Nonprofit Finances are a Racial Justice Issue: Part I

Written by Anita Rodgers, NWHF Director of Finance & Operations

Very few of us start or join a nonprofit organization because we love writing bylaws and following Generally Accepted Accounting Practices, right? We do it because of personal experience, passion for an issue and commitment to justice. Then we suddenly find ourselves having to be an expert on HR, finance, IRS rules and compliance. It can be overwhelming to say the least. But formal nonprofits are required to operate within specific legal and financial frameworks and, with the incoming administration, we need to be ready for greater scrutiny on all of our work. 

Confession: I am one of the very few who actually does like digging into nonprofit financials. And what I love even more is helping my colleagues understand financial statements and engage in conversations about our financial health, because nonprofit finances are fundamentally a racial justice and equity issue.    

In many ways, we are taught to think that finances are boring and inaccessible. And, honestly, they can be. In nonprofits, staff and board members are often presented with incomprehensible financial reports. We are checked for asking questions, then patronized for not understanding the responses. And we aren’t given useful training or time to learn. As a result we often end up pretending we know what is going on with the financials or just feigning interest. I’ll admit, I have absolutely done both, and if you are still reading this, I bet you have too ;-). 

All the negative reinforcement around finances has trained us to leave the money talk to the “experts.” But, I’ll say it again, the reality is that understanding organizational financial health is fundamentally a racial justice and equity issue. Because, by understanding what is happening with our finances, we take back our organizational power. We aren’t dependent on other people to tell us what is happening in our own organizations. We are equipped to engage in meaningful discussions, ask critical questions, and make the best decisions about how to use our resources to achieve our vision, mission and strategic goals in alignment with our values. 

I know, easier said than done. And, honestly, this blog isn’t going to provide any magic solutions. But with this post, and over the next few months, I can at least offer suggestions and tools for getting started with shoring up your financial power. 

We are going to start with financial culture. 

You know that saying, “Culture eats strategy for breakfast”? It means that an empowering culture is more important to organizational success than a sound strategy. Likewise a disempowering culture can completely undermine the best laid plans. This is true not just for our programmatic goals but for our financial health as well. 

How many times have you, in either a staff or board role, asked a finance question, and the finance staff or contractor has responded defensively or glossed over the answer? Finance staff: how many times have you felt like a board member, donor or grantmaker was nit picking and being judgey with their finance-related questions and requests for information? These situations happen all the time and are great opportunities for things to go horribly wrong. 

I was once looking at the financial statements of an organization that was in critical financial free fall, and their board and staff had no idea how bad it was. No one was hiding anything, it was all right there in the financial statements from the contract bookkeeper. It was just that no one on the staff or board really understood what they were looking at or knew what questions to ask. So they did the common thing of fixating on minor details like why they were $100 over budget on office supplies, instead of really focussing on the true indicators of financial health. They had been conditioned over time to shut down curiosity, their own and others’. And their wildly important organization almost went under as a result.

It’s time to reframe our organization’s relationship to finances, to let go of any past negative experiences and commit ourselves and our organizations to building an empowering financial culture based on curiosity and openness. A culture where board members ask questions from a place of curiosity and wonder, not critique, and staff respond with openness and excitement. 

It may sound overly simple, but it actually has radical results. Start by talking with your staff, finance committee and board about your culture around finance. Identify places where you can do better. Work through and heal past harms. Make the commitment at all levels and put it into practice. 

Approach with curiosity. Respond with openness. It can truly begin to transform your relationship to finances and empower your organization with greater understanding and control over your financial decisions and resources. That’s something we need now more than ever.

And stayed tuned for Part II of “Nonprofit Finances are a Racial Justice Issue.”