function partner to ensure that the right short and long-term questions are being asked and forums are established to answer these questions.

$(document).ready(function() { $('#next1').click(function() { var orgname= $('#orgname').val(); var putorgname= $('.org_name').html(orgname); $('.org_name1').val(orgname); }); }); (function($) { $(function() { $(document).ready(function(){ //Client-supplied mystery meat constants var r2eRatioMin = 8; var r2eRatioMax = 22; var wcRatioMin = 0.2; var wcRatioMax = 3.2; var crRatioMin = 2; var crRatioMax = 12; var prRatioMin = 0; var prRatioMax = 10; var currentstep = '#step1'; $('#step2,#step3,#step4').hide(); $('.calcnav .next').addClass('disabled'); function safeVal(value) { value = value.replace('$',''); value = value.replace(/,/g,''); value = value.replace(' ',''); return value; } /**********************************************/ //NAV //When we click a nav link, show the div referenced by the href, which will be something like #step2 $('.calcnav a').click(function(e){ //Don't navigate if required fields are missing or the link is disabled if($(this).hasClass('disabled')){ return false; } if($(this).hasClass('.next') && !checkReq(currentstep)) { return false; } e.preventDefault(); var selector = $(this).attr('href'); if($(selector).length) { //we have a div to show //Fade out, then fade in the new div $.when($('.calcsection').fadeOut(500)).done(function() { $(selector).fadeIn(); currentstep = selector; if(currentstep == '#step4') { step4calc(); } }); } }); //.calcnav a.click() /************************************************/ function step1calc() { var v21 = parseInt( safeVal($('input[name="orgname"]').val()) ); var v1 = parseInt( safeVal($('input[name="bankaccounts"]').val()) ); var v2 = parseInt( safeVal($('input[name="currentassets"]').val()) ); var v3 = parseInt( safeVal($('input[name="fixedassets"]').val()) ); if(isNaN(v1) || isNaN(v2) || isNaN(v3)) { $('input[name="totalassets"]').val(''); $('#step1 .calcnav a.next').addClass('disabled'); return false; } $('#step1 .calcnav a.next').removeClass('disabled'); $('input[name="totalassets"]').val(v1 + v2 + v3); } //Add listeners for step 1 $('#step1 input').change(function(){ step1calc(); }); $('#step1 input').keyup(function(){ step1calc(); }); /**********************************************/ function step2calc() { var l1 = parseInt( safeVal($('input[name="creditors"]').val()) ); var l2 = parseInt( safeVal($('input[name="staffentitlements"]').val()) ); var l3 = parseInt( safeVal($('input[name="grants"]').val()) ); var l4 = parseInt( safeVal($('input[name="currentliabilities"]').val()) ); var l5 = parseInt( safeVal($('input[name="noncurrentliabilities"]').val()) ); if(isNaN(l1) || isNaN(l2) || isNaN(l3) || isNaN(l4) || isNaN(l5)) { $('input[name="totalliabilities"]').val(''); $('#step2 .calcnav a.next').addClass('disabled'); return false; } $('#step2 .calcnav a.next').removeClass('disabled'); $('input[name="totalliabilities"]').val(l1 + l2 + l3 + l4 + l5); var reserves = parseInt( safeVal($('input[name="totalassets"]').val()) ) - parseInt( safeVal($('input[name="totalliabilities"]').val()) ); $('input[name="reserves"]').val(reserves); } //Add listeners for step 2 $('#step2 input').change(function(){ step2calc(); }); $('#step2 input').keyup(function(){ step2calc(); }); /**********************************************/ function step3calc() { var a1 = parseInt( safeVal($('input[name="annualincome"]').val()) ); var a2 = parseInt( safeVal($('input[name="annualspend"]').val()) ); var a3 = parseInt( safeVal($('input[name="staffcosts"]').val()) ); if(isNaN(a1) || isNaN(a2) || isNaN(a3) ) { $('input[name="net"]').val(''); $('#step3 .calcnav a.next').addClass('disabled'); return false; } var net = a1 - a2 ;// - parseInt(a3) //total income - total costs $('#step3 .calcnav a.next').removeClass('disabled'); $('input[name="net"]').val(net); } //Add listeners for step 3 $('#step3 input').change(function(){ step3calc(); }); $('#step3 input').keyup(function(){ step3calc(); }); /**********************************************/ function step4calc() { var currentAssets = parseInt( safeVal($('input[name="bankaccounts"]').val()) ) + parseInt( safeVal($('input[name="currentassets"]').val()) ); var totalAssets = currentAssets + parseInt( safeVal($('input[name="fixedassets"]').val()) ); var currentLiabilities = parseInt( safeVal($('input[name="creditors"]').val()) ) + parseInt( safeVal($('input[name="staffentitlements"]').val()) ) + parseInt( safeVal($('input[name="grants"]').val()) ) + parseInt( safeVal($('input[name="currentliabilities"]').val()) ); var totalLiabilities = currentLiabilities + parseInt( safeVal($('input[name="noncurrentliabilities"]').val()) ); var reserves = totalAssets - totalLiabilities; var netSurplus = parseInt( safeVal($('input[name="annualincome"]').val()) ) - parseInt( safeVal($('input[name="annualspend"]').val()) ); //1 var ratio1 = parseInt( safeVal($('input[name="reserves"]').val()) ) / parseInt( safeVal($('input[name="annualspend"]').val()) ) * 100; var score1 = Math.round((((ratio1 - r2eRatioMin)/(r2eRatioMax-r2eRatioMin))*9+1)*10)/10; if(score1 < 0){ score1 = 0;} if(score1 > 10) { score1 = 10;} $('#score1').text(score1); $('#score1a').val(score1); $('#ratio1').text(ratio1.toFixed(1) + '%'); $('#ratio1a').val(ratio1.toFixed(1) + '%'); var status1 = '';var status1a = ''; if(ratio1 < 15) { status1 = 'bad';status1a = 'red'; } else if(ratio1 >= 15 && ratio1 < 18) { status1 = 'average';status1a = 'yellow'; } else if(ratio1 >= 18) { status1 = 'good'; status1a = 'green'; } $('#status1').addClass(status1); $('#status1a').val(status1a); //2 var ratio2 = 0; if(currentLiabilities <= 0){ ratio2 = 0; } else { ratio2 = currentAssets / currentLiabilities; } $('#ratio2').text(ratio2.toFixed(1)); $('#ratio2a').val(ratio2.toFixed(1)); var score2 = Math.round((((ratio2-wcRatioMin)/(wcRatioMax-wcRatioMin))*9+1)*10)/10; if(score2 < 0){ score2 = 0; } if(score2 > 10) { score2 = 10; } $('#score2').text(score2); $('#score2a').val(score2); var status2 = '';var status2a = ''; if(ratio2 < 1){ status2 = 'bad'; status2a = 'red'; } else if(ratio2 >= 1 && ratio2 < 2) { status2 = 'average'; status2a = 'yellow'; } else if(ratio2 >= 2) { status2 = 'good';status2a = 'green'; } $('#status2').addClass(status2); $('#status2a').val(status2a); //3 var totalExpenditure = parseInt( safeVal($('input[name="annualspend"]').val()) ); var weeklyExpenditure = totalExpenditure / 52; var ratio3 = 0; var bankAccounts = parseInt( safeVal($('input[name="bankaccounts"]').val()) ); var grants = parseInt( safeVal($('input[name="grants"]').val()) ); if (totalExpenditure == 0) { ratio3 = 0; } else { ratio3 = (bankAccounts - grants) / weeklyExpenditure; } $('#ratio3').text(ratio3.toFixed(1)); $('#ratio3a').val(ratio3.toFixed(1)); var score3 = Math.round((((ratio3-crRatioMin)/(crRatioMax-crRatioMin))*9+1)*10)/10; if(score3 < 0) { score3 = 0; } if(score3 > 10) { score3 = 10; } $('#score3').text(score3); $('#score3a').val(score3); var status3 = ''; var status3a = ''; if(score3 < 7) { status3 = 'bad'; status3a = 'red'; } else if(score3 >= 7 && score3 < 10) { status3 = 'average';status3a = 'yellow'; } else if(score3 >= 10) { status3 = 'good';status3a = 'green'; } $('#status3').addClass(status3); $('#status3a').val(status3a); //4 var profitmargin = 0; var totalincome = parseInt( safeVal($('input[name="annualincome"]').val()) ); if(totalincome > 0){ profitmargin = (totalincome - totalExpenditure) / totalincome * 100; } var ratio4 = profitmargin; $('#ratio4').text(ratio4.toFixed(1) + '%'); $('#ratio4a').val(ratio4.toFixed(1) + '%'); var score4 = Math.round((((profitmargin-prRatioMin)/(prRatioMax-prRatioMin))*10)*10)/10; if(score4 < 0) { score4 = 0; } if(score4 > 10) { score4 = 10; } $('#score4').text(score4); $('#score4a').val(score4); var status4a = ''; if(score4 < 1) { status4 = 'bad';status4a = 'red'; } else if(score4 >= 1 && score4 < 6) { status4 = 'average'; status4a = 'yellow'; } else if(score4 >= 6 ) { status4 = 'good';status4a = 'green'; } $('#status4').addClass(status4); $('#status4a').val(status4a); //5 var ratio5 = 0; var staffcosts = parseInt( safeVal($('input[name="staffcosts"]').val()) ); if(totalincome == 0) { ratio5 = 0; } else { ratio5 = staffcosts / totalincome; } $('#ratio5').text((ratio5 * 100).toFixed(1) + '%'); $('#ratio5a').val((ratio5 * 100).toFixed(1) + '%'); var score5 = 0; score5 = Math.round(((1-ratio5)*10+3)*10)/10; if(score5 < 0) { score5 = 0; } if(score5 > 10) { score5 = 10; } $('#score5').text(score5); $('#score5a').val(score5); ratio5 = ratio5 * 100; var status5 = '';var status5a = ''; if(ratio5 < 60) { status5 = 'bad'; status5a = 'red'; } else if (ratio5 >= 60 && ratio5 < 80) { status5 = 'average';status5a = 'yellow'; } else if(ratio5 >= 80) { status5 = 'good';status5a = 'green'; } $('#status5').addClass(status5); $('#status5a').val(status5a); //total var totalscore = parseFloat($('#score1').text()) + parseFloat($('#score2').text()) + parseFloat($('#score3').text()) + parseFloat($('#score4').text()) + parseFloat($('#score5').text()); $('#totalscore').text(totalscore); selector12(); return false; } function selector12() { $("#button").trigger('click'); //$("#button").click(); return false; } /**********************************************/ function checkReq(selector) { var proceed = true; $.each($(selector + ' input.required'),function() { if( $(this).val() == '' ) { proceed = false; } }); if(proceed == true) { return true; } else { return false; } } /***********************************************/ $('.helpicon').mouseover(function(e){ $(this).siblings('.helpcontent').css('top',e.pageY - 10); $(this).siblings('.helpcontent').css('left',e.pageX + 10); $(this).siblings('.helpcontent').show(); }); $('.helpicon').mouseout(function(){ $(this).siblings('.helpcontent').hide(); }); }); }); })(jQuery);