The latest episode of “A Modern Nonprofit Podcast” features Maya Tussing, a financial professional and co-founder of Fairlight Advisors, who specializes in investing for nonprofit organizations.
Maya and her team are dedicated to helping nonprofit organizations manage their investments effectively. In this episode, Maya shares valuable insights on various financial topics crucial for nonprofits, from understanding organizational roles to planning for the future.
Understanding Organizational Roles
When it comes to nonprofit finance, the complexities often cause many to shy away from the topic. To simplify things, let’s start with the key players involved. Maya and her team at Fairlight Advisors typically collaborate with the Director of Finance and the board’s finance committee chair within 501(c)(3) organizations. These roles are vital for overseeing the organization’s financial health.
The Director of Finance, often working closely with a board member who chairs the finance committee, ensures the best financial decisions are made for the nonprofit. This partnership allows for continuous board involvement in financial matters rather than limiting discussions to periodic meetings. In smaller organizations, these responsibilities might fall on a single individual.
Effective communication of the organization’s financial health is crucial. The Director of Finance or Treasurer must be well-informed about all financial aspects, including bank relationships, reserves, and brokerage accounts. This knowledge allows them to speak confidently about the organization’s financial status during presentations and board meetings.
Asking the Right Questions
During the podcast, Tosha asks Maya about the essential questions a treasurer should pose to the executive leadership. Surprisingly, the questions are straightforward yet profound:
- Where are all the banks that the organization uses?
- Are there specific financial ratios the organization focuses on?
- How much money is in the bank account?
- Are there any brokerage accounts?
- Is there a reserve? How much is in it?
These questions help establish a baseline understanding and uncover potential issues that might otherwise go unnoticed. It’s crucial to analyze financial trends, such as the performance of accounts, to make informed decisions and avoid potential financial pitfalls.
Planning for the Future
The conversation also delves into future planning strategies for nonprofits. Maya emphasizes the importance of endowments, regardless of their size, as they provide financial stability and positive optics for the organization. While some boards may view investment in capital markets as risky, many businesses use this space for employee retention, financial growth, and group benefits.
When planning for the future, it’s essential to align investment strategies with the intended purpose and timing of the funds. For instance, it’s not advisable to invest in the stock market if the funds are needed within a year, or to lock money in a CD for 5 to 10 years if short-term accessibility is crucial.
The goal is to be good stewards of the funds, ensuring they meet both present and future needs. This involves balancing the immediate needs of the community with long-term sustainability. Nonprofits must be prepared to respond to sudden community needs without having funds inaccessible due to long-term investments.
The Role of the Treasurer
Ultimately, the Treasurer’s role is pivotal in ensuring the nonprofit’s financial health. This involves not just understanding revenue sources and expenses but also the broader impact of financial decisions on the organization’s mission. Regular audits help, but they don’t replace the need for deep, intuitive financial analysis and decision-making.
For more insights and resources from Maya and her team, visit Fairlight Advisors’ website. You’ll find free nonprofit resources, including blogs, guides to starting an endowment, and other high-level financial information.
We hope you enjoyed this episode. Be sure to engage with “A Modern Nonprofit Podcast” by listening, reading, or watching on YouTube. Don’t forget to review, share, and connect with Tosha and the Charity CFO team on YouTube or at thecharitycfo.com!
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