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Today’s Chief Development Officer is Expected to be a Sophisticated Financial Strategist and Planner

Resource Center - Foundation

At the upcoming AFP/Rice University Development and Finance Symposium, the relationship between your development and finance departments will be fostered through education sessions such as Building a Strong CDO-CFO Partnership. Led by Ronald J. Schiller, founding partner of the Aspen Leadership Group and co-founder of the CDO Career Network, this session will talk about the importance of that partnership and how it lends to building strong staff, institutional leaders, donors and more. Tapping into his new book, The Chief Development Officer: Beyond Fundraising, Schiller provides a look into his session at the second annual Development and Finance Symposium, May 13-14. 

Today’s boards expect—and increased external scrutiny requires—CEOs, chief financial officers, and other senior administrative leaders, including CDOs, to employ sophisticated and responsible financial and business planning practices.

Successful CDOs maintain close connections with internal financial leaders and planners. “Since the development office is a major revenue center for the institution, the financial operations teams will have significant interest in the effectiveness of and output from the fundraising office,” says Martin Shell, vice president for development at Stanford University. “Additionally, the institution’s executive leadership and trustees rely heavily on the chief financial officer and other financial officers for accurate and consistent revenue projections. CDOs always work to ensure there is a close alignment between what development offices report as gift revenue and what financial offices and auditors recognize. This is essential to the credibility of the CDO and the fundraising enterprise.”

CDOs also serve as bridges between financial officers and external constituents with an interest in the financial health of their organizations. “Today’s CDOs must be financially literate, able to serve as interpreters between chief financial officers, chief investment officers, and external audiences,” says Susan Washburn, principal, Washburn & McGoldrick. “Successful CDOs are knowledgeable and conversant on the subject of nonprofit business planning and financing, not simply fundraising goals and progress.”

Weakness in any area of financial management damages an organization’s ability to raise money—CDOs capable of understanding and explaining their organizations’ overall financial positions can help prevent or minimize adverse impact on fundraising when financial challenges and setbacks occur.

CDOs who have great facility with numbers instill confidence in board members and senior colleagues. By contrast, those who are unsure of or unable to articulate goals and progress, and how fundraising goals affect larger organizational goals, lose the confidence of those around them. Knowing how to read and interpret numbers also allows CDOs to manage their staff and programs much more effectively.

Facility with numbers and context is also critical when interacting with donors. “The thing that has changed the most in my 35 years in fundraising is the way that donors look at their gifts,” says Mark Kostegan, senior vice president for development at Mount Sinai Hospital. “Today’s donors see their gifts as investments, and they want quantifiable impact. They also expect me to be able to compare Mount Sinai to other institutions, placing our overall performance and planning, not simply our fundraising, in a competitive context.”

Create a CDO-Support Team

Chief financial officers and other budgeting and planning leaders want and need CDOs to succeed—CDOs are responsible for one of their organizations’ largest revenue streams. Chief financial officers and CEOs are predisposed to allocate resources to efforts that lead to increased resources and financial flexibility. Wouldn’t it, then, always make sense to invest a dollar wherever more than a dollar can be returned? Why, therefore, do so many CDOs run into difficulty when asking for increased resources for the development program?

CDOs cannot request investments in development programs in the hope that ‘someday’ the investment will pay off. Organizations cannot afford to invest in development based solely upon an assessment of potential. Whether the projected return is short-term, long-term, or both, and whether it is unrestricted, restricted, or both, investments in development should be based upon solid plans integrated with overall organizational plans.

Standoffs regrettably but regularly arise between chief financial officers and CDOs—a request from the latter for additional resources met by skepticism or outright refusal from the former. Most often, the standoff is a result of one or more of the following:

  • a weak relationship between CDO and chief financial officer;
  • an unhealthy competition rather than partnership between the CDO and others seeking resources, with the chief financial officer caught in the middle; and or
  • a request for investment of unrestricted resources in the development program to produce an unplanned and/or undesired restricted return, with a corresponding net drain on annual operating funds.

Other senior officers make requests of a chief financial officer aimed at advancing fulfillment of the organization’s mission. If they are competing with the CDO for limited resources, the chief financial officer is torn between investments with direct impact on mission fulfillment and investments that might lead to increased resources and thus to increased future impact. This is a lose-lose position that only adds to the stress of the chief financial officer’s already challenging job.

A much happier outcome is achieved when other senior officers support and even advocate for increased resources for development. The CDO is no longer shouting in one ear of the chief financial officer while ‘competitors’ for resources shout in the other—rather, the CDO partners with other officers in developing a plan that balances current needs and future potential, and presents this alongside those partners to the chief financial officer. This kind of partnership is possible, because every other officer is also counting on the CDO to increase fundraising revenue. And it requires that the CDO and chief financial officer have shared goals with respect to the balance of unrestricted and restricted fundraising revenue.

Preparing for the Role of CDO: Advice for Aspiring CDOs 

Fluency in business language and best practice helps CDOs more readily relate to board members, major donors and others who lead their own businesses. Board members serving their first term on a nonprofit board often express their bewilderment at the language and operations of nonprofits. CDOs with excellent business training and experience help board members acclimate more quickly and have a more fulfilling experience. Even more importantly, familiarity with the principles and practices of successful business administration equips CDOs to create and lead high-functioning and sustainable development programs.

  • Ask to listen in on meetings of your organization’s finance committee, investment committee or long-range planning committee.
  • Assist your CDO in annual budgeting. Ask how development’s budget fits into the larger organizational budget.
  • Assist your CDO in long-term planning for development and, if possible, for the organization as a whole.
  • Serve on the board of another nonprofit. Study its budget, profit and loss, and other financial information carefully, and ask its chief financial officer or CEO to explain aspects you don’t understand.
  • Serve on the board’s finance committee or long-range planning committee of another nonprofit.
  • Read The Economist, the Wall Street Journal, and other publications that will help you become more conversant in the language of business and finance.
  • Become an expert in the recording and use of data. Accurate and thorough information supports decision-making in managing development staff. As a CDO, you will use data in making the case for investment in development, and in supporting strategic positions.

To help bridge the gap between your CDO and chief financial officer, register today for the second annual Development and Finance Symposium, held at Rice University, May 13-14. 

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