MY ORGANISATION is 25 years old this year and reaching such a birthday has caused me to reflect on the evolving role of finance professionals in the sector. When we started out 25 years ago there was no such thing as a SORP (Statement of Recommended Practice). Rules and regulations were pretty much non-existent and the finances of the sector were not predominantly in the hands of professionals. One might say that’s a good thing – that the more informal and flexible approach worked well. However I strongly believe that playing fast and lose was not in the interests of the sector or its beneficiaries. That we needed the professionalism and the improved financial management/leadership that we have now somewhat taken for granted.
Now highly skilled professionals running the finances of charities are expected and the pressure on those managers has never been greater. So other than supporting those individuals to retain and update their knowledge is our job done? Are we still needed?
I would argue that now more than ever inspiring financial leadership is a necessity in charities of all sizes and that we are entering one of the most challenging phases of our existence. The challenge is to move financial leadership to the next level and extend financial capability throughout the sector.
So what’s the challenge with the larger charities? Some would have you believe that the primary skills of charity finance professionals relate to technical expertise and accounting acumen. While undoubtedly the technical abilities of our FDs are an absolute must, modern FDs also have to have a diverse range of tools at their disposal if they are to lead highly effective and efficient charity finance teams. Today’s FD is often seen as a right hand man/woman of the CEO; a strategist with big picture knowledge of the organisation. The strategic role of a finance director; improving efficiency, finding innovative ways of funding through investment and enterprise, focusing on the profitability of funding streams, managing risk, avoiding mission creep and contributing to the delivery of objectives, is more important now than ever before.
Leading highly efficient teams requires emotional intelligence – personnel and line management skills are pivotal roles that charity finance directors now play in an organisation’s strategy, together with resources allocation and performance monitoring. Stewardship of and reporting on the financial performance of an organisation is just one element of the role.
Recognising and reporting on impact and outcomes, leadership, managing relationships internally and externally, IT and a whole host of other skills are significant and desirable – today’s finance directors are centre stage for strategic planning.
In the current economic environment it has become essential that the financial sustainability of a charity is considered and secured. More organisations will be fishing in the same (smaller) pool for the limited funds. Those in receipt of government funding and grants will be experiencing a continuing squeeze on their finances. Investment returns are under pressure and disposable funds of donors are depleted. And all at the very time that demand for services intensifies.
With smaller charities there continues to be a thorny challenge across the sector – one which has yet to be cracked. Despite the enormous improvements in the financial management of charities there is still a huge gap in skills, particularly in smaller organisations. But a transparent and efficient sector is in reach – and it’s now up to us to press on towards achieving it.
Caron Bradshaw is CEO of Charity Finance Group