Your CPA Will Not Take Care of It: Why Executive Directors Must Lead Financial Stewardship
When Executive Directors don’t take a leadership role in their nonprofit’s finances, bad things happen.
In one organization I worked with, the ED would make major purchases without a clear sense of whether they could actually afford them. He nearly bankrupted the organization at least twice!
In another organization, all power and knowledge rested exclusively with the finance committee chair. Only he was trusted to interpret the financial reports. Unfortunately, he had a very powerful side mission: never spend and money. It took a crisis and a lot of work to bring financial transparency to the organization so the board and executive director could actually participate in financial strategy.
The Abdication Problem: Why Executive Directors Step Back
Let's be honest about why so many executive directors find themselves on the sidelines when it comes to financial leadership. The reasons are understandable, even logical on the surface, but they're creating a dangerous gap in nonprofit leadership.
The most common culprit is the "I'm not good with numbers" mindset. Somewhere along the way, many of us decided that we are either "math people" or "people people," and since we chose the nonprofit sector to serve others, we must fall into the latter category. This false dichotomy has executive directors believing they can't or shouldn't be involved in financial decision-making because they don't have an accounting degree or MBA.
Most American adults, including most executive directors, have some level of math anxiety. If you’re one of them, you’re in good company because this describes 13 out of 14 people. The standard financial reports, and the way they get presented, typically makes this situation worse. They were created with a CPA as the target audience, not you. So it should come as no surprise that dealing with the finances can sometimes feel like getting your teeth pulled.
Then there's the over-reliance on treasurer, bookkeeper, or CPA expertise. Your treasurer volunteered for a reason – they have financial skills, maybe even professional experience in finance or accounting. Your bookkeeper or CPA brings technical expertise and attention to detail. It feels natural, even respectful, to defer to their expertise. After all, isn't that why you recruited them or hired them in the first place? But here's the problem: being technically skilled in accounting doesn't automatically make someone the right person to lead your organization's financial strategy. Moreover, these roles are inherently backwards-focused: they're working with historical data, recording what already happened, ensuring compliance with past transactions. Strategic financial leadership requires looking forward. It's a completely different skill and mindset.
Many executive directors have also internalized the belief that financial management isn't "mission work." When you're passionate about serving your community, dealing with budgets and cash flow can feel like a distraction from “the real work.” This mindset creates an artificial separation between mission and money that simply doesn't exist in successful nonprofits.
Board dynamics often reinforce this separation. Some boards actively discourage ED involvement in finances, seeing it as their fiduciary domain. Others have treasurers who prefer to work independently or who communicate in financial jargon that makes others feel excluded. These dynamics can make executive directors feel like outsiders to their own organization's financial health.
Finally, let's acknowledge the elephant in the room: time constraints and competing priorities. Between program delivery, fundraising, staff management, and community engagement, financial oversight can feel like one more thing on an already impossible to-do list. It's tempting to think, "At least I can cross finances off my list because the CPA has it handled."
The Real Problem: Limited Perspective and Excessive Caution
Here's what many executive directors don't realize: your treasurer and accountant, while well-intentioned and skilled, typically don't have the full picture needed to make strategic financial decisions for your organization.
Treasurers usually see finances through a compliance lens. They're focused on whether the numbers add up, whether reports are accurate, and whether you're following proper procedures. Bookkeepers and CPAs share this backwards-looking perspective – their training centers on accurately recording what has already occurred and ensuring compliance with established rules and procedures. That's valuable work, but it's not strategic thinking. They may not understand the seasonal nature of your programs, the relationship between a particular grant's restrictions and your actual service delivery, or why investing in new software now could save significant costs later. Their perspective is often limited to what they can see in the financial statements, not the operational realities that drive those numbers or the future possibilities that could change them.
Accountants face similar limitations. Whether they're staff members or external contractors, they're typically focused on recording transactions accurately and ensuring compliance with accounting standards and grant requirements. They may not understand your programmatic goals, the competitive landscape for funding, or the strategic investments that could position your organization for growth. Their job is to tell you what happened financially, not necessarily what should happen next.
Even more problematic is the tendency toward extreme risk aversion that's common among accounting professionals. While some caution is absolutely appropriate and necessary in nonprofit financial management, too much can paralyze the organization. Treasurers and accountants focus heavily on avoiding problems, which too often translates into also avoiding opportunities.
This excessive fiscal conservatism shows up in several ways. They may resist investing in fundraising that could significantly increase revenue because it requires upfront costs. They might oppose building reasonable operating reserves, preferring to keep cash in checking accounts earning nothing rather than invest conservatively for better returns. Or conversely, they may put too much emphasis on building a reserve fund at the expense of organizational health and mission impact. They often discourage strategic risks like expanding into new programs or compensating staff better to reduce turnover, even when the organization has the capacity and need is clear.
Perhaps most frustratingly, this conservative approach often extends to equipment and tools. You'll hear arguments for keeping inadequate technology "because it works" or underpaying staff "to keep costs down," even when these decisions are actually costing the organization money and mission impact in the long run through reduced productivity, lower morale, and higher turnover.
The result is organizations that are financially stable but strategically stagnant. They're not losing money, but they're not maximizing their impact either. They're playing not to lose rather than playing to win.
The Case for Executive Leadership: Why You Must Step Up
The most effective nonprofit financial decisions happen when executive directors are engaged and informed, working collaboratively with their finance-focused colleagues rather than deferring to them completely. Here's why your leadership is irreplaceable in financial stewardship.
You have program knowledge that informs budget priorities in ways that financial statements simply cannot. You understand which programs have waiting lists and which struggle to attract participants. You know where slight increases in funding could dramatically improve outcomes and where budget cuts would be devastating versus merely inconvenient. This operational insight is crucial for making strategic financial decisions that support your mission.
Your daily operations insight reveals the true costs of running programs. While your accountant can tell you what you spent last quarter, you understand the hidden costs of staff turnover in particular positions, the seasonal fluctuations in utility costs, and the real expenses associated with compliance requirements for different grants. This knowledge is essential for accurate budgeting and honest conversations with funders about the true cost of delivering services.
Grant and donor relationships increasingly require financial fluency from executive directors. Major donors want to understand not just what you accomplished, but how efficiently you accomplished it. Grant officers expect you to speak knowledgeably about cost per participant, leverage ratios, and financial sustainability. You can't effectively steward these relationships if you can't speak confidently about your organization's financial health and trajectory.
More critically, your credibility as a leader is at stake in these conversations. When a major donor asks about your cost structure and your response is "Oh, our CPA takes care of that," or when a program officer inquires about sustainability planning and you defer to your treasurer, you're signaling that you're not fully engaged in leading your organization. Funders lose respect for executive directors who can't speak intelligently about their organization's finances. They begin to question whether you're truly in charge or whether anyone is in charge at all!
This credibility challenge extends beyond external relationships. Board members also lose confidence in executive directors who abdicate financial leadership. When you consistently defer financial questions to others, your board may begin to treat you like a child in money conversations – and since almost all strategic conversations have a financial component, this infantilization extends to most important organizational decisions. Board members start making decisions around you rather than with you, undermining your ability to lead effectively. Or they may require you to get their permission before making purchasing or hiring decisions.
Your staff need financial context to do their work effectively. When program managers understand budget constraints and opportunities, they make better day-to-day decisions about resource allocation. When development staff understand the organization's financial position, they can craft more compelling and honest cases for support. Financial transparency within the leadership team creates a culture of shared responsibility for organizational health.
Most importantly, strategic planning demands financial literacy from the executive director. You can't set realistic goals without understanding current financial capacity. You can't evaluate opportunities without being able to assess financial implications. You can't lead an organization toward sustainability without understanding the financial levers available to you.
Take Action: Practical Steps for Financial Leadership
Ready to step into your role as financial leader? Here are concrete steps you can take without becoming your organization's bookkeeper.
Start with monthly financial review meetings with key staff. Schedule a standing meeting with whoever manages your day-to-day finances – whether that's a staff bookkeeper, contracted accountant, or volunteer treasurer. Use this time to review not just what the numbers say, but what they mean for upcoming decisions. Ask questions like: "What are we learning from these trends?" and "What should we be watching for next month?"
Create a dashboard of key metrics that tell your organization's financial story at a glance. This might include cash on hand, months of operating reserves, program revenue versus expenses, and key ratios like cost per participant or fundraising return on investment. Update this monthly and share it with your leadership team.
Transform your board reporting from dry financial statements to compelling financial narratives. Instead of just reciting the balance sheet, tell the story of what these numbers mean for your mission. Explain how current financial trends support or threaten your strategic goals. Help board members understand not just where you are, but where you're headed and what course corrections might be needed.
Integrate financial data into all your program discussions. When evaluating program effectiveness, include cost per outcome alongside participation numbers and satisfaction scores. When planning new initiatives, discuss financial sustainability from the beginning rather than treating it as an afterthought.
Develop a habit of asking the right questions regularly. You don't need to understand every detail of bookkeeping, but you should consistently ask questions like:
"What does this mean for our cash flow over the next three to six months?"
"How does this compare to our budget and to the same period last year?"
"What assumptions are we making in these projections, and what happens if we're wrong?"
"What opportunities might we be missing because of our current financial position?"
"What would we need to see financially to feel confident about [specific decision or investment]?"
"Are we being too conservative or too aggressive with this choice?"
"What are the financial implications if this program grows by 25%? What if it shrinks?"
"How does this expense/investment help us achieve our strategic goals?"
"What financial trends should be concerning us that we might not be noticing?"
"If we had an extra $50,000 right now, what would give us the best return on mission?"
Build Your Financial Leadership Capacity
Developing financial leadership skills doesn't require going back to school for an accounting degree. It does require is finding the right kind of training and support that meets you where you are.
Look for training programs specifically designed for nonprofit executives, not generic business finance courses. The best programs understand that you need to learn financial concepts in the context of nonprofit operations, grant restrictions, and mission-driven decision making. (Full disclosure: Nonprofit CFOs often provides this kind of training.)
Consider working with a consultant or coach who specializes in nonprofit finance and can explain complex concepts in plain English. The best financial coaches approach their work like fifth-grade math teachers – they're friendly, welcoming, and maybe even entertaining. They break down intimidating concepts into manageable pieces and help you understand not just the "what" but the "why" behind financial management practices.
For organizations with sufficient budget and complexity, the right Chief Financial Officer (CFO) or Fractional CFO can form part of the solution. Unlike bookkeepers and CPAs who focus on historical data, a good CFO's job is to be strategic and forward-looking. They bridge the gap between compliance and strategy, helping executive directors understand not just what happened financially, but what should happen next. A fractional CFO can provide this strategic financial partnership without the cost of a full-time position, making this option accessible to small and mid-sized nonprofits.
When evaluating potential coaches or trainers, look for people who can translate accounting jargon into practical management language. You want someone who can explain why cash flow matters differently from profitability, how to read financial statements like a strategic leader rather than an accountant, and how to create meaningful financial reports that help your board make better decisions.
Be sure to block recurring time on your calendar to review the financial reports. Just twenty minutes a month, over time, will allow you to get a sense of what’s normal, what isn’t, and make it easier to identify any potential problems while they’re still small.
And make time to review your organization's financial policies and internal controls. You don't need to write these policies yourself, but you should understand what they say and why they exist. Regular policy reviews also provide great opportunities to ask questions and deepen your understanding of financial management principles.
Of course, you should build finance skills across your entire leadership team, not just yourself. When your program managers, development director, and other key staff understand basic financial concepts, the whole organization makes better decisions. Consider bringing in trainers for leadership team workshops or sending multiple staff members to relevant training programs.
Your Financial Leadership Starts Now
The path forward is clear: nonprofit organizations thrive when their executive directors embrace financial leadership. Your CPA and treasurer's expertise remains valuable, but it cannot substitute for your strategic vision and operational knowledge.
This isn't about becoming an accountant or taking over anyone else’s responsibilities. It's about claiming your rightful role in guiding your organization's financial health and strategic direction. It's about ensuring that financial decisions support rather than limit your mission impact.
The stakes are too high to remain on the sidelines. Your community is counting on your organization to be both effective and sustainable. That requires executive directors who can integrate financial thinking into every aspect of organizational leadership.
Your journey toward financial leadership can start today with a simple step: schedule that monthly financial review meeting, get a dashboard of key metrics, or sign up for a financial training program designed for nonprofit executives. Which step you take first matters less than taking that first step.
Pro Tip
Here's the truth your treasurer and CPA might not tell you: they're hoping you'll step up too. They want a partner in financial stewardship, not a passive recipient of their reports. They want an executive director who can engage in strategic financial conversations and help the organization make decisions that balance fiscal responsibility with mission impact.
Your organization's financial health is too important to delegate entirely to others. It's time to reclaim your role in leading it.