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What Can For-Profit Organizations Learn About Gender Equality From Nonprofits?

Could they be the key to gender parity?

2Jun

The absence of female CFOs at S&P 500 companies is well known, with just 11.6% of the roles accounted for by women. This is a low figure that needs correction, and an unlikely source could prove to be an inspiration - nonprofits. According to GuideStar's 2015 Nonprofit Compensation Report, 42% of CFOs at nonprofits are women. While this still disproportionate to the percentage of women that constitutes the nonprofit workforce - 75% - it is clear they are doing something right.

The CFO role in nonprofits is markedly different to the for-profit sector, and in many ways, they face a far more complex challenge. According to David Stolow, a veteran nonprofit CFO, ‘In the for-profit sector, the ‘F’ in CFO is what’s important. In the nonprofit sector, it’s a small ‘f’ and it’s the big ‘C’ that’s important. ‘C’ for Chief Fix-It.’ Marcia Heuser, 55, vice president for finance and administration and CFO at Adler Planetarium, which has an annual operating budget of about $20 million agrees, noting that, ‘Nonprofits are really complex. You have to be more lithe, a generalist. We have to stay focused. We do have a more limited way of generating revenue.’

Restrictions around the way finance works in nonprofits dictate many of the challenges CFOs face. The most notable being that cash received in revenue at most nonprofit organizations is not liquid. Rather, it was donated for a specific purpose, and cannot be used or moved around to fill other organizational needs. There is also a dramatic scarcity of resources in comparison to their for-profit counterparts, as well as a high accountability as to how money is spent. The financials and performance are, if anything, more heavily scrutinized, as revenue relies so heavily on public trust.

Do these specific challenges appeal more to women? While intriguing challenges, there’s little reason they would have gender-specific appeal. You could also argue that women are more naturally empathetic and thus more likely to want to move to nonprofit organizations. This is probably a large part of the reason but is only really a valid explanation for any difference between the two sectors if you assume that women don’t want to be CFOs at major corporations - which is patently not true. It would, however, explain the large percentage of women in the overall nonprofit workforce. This is something that for-profits should also look to harness, and they should seek to show employees how their work can make a difference in the world, or what they can do to make it.

What is most impressive, though, is that nonprofits have recognized the large number of women in their workforce and facilitated their rise to leadership positions. According to the 2012 ‘Current State of Women in Leadership’ report from the Women’s College of the University of Denver, women make up 75% of the nonprofit workforce - a number that gives a clear incentive to ensure that the environment best suits women. Lisa Brown Morton, president and CEO of Nonprofit HR, a Washington, DC firm that works exclusively with nonprofits, argued that the past several years has seen the nonprofit sector make a big effort to emphasize work-life balance, even for C-suite executives. There is more mentoring for young women and they offer better work-life balance options that suit those with families. Having women in senior roles also naturally breeds more women in senior roles, as it is easier to see a career path to where you want to go, rather than having to blaze a trail themselves. It also means that more women have the chance to hire women, and can mentor them. This could also potentially be a good argument for the introduction of quotas at private companies.

Female CFOs are necessary at both nonprofits and for-profits. Increasing diversity on the board has proven benefits. For-profits should take heed of what nonprofits are doing and look to harness it themselves at their own firms.

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