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6 Strategies for Nonprofit CFOs in 2024: Focus on Enterprise Risk Management

With a tight job market, declines in charitable giving, and inflationary pressures, 2024 presents concerns for nonprofit leaders, especially CFOs. In a recent Forbes article featuring an executive survey on top risks, CFOs highlighted talent, economic uncertainty, and cyber as top risks. Nonprofit CFOs recognize the pivotal role of talent in navigating risks and opportunities to advance the organization’s mission and goals.

6 strategies for managing risk

Strategies for Nonprofit Resilience & Risk Management

Nonprofit CFOs are embracing these 6 key strategies in 2024:


1. Adopt Advanced Fraud Prevention

Fraud impacts nearly one in five nonprofits, swiftly eroding trust and reputation. Adopting advanced fraud prevention methods is crucial. Check fraud is on the rise, more than doubling in the last three years, taking many forms, such as altered or counterfeit checks, forged or unauthorized signatures, and fake accounts. Train your nonprofit’s employees and boards on how to recognize fraud and red flags to look for, segregate duties so individuals share responsibilities, and utilize alerts to flag suspicious activities promptly.

Some fraud prevention measures nonprofits should be taking:

  • Limit Checks: Transition to electronic payments, such as ACH, bill pay, or wire transfer

  • Positive Pay: Use tools like ACH or Check Positive Pay to identify threats proactively

  • Authorized Users: Establish authorized users, limiting transaction types and amounts

  • Account Changes: Require board resolution approval for any account changes

  • Approvers: Require two approvers for check and electronic transfer authorizations

  • Reconcile: Review accounts monthly and report fraudulent transactions to your bank

Engage with CFO peers and banking partners to stay informed about emerging technologies and internal controls for proactive fraud detection. Safeguarding against these risks is vital for ensuring the financial well-being of your nonprofit and the security of your stakeholders.

2. Fortify Your Cybersecurity Readiness

Nonprofit CFOs identified cyber as a top risk, heightened by expanding data privacy requirements. Emerging technologies, like generative AI, may even expand these risks. In 2023, email compromise surged, with an estimated 23% of business emails flagged as untrustworthy. Close collaboration between finance and IT teams is vital to assess and mitigate cyber risks. Investing in cyber prevention promises significant ROI.

Cultivate a culture of cybersecurity readiness:

  • Investment: Allocate resources to cyber threat detection, prevention, and IT infrastructure

  • Assessment: Regularly conduct audits to identify, prioritize, and mitigate risks

  • Monitoring: Continuously monitor to detect anomalies, breaches, and ensure compliance

  • Vendors: Extend cyber requirements to your nonprofit’s vendors and partners

  • Training: Invest in cybersecurity training to build awareness and encourage reporting among staff

CFOs often need to champion cybersecurity readiness. A proactive strategy not only safeguards your nonprofit’s financial integrity and sensitive data but also aligns with the expectations of today’s donors. Consider engaging IT or risk management consultants when lacking internal expertise, as the potential risks are high for significant financial expenses and detrimental impacts on your brand reputation.

“Cybersecurity threats are a significant financial risk to your nonprofit. As email compromise has risen significantly, establish a rigorous verification process with high scrutiny.”

– Kathy Gasperine, First Vice President Social Impact, Amalgamated Bank

3. Foster Proactive Risk Management

HUB’s Outlook 2024 found 70% of nonprofits need to do a better job fostering risk awareness and mitigation. A priority for all nonprofit leaders, CFOs are often a catalyst for enterprise risk management. Awareness is key so everyone in your nonprofit is committed to risk reduction. Adopting a continuous risk assessment model not only reduces costs but also effectively mitigates risks affecting operational continuity, brand reputation, and the well-being of our employees, board members, donors, and beneficiaries. Risk management incurs costs, whether invested upfront in prevention or incurred after an event, leading to disruptions, productivity losses, and direct impacts on the nonprofit.

Every nonprofit faces unique risks, with top areas to watch including:

  • Property: Stay proactive with property maintenance and safety improvements

  • Auto: Enforce driver controls (monitor speeding, driving records) and ensure sufficient insurance

  • Employees: Uphold a zero-tolerance policy against discrimination and sexual harassment 

  • Cyber: Proactively mitigate cyber risks and assess your needs for cyber liability coverage

  • Global: Ensure adequate protection for your people working or traveling abroad

Collaborate with your insurance partner to prioritize risk reduction strategies, evaluate insurance needs, and access best practices or consultants to help you on your path. Create a risk map prioritizing financial, personnel, mission, and brand risks. Set up processes and form a committee for incident investigation and prevention. Develop an enterprise risk management plan outlining key actions for the next 2-5 years. 

“Risk management lacks the attention it deserves despite its role in financial sustainability. Adopt a culture of risk mitigation into day-to-day operations, with CFOs vigilantly monitoring financial impacts.”

– Melissa Straka, Senior Vice President, Hub International

4. Prioritize Strategic Financial Insights

Nonprofit CFOs are transitioning to spend less time on routine tasks to prioritize strategic financial insights and enhanced forecasting. This shift requires automating tasks, scalable processes, real-time data, and accelerating financial closing. Concentrate on programmatic sustainability by analyzing revenue, P&Ls, and impact at a program level, offering leaders a day-to-day view of performance insights to inform decisions. 

Shift more time to strategic financial leadership efforts:

  • Risk Management: Conduct scenario analysis of risks and develop contingency plans

  • Cash Flow: Allocate capital to growth areas and optimize cash flow for investments and liquidity

  • Strategy: Lead ongoing discussions on strategies to increase financial sustainability and impact

  • Budgeting: Adjust budgets and use rolling forecasts to support mission and goal achievement

  • Reserves: Optimize investment policies to maintain and increase reserves

In 2024, nonprofit CFOs will capitalize on opportunities for cost optimization, efficiency enhancements, and strategic discussions to right-size labor, technology, and innovation to optimize resilience and sustainability.

5. Expand Financial Fluency

EY research highlights a challenge for CFOs “is finding time to build knowledge and expertise.” Nonprofit CFOs recognize a growing need to expand financial fluency across boards, leadership, and staff. As leaders and board members have varying financial expertise, CFOs must foster clarity, ensuring understanding of how operations translate into numbers for strategic decision-making. Clear, transparent financial data serves as a trust signal for donors, foundations, and boards. Leaders with financial acumen inspire confidence in donors, rapidly adapt to risks and opportunities, and drive long-term success.

Key conversations to have with your board, leadership, and staff:

  • Performance: Use analytic tools to evaluate and optimize performance and profitability

  • Funding: Diversify funding sources, revenue streams, and expand strategic partnerships

  • Data-driven Insights: Prioritize and report on key metrics to track daily, monthly, and quarterly

  • Adaptability: Revise strategies and adjust budgets to evolving mission needs and goals

  • Capacity: Plan leadership development and strategic projects to engage, retain, and mentor key staff

6. Diversify Banking Relationships

A key trend among nonprofits is diversifying banking relationships for risk management, and fostering deeper connections. When your banker really knows your operations and future plans, you have a partner who can offer more flexibility including tailored interest rates, financing for grant commitments, or a “rainy day” line of credit to ensure optimal cash flow for growth.

Strategic steps to take with your banking partners:

  • Alignment: Align banking partners with your financial strategy to support growth effectively

  • Assessment: Evaluate strengths and gaps of your current bank in meeting your needs

  • Negotiation: Negotiate competitive interest rates, reduced fees, or improved terms

  • Multiple Banks: Avoid reliance on a single bank for risk mitigation and enhanced flexibility

  • Shared Values: Collaborate with banks aligned with your values, CSR goals, and ESG priorities

The best time to secure a line of credit is before you need it, when you have positive P&Ls. Collaborate with a banker familiar with your nonprofit to streamline the process. Expect a 2-3 month timeline requiring three years of audited financials, tax returns, and collateral, depending on your financial health. Cultivate your banking relationships by engaging in strategic discussions post-audit or when planning future growth investments.

Take Steps in 2024 to Fortify Your Nonprofit’s Resilience

Nonprofit CFOs should examine their risk management strategy, identifying financial, operational, and brand risks to address this year and a plan for incremental improvements over the next 2-5 years. Prioritize strategic financial insights that’ll help you navigate uncertainty and position your nonprofit for sustained success. Reach out for expert guidance on program profitability, enhanced forecasting, and strategic insights.


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