Protecting your mission through stronger financial oversight

Protecting your mission through stronger financial oversight

Jill Holtz: Welcome to the Leading with Purpose podcast, where we share practical advice to help mission-driven organizations strengthen governance and lead with confidence. I'm your host, Jill Holtz from Diligent, and today we're exploring a topic that sits at the heart of every successful mission-driven organization, financial oversight. While finance can sometimes be seen as a technical or back-office function, strong financial oversight is really about protecting the mission.

When boards and leadership teams have visibility into financial health, understand the risks ahead, and make informed decisions together, they're far better positioned to deliver meaningful impact on the mission. To help unpack what good financial oversight looks like in practice, I'm joined by two experts, Ryan Alexander and Hannah Romick. In this conversation, we discuss how boards can move beyond reviewing financial reports to using financial information as a strategic decision-making tool.

We explore the questions board members should be asking, how organizations can build a culture of transparency and trust, why governance and internal controls matter, and how leaders can prepare for uncertainty before it becomes a crisis. And do listen to the end to hear Ryan and Hannah's top piece of advice for boards looking to strengthen financial oversight and better protect the mission.

Jill Holtz: I'm really pleased to be joined by two experts in the mission-driven space.

So first I'd like to welcome Ryan Alexander, who is founder of RA Partners and author of a new book called Protect your mission The finance framework for nonprofit leaders. Ryan and RA Partners help nonprofit leaders and boards strengthen financial excellence, build trust with funders, and make sure financial operations support rather than distract from the mission. So you're very welcome to the podcast, Ryan.

Ryan Alexander: Great, thanks so much, really appreciate the opportunity to be here.

Jill Holtz: And I'm also very pleased to welcome Hannah Romick, co-founder and CEO of Conscient Strategies. Hannah and her team at Conscient work with mission-driven boards, CEOs and senior leadership teams to reduce execution risk, navigate growth, transition and transformation. So again, you're very welcome to the podcast, Hannah. 

Hannah Romick: Thanks, Jill. I'm delighted to be here.

Jill Holtz: So I'd like to start with the big picture. Financial oversight can sometimes sound like a technical or back-office topic, but really it is central to whether an organization can deliver on its purpose. So Ryan, can I start with you? When you talk about protecting the mission, as your book is titled, through stronger financial oversight, what does that mean in practical terms for nonprofit leaders and boards?

Ryan Alexander: Yeah, sure, Jill. I think it's important to note that organizations that consistently deliver on their missions are not always the most sophisticated. In fact, typically they're the most aligned. And so financial oversight means that leadership teams share a common understanding of where the organization actually stands, and they can in turn make decisions together.

Jill Holtz: So, Hannah, from your perspective working with public sector, government boards and leadership teams, why do financial decisions often become those leadership, culture, execution issues, rather than just finance department issues?

Hannah Romick: Yeah, I think Ryan hit the nail on the head. When those teams are aligned on the purpose and the priorities and how they make decisions based on the information that they have in front of them, that's really how they can go and execute with strength. And so it's a combination of both priority setting, understanding that the budget is really telling you how they're navigating through whatever it is they're navigating through, and how they're supporting their mission and desired impact.

Jill Holtz: So sometimes I feel like boards might obviously review finances periodically. Maybe they're doing them at quarterly board meetings or during audit season if it's like a public sector situation. But I think stronger oversight requires finance to become part of strategic decision making throughout the year. So, Ryan, what have you seen in terms of signs that maybe a nonprofit is treating finance as that back office function and not the strategic leadership tool? 

Ryan Alexander: This is an all-too-common phenomenon. Oftentimes, when Finance finds out about major decisions after the fact, that typically is not signs of a healthy organization. Other indicators are the budget being built by Finance in isolation, rather than with the programmatic team that's going to implement and execute the budget for the particular year.

And another telltale sign I would say is that leadership can tell you kind of what happened last quarter, but they have very limited visibility into what the next period of time, whether that's 60 or 90 days, kind of looks like from an organizational health perspective.

Jill Holtz: So a bit too focused on what's just happened rather than what's coming next. And Hannah, how can boards and executive teams shift the conversation then so that financial information becomes part of decision making, you know, the alignment that you both talked to?

Hannah Romick: Yeah, it's the operationalization of that data. So, as they have their regular touch points, make sure that it's part of the agenda of in their rhythm, making sure that they have key decisions that everybody is aligned around and that there is the right data for the right level. So, you have your board, you know, probably quarterly check in on here's where we've been, and here's where we're going. Similarly with the executive team on a monthly cadence, and perhaps weekly depending upon the state of the organization. And then with the broader team, similarly, a regular cadence where the right information is shared so that people have an appreciation of how their decisions influence the broader health of the organization.

Jill Holtz: And probably as you go down the levels, the more detailed you become as well, don't you?

Hannah Romick: Different detailed. Yeah, I would say having the right information for the right level is really key.

Jill Holtz: Yeah, and the goal isn't necessarily that every board member becomes a financial expert, but that they know enough and they understand enough to ask better questions to make those better decisions. So, I think, you know, board members receive financial reports, budgets, audit updates, they get a lot of material in the board packs, but they may not always know what questions they should be asking. Ryan, what are the most important financial questions every board should be asking on a regular basis? What's been your experience?

Ryan Alexander: I would say that there's two key buckets. The first is, what is the organization's cash position? And what does that cash position kind of look like over the near term? And oftentimes that's kind of a matter of months, three or six months.

And then the second indicator and an area where I think boards need to press is around revenue. And that more specifically is what is confirmed in terms of what's projected and what is assumed, right? Those are two very different things. And if a board cannot answer those two fundamental questions, I think those are two areas where I would start in order to better understand kind of the underpinnings of the organization that they're stewarding.

Jill Holtz: So cash and revenue, two key areas.

Hannah Romick: For any organization.

Jill Holtz: Yeah, for any organization, not just mission driven. Hannah, what would you like to add to that? 

Hannah Romick: Yeah, I think we have the revenue, we have the cash. And to that point, how much of it is booked? And then what are the tradeoffs? So what do we need to appreciate and make explicit and intentional? And what are some of those tradeoff assumptions? To Ryan's point, if the expected isn't booked, then how are we going to shuffle things around accordingly? And then just making sure that budgets and approvals are related to the capacity that the organization has to really go and utilize those funds. I think a problem that some organizations probably dream about is just that absorptive capacity for a very large influx of financial wherewithal. And that is an area where we often come in and support to right size is that huge influx and having that capacity to absorb it. 

Jill Holtz: Yeah, that's interesting. So I mean, I talked about board members not being don't need to be financial experts. But you know, that oversight can feel intimidating if you don't come from a finance background. So Hannah, can I ask you, how can leadership teams create a culture where board members feel comfortable asking questions, challenging assumptions that we talked about or just in general engaging with financial topics? 

Hannah Romick: To me, a data is just a data point and a number is just a number until you have the information around it. So, coming into those conversations, looking for that context and that information to really help appreciate what that number is indicative of and really creating that shared alignment that we were talking to earlier in our conversation is we're all presumably the board and the leadership team are all aligned around the common purpose. And so really anchoring all discussions around that common purpose and common mission. 

Jill Holtz: Ryan, can I ask you, what does financial clarity look like in a nonprofit board and its culture? What information should be clear, timely and actionable?

Ryan Alexander: I think that's a good starting point. Finance departments, finance teams need to be mindful of the audience that they're speaking to.

So as an example, delivering a 40 page packet that really is extraordinarily detailed and perhaps challenging for folks to interpret is often not the best strategy, right? So aligning around kind of plain language on a consistent schedule with a clear picture of coming back to cash budget to actual performance.

And then, you know, typically there are two or three things that every board meeting or what have you that require a decision and being very clear about what the challenge the organization is facing and then what is the ask of the board based on oftentimes a recommendation from management.

Jill Holtz: So really clear and probably good summaries as well to help understand that detail would really help. I just want to drill a little bit more into the education of the board members. You can't just have one training session, expect them to understand financials. So it's something that you've got to build over time. You've got to onboard them well, repeated discussion, you know, clear reports, ongoing education. So Hannah, what have you seen in terms of organizations building board capability so that that financial oversight becomes part of the board's regular rhythm rather than the just the deep dive once in a while? 

Hannah Romick: I think it's the definition of roles. I think some and the recruitment of the right people for your board.

So having that appreciation of here's the role this this full board is going to play. Here is how we're going to manage as an operational team versus as the board oversight team. And then each person on that board presumably has their role in the part that they are there to play.

And so is that person on for a strategic thinking perspective? Are they on there because they have financial background? They have legal background. They have those are the common ones that people are fundraising background. Those are often the reasons why people are brought on to boards.

And so having that clear understanding of purpose so that there's room for education of those that may not be there specifically for the financials, but also knowing that if you haven't been brought on for that purpose, perhaps that's where you let others take leadership and you hang back for when your role is important.

Jill Holtz: Yeah. And Ryan, I mean, apart from buying your book, what are practical ways to help board members understand financial information without overwhelming them?

Ryan Alexander: I think Hannah makes a point that's really important to underscore, and that is kind of aligning to a lane. You know, a board operates as a collective, but certain individuals definitely have varying levels of expertise around certain subject matters. So I think that from a member perspective, that's important to keep in mind. I would also say that, again, this notion of managing expectations from a board perspective. So delivering, you know, reoccurring reports on the same schedule in the same format. 

The other thing I'm a huge believer of is transparency. And so that manifests itself in different ways, obviously. But one of them is giving the board an opportunity to kind of ask questions. And from the standpoint that they can gain a better understanding of what is happening, especially from a finance perspective in an organization, that in turn will make them better stewards of the organization because they'll quite candidly learn from questions that they either ask themselves or hear others ask. So I would always encourage board members to kind of dive as deeply into financial discussions or what have you as they're interested in doing.

Jill Holtz: So just to kind of recap, I've heard a few really good bits of advice there is like, first of all, it's a presentation of the information to the board that in a way they can understand, maybe leveraging people who are on the board who do have a bit better finance capability, or even the Finance or Audit Committee, getting them to come in and talk and help keep that training and upskilling. And then not being afraid to ask questions and do deep dives, even if you feel that's a silly question. But I love that point about transparency, Ryan, because I'm actually going to move to another topic now, which is that financial oversight is also about trust.

And transparency is so important for trust, isn't it? That the board feels they can trust that what they're looking at is the true financial situation. But also, you know, it's about trust that the community that the organization serves knows that that organization is sustainable, the funders, staff, the board, you know, everybody that the organization finances are sound. So Ryan, talk to me a little bit about why are internal controls so important for mission driven organizations, especially when resources are stretched?

Ryan Alexander: Sure, Jill. So one point before I dive into kind of internal controls, one other, I think, kind of best practice that organizations should consider doing around transparency, from the standpoint, the organization is required to perform an annual audit, I think it's super important that the board have direct access to the auditors, which often results in the auditors, having some block of time during a board meeting to present the audit and board members ask the auditors have any questions. So I think that that's another something that boards should keep in mind from a governance perspective around financial controls. 

In terms of internal controls, I guess I would kind of approach this and look at this from another perspective. And that is most nonprofit fraud is not sophisticated, right? It's opportunistic, you have the same person who is receiving an invoice, entering the invoice and releasing payment on that invoice. That would be an example of a very poor kind of internal control structure that would be set up within an organization. And so these internal controls, and that's just one example of many, but these internal controls ultimately protect the organization, they protect the resources of the organization.

And they also protect kind of the honest person doing their job because the honest person doing their job can then point to, we have internal controls, here's how everything is done. And here's why there would be no fraud kind of under my watch. So a couple of things to kind of keep in mind as internal controls are thought about and ultimately adopted within organizations.

Jill Holtz: Yeah, I love that. Hannah, talk to me, I suppose, sort of at a higher level, then what role does governance play in creating that accountability around the oversight?

Hannah Romick: Yeah, I think it gets back to your point about trust and transparency and having strong governance just drives stronger team and stronger collaboration and stronger outcomes usually. And so having those set people, generally as humans, we like structure and we like rules.

And so having, yes, rules can be broken at times, you need to have the wiggle room and the appreciation of who's responsible for what, at which point, but having those strong governance structures is usually when people then rise to the occasion and make sure that things are moving in the direction they're supposed to.

Jill Holtz: And I think this feels especially important now because the risk of, you know, the finances or fraud, as you say, it's not just a financial loss, that could be reputational damage, loss of funder confidence, or even the worst service disruption because that money's gone astray.

So I think we're in, realistically, I know this is a bit of a cliche, we're in a time of rapid change, but, you know, many mission driven organizations, school districts, local government, all facing shifting funding sources, rising costs, changes in leadership, growth, you know, new regulatory demands, there's a lot going on and there are moments when weak financial systems can then become mission risks.

So Hannah, what do you see, how are organizations tackling this time of change? How are they bringing inputs into board decisions to make strong decisions in times of uncertainty?

Hannah Romick: Yeah, I think uncertainty is always the time when fear is at its highest. And so scrutiny is also often extra, for lack of a better word. And so you certainly having that consistency, so to our conversation, the conversation we've been having, having that consistent and strong reporting mechanisms of narrative to go along with it, the story to go along with the data to really reinforce, here's the area where we really need help, here's the area where we're going to let go.

Here are some things that we're trying to help shape how we rise into the occasion. And I think, you know, 2026 is, is the year we're in right now. And I don't see the pace of change slowing.

And so if you if you as an organization haven't figured out how to operationalize change into the way you're doing business, certainly now is a great time to start thinking about that. Because there are ways, there are ways to build it into your operating rhythm.

Jill Holtz: Yeah. And Ryan, what do you think? How can nonprofit leaders and boards prepare for this ongoing financial uncertainty before it becomes a crisis?

Ryan Alexander: Yeah, I think it's important to note that kind of organizations that handle uncertainty well, are not necessarily the best funded organizations, right? Instead, they're the ones that saw it coming. And so, you know, kind of going back to this notion of a rolling cash forecast, so that if you see a grant slipping, it shows up on your radar weeks or even months before there's actually a crisis at hand, right? So I think that that's important. I think conservative revenue assumptions, instead of optimistic ones are also important.

And then one of the things that I think is important for organizations to ask themselves is, and it needs to be an honest answer, you know, if we lost our top funder or our top two funders, what would we do in that situation? So scenario planning, I think, also meant to Hannah's point, like preparing for the uncertainty, given that we know there's going to be uncertainty, I think is critically important.

Hannah Romick: Having those risk mitigation, how do you diversify? How do you think about, yeah, scenario planning is fundamental.

Jill Holtz: And being able to see those early signals, as you said, Ryan. So for many mission driven organizations, you know, funding is complex, you're talking about grants, funders, nonprofit donors, all have expectations, requirements, regulation that you've got to meet, everything has to be managed carefully, so that you're staying compliant while you're still advancing the mission. So Ryan, what are some common gaps you see in how nonprofits are managing that funding complexity?

Ryan Alexander: Yeah, Jill, I think you hit the nail on the head with grants. I mean, this is often an area where there can be kind of mass confusion between finance and development, in particular.

One of the ways not to manage this funding complexity is for finance to just learn about grants after the fact. I've seen many instances where, you know, development will think a grant is unrestricted, and they're very excited about securing the grant only for finance to later kind of parse through the grant agreement and ultimately determine it is restricted, and perhaps even restricted to a program that is either fully funded or overfunded already. And so, you know, coordination between finance and development is paramount.

You've got restricted grants, unrestricted grants, you've got conditional grants, unconditional grants, and then ultimately you have the reporting function that comes with grants, and that's reporting back to a funder how the money was spent, what programmatic impact the organization had. And so alignment between finance and development in particular, I think, is it cannot be stressed enough as it relates to kind of the grant lifecycle within organizations.

Jill Holtz: Yeah, that's really good advice. Hannah, I'd love to ask you something kind of related, which is something I know boards worry about is mission drift. So sometimes an organization pursues funding because it's available, but that may not fully align with strategy or capacity. Can you talk to me about that? 

Hannah Romick: Yeah, one of our favorite exercises in these situations is, as you think about your strategy and your mission, just really charting on a two-by-two kind of what is that revenue that's going to help us keep things operational, and what is that revenue that really meets our mission, and ensuring that there is perhaps a balance of that. If there isn't sufficient revenue that is aligned with the impact we're trying to have and the operational expenditure we're trying to cover, that's always the best scenario. And I think the realities of our current market and to our pace of change is just appreciation that sometimes we need some revenue that may be a little bit outside of our core delivery, but it brings in the funding necessary to really ensure that mission is accomplished. And so it is very much an ordinary conversation that many should be having, and often a necessary part of driving these mission-driven organizations forward.

Ryan Alexander: Jill, if I could just add, I think that's an excellent point. And I think one, from a finance perspective, one thing organizations need to keep in mind is when they do accept dollars that are kind of outside the purview of their scope of work, that they don't conflate receiving those dollars in with budget-reducing dollars against their budget, right? And so it's a very, a lot of times they'll celebrate the win, but it's like, wait a second, we weren't even supposed to do this program within our budget, and so these dollars don't reduce our budget need as an organization. It's just something that happens from time to time, and so organizations need to be mindful of that.

Jill Holtz: Yeah, certainly.

Hannah Romick: Yeah, if they're restricted or unrestricted, to that whole, all the money comes in so many different shapes and sizes, so the two by two is not, it sounds a lot more simplistic than we described it, and to Ryan's point, you may not want to accept some of those funds if it comes with too much burden and not sufficient budget reduction benefit.

Jill Holtz: Great advice there. So at Diligent, we sell technology, we're passionate about our solutions, BoardEffect for nonprofits and Diligent community for the public sector, how they help mission-driven boards with better governance and oversight. So Ryan, from a governance perspective, what needs to be in place for that technology to actually improve oversight rather than just add another system in place? 

Ryan Alexander: Yeah, Jill, I think that that's a good distinction. Technology does not solve inefficiencies and broken processes and procedures within an organization. I often refer to it kind of as an accelerant. So if you have a bad process and a bad set of procedures internally and you layer on technology, oftentimes it just accelerates that bad process and procedures, right? And so I think it's really important for organizations before they consider implementing kind of any sort of technology solution to ensure that the foundation of the organization and of their systems and processes is strong ahead of introducing any sort of technology that should ultimately help and accelerate kind of their workflows as an organization. 

Jill Holtz: Yeah, that's good advice. So I suppose one of the nice things about our board management software is how it supports the board's oversight by centralizing in one place, not only the board packet, the budgets audit, kind of historic, but also the historical records so that you can go back and see the decisions that were made in the past and that's all in one secure location rather than floating around on the email so that board directors really have the access to information to ask those questions that you talked about earlier to help make better decisions. So I'm really conscious of time, so I'd like to end with one final question for both of you. So I'm going to start with you, Ryan.

Ryan, if a board listening today could do one thing to strengthen financial oversight and better protect its mission, what would your advice be?

Ryan Alexander: I would say that I think the key thing is to make sure everyone in the room is working from the same reality kind of before the meeting. The same numbers, the same assumptions, appreciation and understanding of kind of what's confirmed versus what's hoped for, and I think everything kind of follows from that. I love that.

Jill Holtz: Hannah, if a board listening today could do one thing to strengthen financial oversight and better protect its mission, what would your advice be?

Hannah Romick: Yeah, I think what Ryan said is true and it's that regular discipline of just connecting the financials with that mission critical decision. Having that as part of how they operate and really driving that alignment and that cohesive set of goals really drives organizations forward. I love that.

Thank you. Thank you both so much for joining me today and sharing your insights. Ryan, I will put a link to your book in the show notes and Hannah, your website as well so people can go and explore and find out more. So thank you both. 

Hannah Romick: Thank you, Jill. This was delightful.

Ryan Alexander: Yeah, thank you so much, Jill. Appreciate it.

Jill Holtz: Thank you for listening to this episode of Leading with Purpose. I hope today's conversation with Ryan and Hannah gave you some practical ideas for strengthening financial oversight and using it as a powerful tool to advance your mission. 

One of the key themes that emerged, I felt, was that strong financial oversight isn't simply about reviewing numbers. It's about creating alignment around priorities, building transparency and trust and ensuring that boards and leadership teams are working from the same understanding of both the organization's current reality and future risks.

If you'd like to learn more, I'll include links in the show notes to Ryan's book, Protect your mission The finance framework for nonprofit leaders, as well as information about Hannah and Conscient Strategies. And if I could ask you a special favour, if you enjoyed listening, please do rate and review the podcast wherever you listen, as it helps more board members, executives and governance professionals discover these conversations. Thanks again for tuning in and I look forward to bringing you more practical advice for purpose-driven governance on the next episode of Leading with Purpose.