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Take It from This CFO: Why Nonprofit Boards Need Your Expertise

Bennet P. Tchaikovsky is the chief financial officer of VLOV Inc.

Nonprofits need you. As a CFO with corporate experience, your background is invaluable and a necessity given the continued scrutiny being placed on nonprofits. Being on a nonprofit’s board can give a CFO valuable exposure and board experience, all while giving back. I’ve had the pleasure of serving on two not-for-profit boards in the last four years and am still involved with both organizations. I can only say in so many words that these organizations have given back to me more than I’ve given to them.

One of the great things about being involved with a nonprofit is that you are dealing with an organization with a primary goal of being transparent. All nonprofits have their Form 990s posted on websites, such as GuideStar, and give a prospective donor or board member the ability to review the financial statements of the organization prior to either donating or becoming involved with a nonprofit.

The need for CFOs to be involved with nonprofits is greater than ever: Charity Navigator, the leading agency that rates a nonprofit’s accountability, transparency, and corporate governance will soon add efficiency as a criteria and measure how a nonprofit is progressing towards achieving its stated purpose.

With this increased demand in mind, I’ve listed some guidelines for CFOs to consider prior to joining a nonprofit.

Rule 1: Look before you leap.
You may have the opportunity to look inside a nonprofit and see how it operates by first being a part of its advisory board or audit committee rather than the full board of directors. This is what I did for my first nonprofit board. As an advisory board member, I went to meetings, participated in governance discussions, and offered suggestions in the finance committee. I got my feet wet but didn’t have to make a full commitment. I was never viewed any differently than a regular board member, and after a few years I joined the regular board.

If this is not an option, do your diligence: Review the financials, talk with past board members, and look online to see if there are any reviews of the nonprofit. Being on a nonprofit takes time, and you want to make sure that you are investing your time wisely.

Rule 2: It starts and ends with the executive director.
My long-time mentor told me seven years ago as I was beginning to look at joining a nonprofit that he would join one only if the executive director (ED) was exceptional as the ED is the day-to-day face of an organization. The ED for a not-for-profit has multiple items to juggle, including dealing with other board members, charitable events, and staff. Also, given the heightened scrutiny on not-for-profit organizations, an ED must take the initiative and responsibility to ensure that the organization is accountable, transparent, and effective. Many nonprofits create charts as to how EDs are spending their time. See if you can see the chart before joining; it’s invaluable to know whether the ED is consumed with organizing golf tournaments, focusing on fundraising, or truly helping the nonprofit meet its intended purpose.

Rule 3: Determine the time commitment.
When interviewing the ED and other board members, be sure to ask about the expected time and financial commitment. If an nonprofit’s board is large, meetings may take longer, unless the board president or ED can take the agenda and make sure the discussion stays on point. Try to join a board where you can make the meetings and be active. You’ll get more out of the experience, and the nonprofit will benefit as well.

Rule 4: Treat the nonprofit like a publicly traded company.
Financial statements of nonprofits, with the exception of some governmental accounting issues, are essentially the same as for-profit enterprises. Additionally, related-party transactions need to be fully disclosed in the financial statements of a nonprofit.

A good friend of mine once had a meeting with a nonprofit that was looking for board members. During the course of the meeting, my friend learned that the nonprofit was paying a director but didn’t disclose that fact in the footnotes for its auditors. He brought this up to the ED and said it would be an issue if he became a board member. He never heard from the nonprofit again. As an exempt organization, nonprofits are generally non-taxable. Therefore it is extremely important that a nonprofit fully transparent internally and externally. All of the nonprofit’s corporate governance should be posted to the website, and Form 990s should be easily accessible. Charity Navigator provides great guidelines and metrics for how nonprofits can achieve accountability, transparency, and effectiveness.

Rule 5: Stay away from the big gala.
When an nonprofit hosts a golf tournament or formal affair, the board needs to ask: How much of the ED’s time is being taken out of the organization’s exempt purpose and being placed into the event, and does the board have enough resources to effectively pull off such an event? The transparency rules apply here as well. If organizers are getting paid a bonus or other contingent compensation for obtaining sponsors, this should be disclosed.

As a corporate donor, I would be upset to discover 10 to 20 percent of what I donated was going in the pocket of a salesperson assigned to an event instead of the organization. Eliminating these types of events can be difficult as the big event may define the organization. I am not a party planner (obviously a party pooper) and would rather not spend my time and energy planning these affairs.

Rule 6: Know when to step away.
Board members are responsible for ensuring the nonprofit’s long-term viability. For that reason, speak up if you have conflicts with members of the board or the ED. If there is fraud or some other clear type of wrongdoing taking place, then it is your obligation to ensure that the nonprofit does the right thing and corrects the irregularity. However, if you have a continuous disagreement with the board or the ED, it may be time to move onto a different organization that will more appreciate your time.

Helping nonprofits is one of the best ways to give back. Nonprofits need the help and time only a CFO can provide. Your business background and perspective is invaluable to nonprofits especially as they continue to be subject to greater public scrutiny.

Bennet P. Tchaikovsky is the chief financial officer of VLOV Inc. (OTCQB: VLOV). He has served on public and not-for-profit boards as the audit committees’ designated financial expert and as CFO for numerous publicly traded companies, and he has been integral in the uplisting of several companies to the Nasdaq. Tchaikovsky is a licensed CPA and attorney in the state of California and a graduate of Southwestern University School of Law and UC Santa Barbara. He also serves on the board of directors of the Arthritis National Research Foundation and the audit committee of the Long Beach Day Nursery. He can be reached at bennetatwwofficers [dot] com or 310-622-4515.

Comments

Bennet Tchaikovsky
Title: Chief Financial Officer
Company: Worldwide Officers, Inc.
(Chief Financial Officer, Worldwide Officers, Inc.) |

Chris-

Thanks for your comments/questions.

I was able to join a not-for-profit thanks to a networking group/association that in addition to their main objective of corporate networking also went out of their way to help not-for-profits build boards. During the networking meetings the organizer made a point to talk about the "front and back side" of a business card: the business side (what one does for a living) and back side (personal & not-for-profits that you were involved with). I made it very clear to the organizer that I wanted to join a not-for-profit board & announced when talking about myself at the meetings.

Once you know the type of board that you want to join, here are some suggestions to joining up with an organization:

1. Let your social/business network know that you are looking to join a not-for-profit board. I've found that once you put the word out people are more than willing to assist you in finding a opportunities.
2. Find a recruiter that specifically looks to build not-for-profit boards. Recruiters can be found through general internet searches.
3. Search not-for-profits in your area or interest. Both guidestar.org and charitynavigator.org have tools whereby you can search by zip code/area to identify potential groups.

Once you identified the group you'd like to join, use your social networking accounts to make the initial connection (remember, everyone in your contact group will want to help you with an introduction).

If you don't have a direct connection, I would suggest contacting the Executive Director and/or Board Chairperson directly with a cover letter offering your time to assist the organization and your compassion for the organization's cause.

I hope this helps and please do not hesitate to post again with further questions.

Best,

Bennet

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

Bennet - Thanks for sharing this valuable piece of information. There was once a question posed here on Proformative about to get involved with a non-profit. You briefly mentioned that above. I would be interested in knowing how you did that more fully, for those of us that are seriously considering becoming a part of a non-profit board, especially within a finance/audit committee position.

One of the best ways I can think of is to be involved in serving within the organization in some capacity. Any others you can recommend? Perhaps a post for another time.