Focus on performance shines light on CFOs.

Many nonprofits are focusing on the CFO function in their organizations--the result of increased scrutiny of nonprofit organizations' financials and performance, higher accountability to the public trust and the rapid growth and increased complexity of individual organizations.

So says Bridgestar, a nonprofit initiative of the Bridgespan Group dedicated to attracting, connecting and supporting senior leaders for the nonprofit sector. In its July newsletter, Leadership Matters, Bridgestar examines the state of the nonprofit CFO, based on surveys, in-depth interviews and focus groups with nonprofit leaders. The report found patterns among CFOs of similarly-sized organizations across the country, in terms of the roles and responsibilities of the CFO, major challenges and keys to success.

Not surprisingly, Bridgestar found that many finance chiefs, especially those in mid-sized to larger nonprofits, have worked in the for-profit sector and "bridged" into the nonprofit sector within the last 10 years. Only a handful were "homegrown" in the nonprofit sector.

When organizations with budgets under $10 million did have CFOs, they tended to wear a lot of hats, such as finance (including budgeting, cash flow and accounting), IT, legal, HR, administration and operations, including facilities--giving them more in common with chief operating officers. In contrast, CFOs in organizations with budgets over $40 million were more likely to focus exclusively on the finance function.

Given the missions of their organizations and the resource constraints nonprofits often face, CFOs told Bridgestar that one of the top challenges they face is dealing with nonprofit economics. For example, because restricted gifts must be used for specific purposes, having a positive bank balance doesn't mean an organization is solvent or can use the money any way it needs to. CFOs may find themselves telling their staffs to cut back in one area while urging them to spend in other areas or lose funding.

For CFOs trained in the for-profit world, challenges included the consensus-driven culture of nonprofits, dealing with multiple stakeholders, working with non-financially-oriented staff and figuring out how to measure success in a culture that emphasizes mission over the financial bottom line.