Considering a Career Change?
Recently, Accounting Management Solutions was fortunate enough to add Jim Forbes, also the incoming Secretary/Treasurer to AARP’s National Board of Directors, to our New York City team. A senior corporate executive who made the transition to nonprofits 15 years ago, Jim says he saw his corporate world like a “high stakes poker game with a focus on the good hand and potentially reaping high rewards,” but he wanted to make a change to the nonprofit side of the finance world. He thought he would be stepping back a bit and that such a change would be easy to manage but quickly discovered this was NOT the case at all.
Jim’s “top considerations” (aka “lessons learned”) can serve as a guide to some of the core issues in transitioning to not-for-profits.
Culture is frequently cited as a deciding factor for many who don’tmake the transition, despite the fact that they may not truly understand it.
Not-for-profits often have poor reputations when it comes to culture. For example, outsiders liken nonprofit decision making to a long slog through a swamp. Critics call it belaboured, slow, or treacherous. You hear stories of internal camps or organizational silos vying for position.
Having had long careers in both corporate and NFPs, Jim sees no real difference in each organizational structure. Many of the same issues exist in both. He says, “The key is to understand the specific cultural environment of an individual organization and forget whether it is a for-profit or a not-for-profit.”
“Because nonprofits have a stated mission and the teams are more socially conscious, you do find that the mission can and should weigh more heavily in the decision making process at a nonprofit.”
Understand that the bottom line is not always a monetary one
“It is okay to run a deficit on a project.” Anathema in most corporate situations, Jim sees an ever growing number of nonprofit organizations analyzing their results using the “triple bottom line” approach, not simply financial returns.
1. How will/did the effort contribute to our mission? 2. How will/did it benefit our stakeholders? 3. What is the financial impact?
All three are important in the delivery of a social mission. The great mind shift a corporate finance executive needs to make is that it may be okay for expenses to exceed revenue! Naturally, the financial analysis is not simple. It can be made more complex because of the source of the funding stream, donor restrictions, sustainability concerns and the like.
Do more with less
This is a virtue in any organization: corporate or not. In a well-run nonprofit, this must be the mantra, if it isn’t already so. The incoming nonprofit executive will usually fare better with this attitude ingrained on his or her psyche. However, be careful to balance the “Do more with less” with the mission delivery and donor intent. Jim has learned to take this one step farther. His goal is to be the “financial executive who can tighten the belt while creating new ways to increase spending efficiency and revenue.”
A practical lesson: there is much to be gained in the eyes of the organization when there is an analysis of expenditures conducted in an open and unbiased fashion.
The “product” is not always hard goods
Leaving the world of hard goods and services can indeed be a challenge. Jim’s experience is that any focus on “production” can be more easily overcome when one understands and embraces the mission of the nonprofit. This means focusing specifically on, “enabling constituents to function better in life, or helping develop social justice, or being key in the role of educator and advocate...these are the “hard goods” of the NFP sector.”
“There is a certain mental / attitudinal conditioning you may have to work toward, and that is okay. But my advice is to do the heavy lifting of mission alignment, if it needs to be accomplished,before joining the organization.”
Never say, ’once I get in there it will be different.’ Then it is too late and you will be damaging yourself and the organization.
Nonprofit is still a business---but with a heart.
Not-for-profits are still businesses and must be run with sound business principles. The key difference is the style or approach.
Understanding your nonprofit’s culture, mission and the way critical decisions are made is important ground work for understanding how to be effective within the organization. These three things will allow you to do what you do best in a fashion that is effective and embraces the not-for-profit in such a way that buy-in and acceptance is fostered.
Jim’s guidance/process for transitioning to a role in a nonprofit:
1. Embrace the culture 2. Define the “bottom line” 3. Encourage efficient spending 4. Understand and embrace your nonprofit’s unique “product”