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perspective, you have a different focus and that you focus
on revenue and expense differently.
Wells:
Given the same revenue stream that you would have
in a for-profit corporation, we focus on maximizing the efficient
use of the limited resources we have. Obviously, this is an
oversimplification, but we try to use every bit to provide services
to the end users, our clients, and they are the ultimate stake-
holders. We’re not necessarily working for a bottom-line profit.
The economy’s been pretty funky in the last few years, as we
all know. How has that affected funding sources, revenue
in your case – have they increased, have they been static
or are they declining? And how do you deal with that?
Wells:
We’ve been pretty lucky. Even during this time, we’ve
actually grown a little bit. But, the mix of our revenues has
changed. We have noticed that private donations have declined
somewhat. We’re lucky we have a pretty loyal donor base, but
even so, we’ve definitely noticed a slippage there. It’s harder to
meet our goals. Foundation giving has definitely declined. And,
a lot of foundations are now putting a bit more stipulation on
the money. For example, they might say that this funding is only
for startup; after this, you have to go find alternate means of
funding the same program. So, it’s been a little more difficult to
bring in revenue that way. We found that we have to place a bit
more reliance on fee-for-service programs to supplement any
kind of grants or contracts that we have.
You talked about how certain organizations are placing
collars around their funding, and giving youmore descriptions.
Are they also looking to measure how that funding is being
spent and measure the results?
Wells:
Absolutely. That’s actually a huge area right now where
not-for-profits have to come up to speed. A lot of the funders
these days – government organizations and private and corporate
foundations – are looking for impact-based programs. It’s one
thing to say that you saw this many pre-schoolers and helped
them get ready for kindergarten, but funders are much more
likely to give you continued funding if you can show that your
contact with these children actually made a difference. So,
they’re really looking for a measurable impact on the community.
And, organizations that can come up with the best ways to
measure that are the ones that are most likely to get funded.
I’ve got to imagine that you’re looking at the expense side.
Have expenses risen, have they been declining – and how
are you getting in control of those?
Wells:
Like any good for-profit organization, we at Family
Service also have done an analysis of our expenses and seen
how we can keep them in check. Since more than 80%
of our expenses are payroll and payroll-related expenses, it’s
been somewhat of a challenge. What we have done is we
have streamlined certain positions and combined certain
positions. But we’re really doing the best that we can to keep
our good employees and make sure that they can continue
to deliver the services to the clients. So, to that end, we’ve
had to be a little creative with the way we staff certain things.
Let’s talk about the role of the CFO, specifically. Not-for-profit,
for-profit – is the role very different when the CFO is performing
services for not-for-profit versus a for-profit organization?
Wells:
In general, the mechanics of the job are the same.
If you’re working for a for-profit corporation, you’re looking to
maximize profits, obviously. If you’re working for a not-for-profit,
you’re seeing it from a slightly different angle. There’s more of a
personal feel for clients, programs and things like that. The job
is the same, but there’s just more of a personal self-fulfillment
working for a not-for-profit – feeling like your actions are actually
helping end users.
I would imagine, too, that you’re measuring success
differently in a not-for-profit: Did we deliver the service?
How well did we deliver the service? And can we continue
to deliver the service?
Wells:
Correct.
Is that different from the perspective of a large versus a
small company?
Wells:
I think, in general, between a large and a small company,
whether it’s a for-profit or not-for-profit, it’s very similar. But in a
smaller company, the job is much more hands-on, simply because
there are fewer staff members to do some of the day-to-day
functions. A CFO in a smaller organization will find himself or
herself doing things like bank records and even possibly cutting
checks. I think that the job of the CFO in a smaller organization
also is a little bit broader. Again, there just aren’t as many staff
members. For example, my job not only encompasses finance
and accounting but also information technology, human
resources and facilities management.
How closely do the CFO and CEO align in not-for-profits
or for-profits?
Wells:
I think that for most issues in any kind of organization,
the CEO and the CFO need to be involved – maybe one more
from a strategic perspective, one more from a financial perspective
– but certainly they need to work closely together. It’s nice to
bounce ideas off one another, and it also helps sometimes if
the two don’t necessarily have the same perspective on
everything. For example, if one is a bit more big picture and
the other is a little bit more detailed. Certainly, you might
get the best of both perspectives that way when you
work together.
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CFO Audrey Wells and Andrew Zezas
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