Why the Back Office Must Be a Priority
Picture this: A funder is about to sign on the dotted line, but they ask to see your financials. You pull numbers from your system only to realize they don’t look quite right. Upon investigation, you realize they’re not correct and discover the root of the problem is issues with your finance process — employees are tagging expenses with the wrong codes. You’ve been sharing the wrong numbers with funders.
This is the situation that nonprofits might find themselves in if their back office has taken a backseat. Yet by referring to their finance, talent and technology teams as the back office, nonprofits are already devaluing the important work these teams do. Their critical work propels the program, drives impact and supports fundraising by bringing efficiency and effectiveness to functional areas and driving operational excellence across the organization. Any nonprofit looking to succeed should consider these integral support functions a priority to their long-term success.
Financial Planning Is Key to Long-Term Success
Nonprofits that don’t prioritize support functions can’t grow. Without the proper support team in place, a number of problems could arise, including a gap in funding. Funding is fleeting for nonprofits — supporters chase recent fads causing irregularity and unreliability in cash flow for most nonprofits. Currently, nonprofits addressing pandemic issues or focusing on DEI are receiving heightened attention, but that could change at the drop of a hat. If nonprofits don’t prioritize a strong finance support function to budget for long-term financial sustainability, they risk cutting programming or staff or even having to close their doors. Even for organizations with ample funding cushion, a lack of focus on long-term financial sustainability can hinder future growth and viability.
A ‘Whole Person’ Approach Is Necessary to Attract and Retain Talent
Nonprofits are not immune to employee turnover and are often more susceptible than for-profit companies to attrition. When something unexpected (like a pandemic) happens, having a strong talent function that understands the labor market and how best to attract and retain employees is critical. As baby boomers retire and Gen Z joins the workforce, the way employees work and what they expect from their employers is shifting. A strong talent function that can address these challenges from a “whole person” perspective and appeal to what employees want most right now — culture, engagement, purpose, growth, balance — can be the key to turning attrition into retention.
Preparing for a Disaster Requires the Best — Not the Cheapest — Solutions
Cybersecurity and ransomware news headlines lately have been cause for concern. While chances are slim that a nonprofit would be the target of an attack, their service provider could very well be, especially with so many nonprofits receiving in-kind services from big providers. Now more than ever, organizational leaders must consider what cybersecurity protections they have in place. Often, leaders choose the cheapest option rather than the best one and leave their organizations vulnerable to future attacks.
Support Functions Must Work Together to Be Effective
When creating a strong back office infrastructure, it is vital that support functions work together. Talent can approach acquisition and retention strategies through a financial lens, creating solutions that appeal to employees on multiple levels. The technology team can work with finance to find an optimal security solution, rather than a cheap one, thereby protecting the company in the long run. Finance teams can support functional teams in making value-driven decisions that contribute to the long-term sustainability of the entire organization. Only when support functions work together and in collaboration with other functions can a nonprofit reach its full potential.
Prioritizing Support Functions Is Simple
These are only a few reasons why deprioritizing support functions can cause challenges for nonprofits and why it’s so critical for nonprofit leaders to invest in and build strong support functions. The steps to do this successfully include:
- Identifying your challenges and hiring the right people to tackle them. Be open to hiring people who have transferable skills versus nonprofit-only backgrounds. Let candidates tell their stories and make hiring decisions based on that, rather than solely what’s on their resume.
- Getting your leadership team on board. Bring functional leaders into the fold when making hiring decisions and encourage them to share the value of support functions with their teams.
- Build support and program team understanding. Many nonprofits have support function teams that don’t know anything about the company beyond their functional focus. Leadership should create meaningful opportunities for support teams and program teams to connect on a regular basis and help create a mutual understanding of why different functions matter.
- Showing how much support teams are valued. People who work in support functions often feel undervalued. The more nonprofit leaders work to highlight and elevate the key role these departments play in the long-term success of the organization to all stakeholders, the more success they will have in attracting and retaining these key support team members.
Given today’s competitive fundraising landscape, tight labor market and risky cybersecurity backdrop, now is the time to make support functions a primary focus. By putting a spotlight on the finance, talent, and technology functions, your nonprofit has a better chance at long-term success.
Pareen Kohlhaas is the chief operating officer at COOP Careers. She spent 13 years working in financial services across New York and London at Goldman Sachs, Bank of America, Morgan Stanley and Nomura. In 2015, she transitioned into the nonprofit sector through the Broad Residency in Urban Education, serving as the director of recruitment for KIPP NJ and consulting in talent strategy at East Harlem Tutorial Program and College Advising Corps. Most recently, she was chief operating officer at the SIFMA Foundation, a national financial education nonprofit.
She was born in India and came to the U.S. at age 4. She grew up in New Jersey and completed her undergraduate degree at Villanova University and a Master's in finance at London Business School.
She currently resides in her hometown of Middletown, New Jersey, with her husband, Michael, their two sons, Julian and Teddy, and their dog, Penny. Pareen speaks five languages and loves to travel.