Recent changes in government policy have resulted in substantial impacts on the Not-For-Profit (NFP) association sector. Government grants to NFP associations are expected to decline, contributing to the resourcing pressures for many NFP associations in Australia. Financial resources from memberships, donations, and government grants were core funds used to sustain NFP associations for many years. However, the concern in the sector now would be their survival under the increasing budget constraints.
The recent changes in the National Disability Insurance Scheme (NDIS) removed many existing grants paid directly to the NFP association sector. According to market research conducted by BDO in 2016, most associations were not ready for the changes in the new scheme even after the NDIS was rolled out. The complexity of the changes required more effective change management. Typical associations in the healthcare and community well-being industry needed significant training and transitional support.
A significant strategy for NFP associations to effectively adapt to change is the development of new leadership. It should begin with Board reforms to create an “A-team”, who is willing to lead the association through changes. In order to achieve this changing leadership need, the role of Chief Financial Officer (CFO) is crucial. CFOs can assist their CEOs and Board members with strategic decisions on budget, financial health analysis and estimation.
The role of CFOs in NFP associations are expected to go beyond accounting or numbers. CFOs provide significant directional support to their associations. However, resource constraints often make it difficult for NFP associations to afford experienced CFOs on their Boards. The consequences are less effective decisions, poor financial management, and even fraud.
Not having a full-time CFO is not a roadblock for NFP associations because there is a solution to help you. At Tailored Accounts, we could become your CFO to give advice and recommendations on your association’s financial situation. If you are the decision maker of your NFP association, feel free to contact us for our CFO program.