While nonprofits are unique organizations that run differently from for-profit companies, they still require careful financial management and strong oversight. It takes money to continue offering quality services and programs, and someone needs to keep track of all the moving parts.
With an inflexible budget, you might wonder, “Do I have to add to my headcount for this?”
Not necessarily. Leaning on what’s called a “fractional chief financial officer” (or fractional CFO) can provide just enough lift to position your organization for success.
Fractional CFOs are 100% external executive partners that function as a service rather than full-time W-2 employees who earn benefits. They alleviate stress related to financial matters, operating on an as-needed basis to give nonprofits a solid external strategy partner. Of course, their priorities may differ from the corporate world.
Here, we explore the role of fractional CFOs for nonprofits.
The responsibilities of a fractional CFO for nonprofits
You’re used to thinking about roles such as executive director or philanthropy director in your nonprofit, and figuring out how a CFO fits in might not be so intuitive. Instead of thinking of the formal-sounding, C-suite “Chief Financial Officer,” think, “head of finance.” They’re not involved in the day-to-day bookkeeping and payroll, but rather larger initiatives and business strategy.
Chief among these are:
Budgeting and forecasting
Your fractional CFO acts as your external eyes and ears. They monitor your organization’s cash flow, making sure you don’t overspend. In the process, the fractional CFO also shows you how to find and explore new opportunities—but in a budget-conscious way.
Financial planning and modeling
A fractional CFO is a jack-of-all-trades. They’ll put on a new hat to be your advis0r, explaining the financial implications of the organization’s plans and programs, often factoring in current events and economic head- and tailwinds. An important part of this is building models of real financial situations, helping your CFO partner analyze project or investment performance.
System implementations
When your nonprofit gets on the fast track to growth, things start looking a little different. In comes your fractional CFO again, ready to implement systems to accommodate the shift. Change is hard no matter how prepared you are, so they stand ready to handle risks and monitor resources during the adjustment period.
Audit support
An audit can strike fear into the hearts of any organization, but a fractional CFO can make the process run smoother. Instead of feeling like you need to scramble to collect documents, your fractional CFO takes care of it, organizing your information in one place, usually with accounting software. If you want to be more involved in the process, they can also provide financial coaching to your team.
Data visualization
If figures and percentages don’t come naturally, a fractional CFO can use the latest tools to provide insights into your nonprofit’s data and how the pieces go together. Its cash flow dashboards show how much money is going in and out of your organization at all times, helping you respond and make evidence-based predictions. And as a bonus, you can see all revenue sources—from donations to sales—in one place.
The benefits of hiring a fractional CFO for nonprofits
It’s a common refrain: “Do we really need a fractional CFO?”
For some growing nonprofits, the answer is yes. You’ll be glad to have one by your side when you see how much easier life gets. A fractional CFO can bring strategic and financial chops to refocus your organization, delivering:
Time and productivity savings
Your nonprofit is probably more concerned about delivering benefits or fulfilling its mission than fussing over finances. But having a financial professional dig into cash flow forecasting, financial planning, or growth strategies? That’s time your executive director can get back and put into day-to-day operations. A fractional CFO could even participate on your board and collaborate with bankers and attorneys, taking the lead on administrative functions to further free up the executive director to focus on big-picture needs.
Money savings
As Kathy Svetina of NewCastle Finance puts it, “A fractional CFO is a great way to get that full-time CFO expertise for a fraction of the time and cost.” And she’s spot on—just think of how much full-time salaries and benefits eat into your nonprofit’s already limited funds.
Fractional CFOs help nonprofits access professional financial advice, even when there’s no room in the budget for full-time staff. With the money you save, you can focus more on:
- Programs
- Marketing
- Fundraising
The right fractional CFO can be worth their salt, coming into the picture with diverse experience to understand the financial management needs of your unique group.
Prior nonprofit experience
Chances are good that you’ll find a CFO with experience not only in your nonprofit sector but across diverse industries, including:
- Minority- and women-owned businesses
- Disability advocacy and support organizations
- And more
That’s because fractional CFOs usually have a few full-time CFO positions on their resumes, even if they now serve multiple nonprofits. And you win because it helps them provide fresh perspectives for your organization, where they apply those experiences to their partnership with you. With such a solid nonprofit background, a fractional CFO can identify and respond to trends they’ve seen affect others and apply effective strategies for your organization.
How to choose a fractional CFO for nonprofits
Hiring can be daunting when so many CFOs are available 100% virtually. You have the whole wide world of pros to choose from!
Clear the cobwebs by breaking the process down into just a few steps:
Ask key questions
You need to get certain things out of the partnership. It takes research. Start with a few simple questions to weed out your options, such as:
- What services do you provide?
- How long is your onboarding process?
- What will the relationship look like?
If a candidate can’t meet your needs, it’s okay to move on.
Look for experience
A fractional CFO also needs the technical know-how, and that comes from executing the CFO function day in and day out. They should bring at least a minimum of core skills to the table, including:
- Data analysis, risk management, and forecasting
- Accounting software experience
- Analytical skills
- Ability to explain financial terms
- Familiarity with nonprofit structure
By trusting a partner with wide-ranging experience, you can take advantage of a larger professional toolbox. A veteran fractional CFO brings with them strategic insights and network connections to help you. It’s also important to look beyond simple financial experience because CFOs need to be more strategic than an average accountant.
If a prospective partner has only ever worked as an accountant, it’s okay to move on. A strong CFO partner needs to approach the organization from a big-picture view, rather than just looking at the numbers.
Don’t forget about chemistry
Think about picking a CFO like dating. After all, you’ll want to ask yourself a lot of the same questions you would at a candlelit table:
- Are you comfortable with the candidate?
- Do they seem to care about you (and your organization)?
- Do you see a future together?
And like any great romance, your differences and similarities strengthen the relationship. Your fractional CFO should align with your organization but also be able to challenge you when needed. Look with a keen eye to find “the one.”
Let your fractional CFO drive nonprofit growth
Your executive director doesn’t have to do the lion’s share to keep your organization moving forward. An external CFO partner can be a valuable asset to manage big-picture financial operations, whether it’s managing the budget or understanding mounds of data. And you’ll save boatloads of time and effort to boot, making way to put more energy into growth.
This article originally appeared on the QuickBooks Resource Center and was syndicated by MediaFeed.org.
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18 business ideas for freelancers
Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money. The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Whether you’ve come to embrace WFH culture, need to supplement your income or have joined the Great Resignation and are now looking for more fulfilling work, starting a freelance business can be a great solution.
Freelancing often comes with a number of perks, like getting to be your own boss, setting your own hours, and working from wherever you like. Start-up costs are often low. And, if you need some capital to get your business going, you may qualify for a small business loan for self-employed people.
However, starting your own freelance business can take a lot of hard work and hustle, and it may be some time before you start making real money. If you’re up for the challenge, here are some home-based small business ideas to help you brainstorm the best way to tap into your talents and flex your entrepreneurial muscles.
Related: How to run a successful small business: 9 helpful tips
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If you have a great eye and a decent camera, you may be able to turn your creativity into cash. One option is to sell your photos to a stock imagery site like Getty Images or Shutterstock. If your home is particularly picturesque, you might offer to do headshots or portraits in your yard or set up a home studio. If you’re interested in event photography, you can market your services to people who need professional photography for weddings, graduations, engagements or other events.
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If you are both creative and technical, you might enjoy freelance web design. A web designer typically builds all the elements of a website, including the graphics, type fonts and layout. You’ll likely need to have some knowledge of basic programming languages, such as HTML, CSS and JavaScript, and also know your way around image editing software like Photoshop. You can learn these programs through research and practice or classes. When you’re ready, you can create your own website to showcase your skills and market yourself to potential clients.
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Virtually every business needs creative elements like logos, web designing, memes, blog posts, infographics, ad banners and more. That means there is often a lot of opportunity for a good graphic designer to get freelance work. To become a graphic designer, you typically need to have strong drawing skills, knowledge of graphic design theory, and mastery of design software (such as Photoshop and Illustrator). You can take a degree course in designing or learn it online. Once you have some solid skills, you can start marketing your design services to potential clients.
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If you have an eye for color and composition and love to create beautiful, inviting spaces, you may want to think about getting gig work as an interior designer. You don’t necessarily need to have a degree in design to become an interior design consultant. You can just create a portfolio of some of the successful redesigns you’ve done and ask your friends and family to start recommending you.
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If you have video editing skills and are looking to freelance, you may find yourself in demand. With the growing prevalence of video in social media and marketing, the need for video producers has grown in recent years. Even if you don’t have a lot of experience cutting and editing video, you can hone your video skills with online classes and tutorials. As a video producer, you can have the flexibility of working from home on a variety of projects while also utilizing your creativity.
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Does your skill set include online advertising, content writing and SEO? If so, you may want to consider starting a digital marketing services business. When companies roll out new products, they often need help handling external communication and messaging, including email campaigns, online advertising, and social media marketing. And since it’s digital marketing, you aren’t likely to be rooted in any one location.
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If you understand how engaging multimedia content can be used in marketing, then social media consulting may be a good fit for you. As a social media manager, you can help companies understand how to use Facebook, Twitter, Instagram and other platforms to reach their business goals. If you can stay on brand, share content appropriately, and reply to customers intelligently, you might make a great social media manager.
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Companies of all types and sizes are using data analytics to understand trends in customer behavior. Data analysts use a variety of analytical tools to assess things like sales numbers and performance, identify market trends, and then write reports that chart their analysis and recommend future strategies. This can be a great freelance option for people who have been working in data analytics. However, beginners can take online courses and enroll in certification programs to master the required skills.
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To stay competitive, email marketing is a must for many companies. And that can be great news if you are a strong and creative writer. Having a background in sales and marketing can also serve you well. Email marketing pros need to be able to craft creative and compelling copy about a company’s products, services and promotions, and convert readers into buyers. The job may also include monitoring email marketing campaigns, building email databases and tracking results.
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SEO service providers utilize search engine optimization to make sure a company’s site comes up high in online search results since a high-ranking placement generally translates into a lot of site traffic. If you’re an SEO pro who understands Google’s algorithms and the value of keyword frequency and meta descriptions — or you’re willing to learn — you may find your services in demand by a range of different organizations who need help with their SEO content strategy.
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Blogging can be a profitable freelance job. If you are able to build a large following, you may be able to sell advertising space, which can bring in a small revenue stream. You can earn even more through sponsorships and affiliate marketing, which is when brands you believe in pay you for advocating their goods and services. If you don’t want the limelight yourself, you may be able to blog behind the scenes for companies and individuals (like high-profile folks who need a blog but don’t have the time to feed the beast) who may pay you handsomely by the hour or post.
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Copywriters typically create material that encourages consumers to buy goods or services. Copy can be used for advertising, websites, billboards, email campaigns, newsletters and more. As a freelance copywriter, you may find yourself creating catchy taglines for online or print advertisements or composing a unique blog article optimized for the web. Freelance copywriters can work directly with clients or through intermediaries such as agencies or online work exchanges.
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If you’re an ace at organization and love throwing parties for your friends, event planning could be a good fit for your freelance business. An event planner ensures that events, such as parties, weddings, fund-raisers, meetings, and conventions, are planned, organized and executed correctly. The job typically includes scouting out locations, securing any services needed at the event (such as food, transportation, and entertainment), and being on-site the day of the event to make sure everything runs smoothly and everyone has a great time.
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Maybe math is second nature to you, or your grades on essays were always A+. Or perhaps you are a gifted piano player. Whatever your particular talent, there is a good chance that there are folks out there who need some assistance in that area. You can start advertising your tutoring or teaching services through friends, family and neighbors and build out from there.
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If you’re an animal lover, pet-sitting allows you to enjoy pets without the responsibility of ownership. All you typically need to get started is an understanding of how to properly care for dogs and cats (or any other pets that may need your services). For many, this freelance job can be a win-win: You get to build relationships with the animals and get paid for showing some TLC.
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Do you have a talent for crafting or creating handmade goods? It could be quilts, decorative pillows, hand-knit sweaters, jewelry, you name it. If so, you may be able to turn your hobby into a freelance business by advertising your goods on a craft-selling site like Etsy, Handmade at Amazon or ArtFire. In addition to selling online, you may also want to take advantage of opportunities to sell at street fairs, bazaars and festivals.
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If you’re a fast and accurate typist, you may want to consider becoming a freelance transcriber. This kind of work involves listening to an audio recording, such as a webinar, video conference, interview, or speech, and then typing every word that is spoken into a document. There are all kinds of companies that hire freelance transcribers, as well as transcription services that hire individuals to transcribe audio for various clients.
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Once you have your cosmetology license, you typically have a lot of flexibility in terms of when and where you work. Who says you have to be in a salon all day? Many hairstylists and makeup artists work for themselves and offer mobile services, in which they serve clients right in the client’s home. Or you might offer services in your own home. You can also start a hair or makeup blog or post tutorials on YouTube to generate an additional revenue stream.
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When it comes to starting a freelance business, having a good idea is only the beginning. A great next step is to develop a business plan. This involves deciding your company’s purpose, figuring out what service or products you will offer, and setting measurable targets and goals.
In addition, you may want to determine business financing options if you need initial capital to get started and then create a business budget.
It’s also a good idea to choose a business structure (such as a sole proprietorship or limited liability company), get any required licenses or permits, and purchase any equipment and supplies you may need, being sure to keep receipts since these expenses may qualify as self-employed tax deductions.
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There’s much appeal to the freelance life. You get to call the shots and work as much or as little as you like. And turning your marketable skills into your own home-based freelance business may be easier than you think.
One of the biggest challenges you may face is how to fund your business. You may have savings to get you going or have family and friends who will help you launch. If not, you can look into getting a small business loan.
Learn more:
This article originally appeared on LanternCredit.com and was syndicated by MediaFeed.org.
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