The rise of the charity finance leader

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The role of a finance leader in a charity is multi-faceted. They sit on the board, direct the strategy, lead on governance, all while managing budgets, invoices, and generally keeping the organisation’s finances in check.  

It can be difficult for finance leaders within charities to juggle these competing priorities. According to research highlighted in The Rise of the Data-Driven Nonprofit Finance Leader, on average, finance leaders set a goal of spending 50% of their time working on strategy, yet three quarters of their working day is spent instead on routine accounting and protecting the organisation against risks. 

Striking a balance between these two priorities is necessary. Without it, research suggests that more than a third of executives make the important decision either reactively or after putting it off until the decision can’t wait anymore.

These statistics are even more sobering given that four in five Chief Financial Officers believe they are not keeping up with the pace of change well enough. 

Finance Directors and Executives have a large part to play in leading their charity to better outcomes. The breadth of their role means that they can effectively direct strategy and improve impact, which, in turn, has a beneficial effect on fundraising too.

Donors and supporters care most about a charity’s overall efficiency – this is the most searched aspect of a charity’s operations before they donate, according to Nonprofit Financial Management Software, Sage Intacct..  

The Rise of the Data-Driven Nonprofit Finance Leader outlines ways that Finance Directors can strike that aforementioned balance between business as usual and driving strategy.  

It points to three key stages of financial leadership, which we’ve outlined below.

• • Financial Leadership 1.0 

Financial leadership 1.0 is the most basic level of Sage Intacct’s scale. Financial leaders at this stage are ‘financial historians’, looking back rather than forwards and taking on too many manual accounting tasks. 

• • Financial Leadership 2.0 

Those at the second stage of financial leadership are better at using real-time data to make decisions in the present. They are called ‘Business analysts’.  

• • Financial Leadership 3.0 

The most advanced stage of financial leadership is about looking to the future. Whereas the previous two stages were about looking at the past and present respectively, Financial Leadership 3.0 make use of Artificial Intelligence, using data to predict their charity’s direction in the future. This stage is that of the ‘Data-driven strategist’. 

Financial Leadership 3.0 should help charities identify their next steps, where they should invest their funds and how they can maximise their impact for beneficiaries and program participants.  

The e-book goes on to talk about the people, processes, and technology that charities need to put in place in order to achieve financial leadership 3.0. It advises financial leaders on how they can better segment their data to monitor the metrics that matter most to their organisation, such as the number of projects delivered or the number of people helped.  

The Rise of the Data-Driven Nonprofit Finance Leader also outlines the benefits of being a data-driven finance leader. These include faster reporting, an increase in donors, and a growth in grant funding. To find out more about these benefits, you can download the e-book below.