Christian Leadership Alliance

Where Does the Money Come From?

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Green Eyeshades Give Way to the Ministry's Executive Suite

The role of the chief financial officer within today's business or ministry organization is a team relationship with others in the so-called C-Suite, as in chief executive officer, chief operating officer, chief technology officer, etc. The "green eyeshades" image has long ago given way to the role of internal consultant, educator and strategist. That new role comes into sharp focus when the CFO must serve as turnaround specialist. A case in point comes out of a conversation I had with Winston Ling, vice president of finance and administration at Tyndale College & Seminary in Toronto.

In 1995 Tyndale was insolvent and filed to make a proposal to creditors under the Bankruptcy and Insolvency Act in Canada (although it didn't officially declare bankruptcy). Shortly thereafter Ling was brought in to help engineer a turnaround. He emphasizes that although there were times when he and the CEO disagreed, they always heard each other out and left the conversations supporting each other and the course of action they had decided was best. Ling worked to institute a culture of fiscal accountability and responsibility at Tyndale. Prayer followed by inaction was replaced by prayer with a bent for decisive action.

With Tyndale's experience as a more recent backdrop, the organizations we're considering here are churches and ministries that are largely dependent on donated funds. Most of these organizations have annual revenues of $1 million or less. The Tyndale experience underscores that the CFO in progressive nonprofit organizations no longer simply assembles financial data, but is an internal business consultant and financial educator.

This shift in the perception of the financial officer in many industries, but especially in nonprofits today, suggests three things the CFO should be doing:

Gain agreement on the primary financial objective in the organization.

Some nonprofits are still mired in the "we must break even financially" mindset, convinced that being a nonprofit prevents the organization from earning a surplus. That just isn't so. Surpluses, or net revenues, must be retained in the organization, not paid out to individuals. Tyndale now consistently earns a surplus. Surpluses in nonprofit organizations are needed for prefunding land, facility and equipment expansion, providing working capital necessary to bridge the summertime or "dry year" ebbs in donations or other revenues, and to build up a cash reserve of six months to a year's worth of expenses.

Ling notes donation-dependent organizations are not considered to be financeable from the perspective of most banks—with buildings being one possible exception. (Organizations with $5 million or more in revenues and a strong relationship with their depository banks may find those banks receptive to a discussion of a credit line while holding smaller cash reserves.)

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