Small nonprofits rein in costs, expand reach with shared CFOs
The Society for Contemporary Craft has come a long way from its tiny storefront in Verona 43 years ago.
The arts nonprofit grew into a bustling space in the Strip District with gallery space Downtown. Its budget more than doubled in the past two decades, up to $1.1 million, and staffing tripled to 12 employees.
Last year, more than 45,000 people used its services, which include free exhibits, open studio space and workshops on everything from goldsmithing to carving wooden spoons.
But like many small nonprofits, the craft organization often scrambled to finish each year without a deficit, making it difficult to plan long-term investments.
“There are too many years that are just focused on breaking even,” Executive Director Janet McCall said, “and trying to get beyond break-even has been extremely challenging.”
This month, McCall and a group of fellow arts nonprofit executives did something to help put an end to that short-term scrambling: They hired a shared chief financial officer.
Each of the five will remain independent entities while getting strategic financial advice from a professional none of them could afford to hire individually.
“What's attractive about this situation is that everyone still has their own autonomy,” said Heather McElwee, executive director of Pittsburgh Glass Center, another of the nonprofits in the Arts Finance Cohort.
They drew inspiration from a group of environmental nonprofits that hired a shared CFO in 2012.
“It's a relatively simple concept to get your head around, and it actually works,” said Kevin Gieder, the shared CFO for the Environmental Finance Collaborative, which includes Bike Pittsburgh, Construction Junction, GTECH Strategies, Nine Mile Run Watershed Association and Tree Pittsburgh.
Gieder, who was finance group leader at H.J. Heinz Co., said sharing professional services is “something that a lot of other organizations could benefit from.”
Funders throughout the nation are starting to reward meaningful collaboration. The goal is to rein in costs while expanding reach and impact.
“We're seeing appetite amongst nonprofit organizations but also among funders for nonprofits to really find ways to collaborate in service of their missions,” said Sandi Clement McKinley, vice president of the New York-based Nonprofit Finance Fund.
Indeed, the local arts cohort secured grants to cover the cost of a recruiter and the shared CFO's first three years of salary.
The group received $160,000 from the Mc-Cune Foundation, the foundation's annual report shows, and $60,000 through a Community Connections grant from the Allegheny Regional Asset District, which funds arts groups, libraries and parks by using half the revenue from the county's 1 percent sales tax add-on.
“That gives us three years to prove the concept without having to get additional monies from somewhere else,” said Jeffrey Dorsey, executive director of The Union Project, a community arts space and ceramics studio in East Liberty.
The Union Project will provide office space for the CFO. The nonprofits rounding out the arts cohort are PICT Classic Theatre and New Hazlett Theater.
Such nonprofit cooperation is not limited to the financial office.
Among other collaborative efforts using RAD funds: The National Aviary and Children's Museum of Pittsburgh are hiring a shared group sales manager; the Bricolage Production Company and World Affairs Council of Pittsburgh are hiring a shared development officer; and nonprofits that make up the Pittsburgh Music Alliance are using a joint marketing program.
“We thought we could help assets that were trying to work together to lower their overhead,” RAD board Chairwoman Dusty Kirk said.
Plenty of nonprofits — and for-profits, too — team up to share certain resources or outsource financial duties, McKinley said, but the two Pittsburgh examples of shared CFOs are “more evolved” than those she usually encounters.
As Gieder enters his third year of working for the Environmental Finance Collaborative, he says he's pleased by progress he has made and excited about continuing to help each organization get more sophisticated in its financial planning.
He helped cut costs by streamlining some functions. All five nonprofits use the same auditing firm, have embraced a new timekeeping system and are developing detailed dashboards to track financial metrics and project outcomes.
The executive directors of each nonprofit, along with their boards, have final say in decisions. Gieder often plays “devil's advocate” as he provides feedback.
“It can be very cut and dry, return-on-investment analysis, or it can be helping people think through alternatives and understand the risks,” Gieder said.
The Arts Finance Cohort, which started meeting in December 2013, used a search firm to whittle a pool of nearly 100 applicants to a dozen candidates. The nonprofit executive directors selected six to interview.
They chose Rebecca McNeil, a Certified Public Accountant and the Children's Museum director of finance for 17 years. She is set to start the job in February.
Natasha Lindstrom is a Trib Total Media staff writer. Reach her at 412-380-8514 or firstname.lastname@example.org.