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Stephen Newland Part 1: Building bridges between CFO's and CDO's
44 Plays7 months ago
Fractional CFO Stephen Newland shares his wisdom in this two part series about how fiscal officers and development officers can work together more effectively and learn to speak one another's language.
Need some Fractional CEO Support?
Contact Stephen at https://www.linkedin.com/in/stephenmnewland/
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Check out www.abundantvision.net
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Transcript
Introduction to the Podcast
00:00:05
Speaker
Welcome to the Abundant Vision Fundraising Podcast. Whether you are a seasoned professional or a first-time fundraiser, we have the advice you need to take your next step toward major gift mastery. I'm your host, Tom Dauber, president of Abundant Vision Philanthropic Consulting.
00:00:25
Speaker
This is Tom Dauber with the Abundant Vision Fundraising Podcast.
Meet Stephen Newland
00:00:29
Speaker
I'm pleased to have Stephen Newland on today. Now, Stephen's a little different than some of the other guests I've had on. In fact, I believe he's the first non-fundraiser I've ever had on the show. So buckle your seats. We're in for a wild ride. Stephen, tell us a little bit about who you are and what you do.
00:00:46
Speaker
Yeah. Well, thanks, Tom. It's honored to be the first non-fundraiser on the show, so that's awesome. um I'm Steven Newland. I'm located in Atlanta, just outside of Atlanta, and I'm a fractional CFO for nonprofits.
00:00:58
Speaker
Fractional CFO can mean a lot of different things, and so the simplest way I like to explain it is I help with things like budgeting, creating a budget, and then managing to that budget, building a cashflow forecast so nonprofits have visibility into how much cash am I gonna have in the bank six, 12, 18 months into the future, as best as we can project that. Building grant budgets, overseeing accounting, that's essentially in a nutshell what I do, and and then overall financial strategy ah to build a sustainable organization.
Nonprofit Finance Challenges
00:01:27
Speaker
That sounds like a lot of useful stuff. Do you find that nonprofits need a lot of help in those areas? I do. I think there's just a lack of resources available to nonprofits and in this specific area. There's a lot of stuff available to startups and small businesses, but there's not a lot that focus on nonprofit. There are quite a few differences between nonprofit and you're just standard finance.
00:01:53
Speaker
And then not to mention that with a lot of nonprofits, time is of the essence, right? And so you've got to be more efficient in every single area and finance can be confusing and you might get one question in your email and then all of a sudden you spend 30 minutes researching the sales tax question and you're like, what happened to my day?
00:02:12
Speaker
so Yeah, no, I totally get that. So before we get into the nuts and bolts of things, could you tell me a little bit about yourself, what you enjoy doing when you're not focused on your professional life? Yeah, I love that. So I am a huge sports fan. So I grew up in Cincinnati, Ohio. Yeah, I'm here in Atlanta now, but I grew up in Cincinnati. So I grew up a huge Reds fan, Bengals fan, which being a Bengals fan when I was growing up was rough.
00:02:41
Speaker
But now we're doing good, man. I'm in a Cincinnati Bearcats fan, so I love sports. I'm a big Arsenal fan if anyone's a fan of the Premier League soccer, and I enjoy playing poker, so those are a few things I like to do. Okay, so this next question is very important then. Can you do the icky shuffle? Oh, I don't think I could give it a very, very bad ah attempt. yeah No one would want to see that.
00:03:09
Speaker
Thank goodness this is a podcast. That's right. No pressure there.
Communication Issues in Nonprofits
00:03:15
Speaker
Now, time for some true confessions. Overall, I've had some great experience with fiscal types in the nonprofit world. However, I can definitely think of some times where those relationships just went sideways for me. We weren't communicating well. We didn't understand each other. It it almost seemed like we were talking different languages.
00:03:38
Speaker
at times. Now, my experience that those sorts of difficulties between fiscal types and fundraisers aren't uncommon. And that's why I wanted you to be on the show today, Steven, maybe to help my listeners avoid some of the common pitfalls that can happen when fiscal officers and development officers are trying to work together. Could you walk me through some of the most common points of tension you see that come up between fundraisers and fiscal officers?
00:04:05
Speaker
Yeah, I'll kind of go through a couple of quick bullet points and then we can maybe dive deeper into any of them that seem interesting. But first, before I even go down that route, I want to kind of rag on us finance people for a little bit. Just for a quick second. I want to build some brownie points up. So we have a tendency to overcomplicate things and to be very rigid. And sometimes we have to be because there's certain accounting rules in place.
00:04:31
Speaker
But I find that us finance and accounting people, just as a broad brush, are a little too black and white sometimes. And I think that is kind of at the root cause of maybe where some of the tension starts to come into play. I think the really, really great finance and accounting people see the overall picture and can operate in the gray. But I think a lot of times we get that bad rap because there's a lot of that black and white and it's hard for some finance and accounting people to kind of to see the gray. So those are some brownie points. Hopefully I want some brownie points with some of your listeners.
00:05:09
Speaker
I hope so. But a few of the tension points that I see, I think the first thing is just managing the tension of raising dollars while thinking about the administrative side of the house. So ah on the finance side, I'm thinking about, okay,
00:05:25
Speaker
How many different systems are we going to have? Let's say we're at a gala and we're going to raise money through a silent auction, through a live auction, through tickets. I'm thinking about I got to calculate the fair market value of everything to get the tax deductible receipt correct.
00:05:42
Speaker
I got to manage like two or three different systems to make sure receipts are going out correctly. Maybe there's seven different ways money can come in the door. And so just thinking about that administrative burden for that next dollar raised and how to get that dollar in the door. One dollar in the door can look very different to finance than it might on the and the fundraising side.
00:06:04
Speaker
How so? um just I guess because because we're seeing the the behind the scenes, like the administrative piece of it. so that That is typically how I'm looking at it. um I'm thinking about, okay, I have to do these you know seven steps in the back end. It's more complicated, for example, to raise from a finance perspective to raise that dollar at an event, then it might be for a grant or for a corporate sponsorship. Just because I'm having to calculate these fair market values and make sure the receipts are correct and giving the right tax deductible amount and and all that. That makes total sense. Yeah. A couple other areas.
Balancing Financial Perspectives
00:06:46
Speaker
is forecasting. When finance is doing a forecast, we typically want to be as conservative as possible but still realistic. This is common whether it's development or sales in the business world.
00:07:01
Speaker
Some of the estimates tend to be a little rosier. Maybe then maybe then than what say is realistic. But that's good. You need that. That's a very healthy thing. You need your development team to be that way. You have to be. um Because if they're not like that, then you know you have no shot at getting the money in. Tom Dauber here for Abundant Vision Philanthropic Consulting.
00:07:26
Speaker
Fundraising can be hard work and it can be hard to mentally get into the place you need to be in order to see new opportunities. Everyone struggles with it. We are like the fish in the fishbowl who just can't see the water they're swimming in. That's when having outside expertise comes in handy.
00:07:44
Speaker
For 25 years, I've been helping nonprofits analyze the challenges, discover new ways forward, and develop clear plans that lead to greater fundraising back to the show.
00:08:12
Speaker
let's Let's talk about that point a little more if we could. yeah i've I've been in charge of fundraising efforts as a chief development officer. And I remember when I first started, my optimism ah got the best of me a few times. To the point where I had folks, I mean, way above me coming to me saying, now Tom, he doesn't really look right. When I was throwing off their numbers and all those sorts of things.
00:08:40
Speaker
And I guess i I had to learn pretty quickly that I've got to be as pessimistic as possible to under promise and over deliver when it comes to that sort of thing. I can think of something that I would do to do that. But I'm curious as a CFO, what sorts of steps can fundraisers take to kind of keep their optimism ah in control when it comes to making those types of projections?
00:09:07
Speaker
Well, so one of the tools that I like to use, whether it's a sales pipeline or even development work, is you list the different sources of funding. And it might be we're talking to this large donor. um It might be $100,000. We've got these you know five grants that we've applied for. We've got year-end giving, and we've got a target on it.
00:09:28
Speaker
And then giving each of those a probability that you hit that target. And so maybe there's a 25% chance you get that large donation in. And then you can multiply that 25% times that we think he's going to give $100,000. And you kind of create this projection that way. But what you're doing is you're looking at every individual component of that on a weekly or biweekly, however often, basis.
00:09:54
Speaker
I think that's one way to really manage that process. That's great. That's great advice.
Managing Budgets and Targets
00:09:59
Speaker
Now, I know sometimes that process works in reverse. Sometimes we have the folks at the top coming to us and saying, okay, here's the budget. and How are you going to get us to this budget? Really without the prospect portfolio, even in view, how do you deal with that situation?
00:10:17
Speaker
So from my experience, I always try to push as best as we can heading into a new year and even as part of the budget process to spell out as much as we can realistically know is going to come in. Now, does that always happen? Absolutely not. It's usually like, here's our target development team. i Work your magic. What I like about establishing that as part of the budget process is all the leaders of the organization are signing off on that.
00:10:45
Speaker
And they're saying, yeah, I'm signing up to help development achieve these goals. And we think this large donor is going to, is going to materialize and we think this grant is going to come through. So I just feel, I feel like that helps in the process when you get a little bit more detailed as a part of that budget season. Things are going to inevitably change probably by the time you even reach February and March, but I find that to be helpful.
00:11:10
Speaker
Is there language that chief development officers could use when talking to fiscal officers that might make that conversation easier? i I'm a big fan of just sitting down and talking through, hey, here's what I have to do in my role as a chief development officer. Here are the challenges that I can give you a projection finance But here's the thing, I'm gonna reach out to this grant next week or two weeks and I'm gonna find out that they've all of a sudden changed their timeline or they've closed submissions or now it's invite only. And so I think just explaining, hey, here are the challenges that I'm going to encounter and trying to reach this goal. And just so that the finance team and isn't just like wondering, why did development just, why are they not hitting their goal? But explaining like, hey, this is not as easy as just money comes into the bank and it just magically appears.
00:12:05
Speaker
i I'm a big fan of that and I think it goes the other way too. I think finance explaining like, hey, I ah hate to be an administrative burden and I hate to have to harp on receipts and all the, you know, but I have to do these things because it's just part of, you know, staying compliant. I think that breaks down so many barriers. I really do. That's great. That's really helpful. I wish I would have known some of those when I was younger. What other sorts of things come up between CFOs and CDOs?
Revenue Recognition Nuances
00:12:34
Speaker
Yeah, the revenue recognition is one for sure. And so it's just, you know, when does accounting recognize $1 raised versus, you know, ah if you get the pledge or the commitment for the dollar, I don't know, from a development perspective, you just kind of assume like, Hey, I've got that dollar, it's in the door and move on to the next dollar, right? Pretty much. Yeah. Yeah. So I think we can, there's definitely some more in depth we can cover on that.
00:13:03
Speaker
Another kind of bucket is thinking about restricted donations versus general donations. I'd be really curious on your perspective on this, but from a finance perspective, I don't think of those at all as the same. ah Even though like it might be $100,000 restricted donation is... you know It's not as valuable as a general donation and it actually creates more work on the finance side of things. We have to keep track of every single restriction and every time something is spent against that, but it's just another entry and another thing that we have to keep track of on the finance side. It's a big difference in what makes nonprofit finance work a little bit more complicated than for-profit.
00:13:44
Speaker
Oh, I bet it does. That was a really big thing that I had to deal with at OSU. And I think every state school, every private school has to deal with that because you have so many restricted endowments. You had so many restricted, we would call them current use funds, but non-endowed funds that might be restricted for a specific purpose. The ironic thing is a donor is going to give more money to the thing that they care most about.
00:14:10
Speaker
And so that might be scholarships. Well, the moment you start talking scholarships, you're talking restrictions. And so the the question is, from a fundraising standpoint is you can just go after discretionary dollars, but if it results in you raising 25% of what you could raise, is that the best use of your time? Yeah. And I think just even explaining that on the finance side, I'm like, yeah, that makes perfect sense. You as a fundraiser can better tell the story and hone in on exactly what you know what they really are focused on. And that's going to result in a bigger
Handling Restricted Donations
00:14:45
Speaker
donation. And so you would make that trade off every day.
00:14:48
Speaker
Really, and the the thing that I did find that we could do ah in a complex place is oftentimes there would be ways of saying, okay, so in the general budget, how much was going, you know, towards scholarships and can this replace some of that money and and even provide more, obviously, than what you were originally going to do, but then free that money up to do something else. If we can fund something with donor dollars, then all of a sudden that in theory can free up your discretionary dollars to do the things that nobody's going to pay to fix your bathroom. But at the same time, if if your students don't have working toilets, it's going to be a problem for your school. There's things like that, I think, that can be done that still honors the donor intent and honors the restriction, but at the same time allows the college to let its money go further.
00:15:36
Speaker
Yeah, I think that's a really great approach to it. So let me flip back over to my questions here. Now, let's say I'm not a development officer.
Advice for Nonprofit Leaders
00:15:47
Speaker
Let's say I'm the CEO of a nonprofit. What should I be thinking about in my work that could make the relationship better and life easier for my CFO and their interactions with the the CDO? I think A lot of times it can feel like ah you're kind of in your own silo and I manage finance and I manage development. Finding ways to break those silos and this is a leadership team and we are measured on organizational success first. um And as a part of creating organizational success, we each have a bucket to operate in.
00:16:29
Speaker
first and foremost, the organization's success should be the number one criteria. And I think just facilitating and kind of driving that home and building the culture around if the organization doesn't succeed first, even though it might make your department look better or your team look better, then that's a loss. That's not a win. And so I think just developing that culture and just really driving that point home. That's great. That's great advice, Steven.
Podcast Conclusion
00:17:04
Speaker
That's all the time we have today. But be sure to tune in next week to hear the next part of this exciting conversation. Now, if you've enjoyed this podcast, please be sure to subscribe and give us a five star rating on your podcast provider. I'm your host, Tom Dahmer. Thank you for joining me as we journey together for its major gift mastery on the Abundant Vision fundraising podcast.