What is Your Strategic Financial Position?

Board members, Executive Directors, and senior nonprofit leaders have many responsibilities, but perhaps none is more important or pressing than financial management. Unfortunately, responsibility for managing the organization’s finances is too often shifted to a single individual like the Board Treasurer or an insulated finance committee.

Not only is this habit a violation of the best practices of organizational management, it blindfolds a majority of an organization’s leaders from some of the organization’s most useful decision-making information – financial information!

An organization’s finances tell an objective story about its past activities, priorities, and successes. They can provide insight into the most critical question: do our finances align with and actually support our mission and our strategy?

A traditional audit is not designed to answer questions like this (note: an audit is a critical tool, it just answers different questions!). Rather, a deeper review of financials within the context of the organization’s strategic focus provides critical information about where their financial strategies are helping and where they are hindering their mission-impact and overall sustainability.

The first step to answering the question is to understand where your organization’s functions and practices falls on the Continuum of Financial Functions:

Knowing where you fall along the Continuum clarifies what is needed to develop a financial strategy that will help you achieve your next level of success, whether that next level is greater efficiency, increased impact, or long-term sustainability. If you need more help identifying your practices along the Continuum, try this organizational self assessment. My next post will outline the steps for developing your own integrated financial strategy.