How Can Nonprofits Build a Sustainable Financial Future to Propel Their Missions?

In the grip of the COVID-19 pandemic, nonprofit organizations continued to provide social, medical, and cultural lifelines to millions of people. As the economic disruption eroded their revenue sources, nonprofits faced an uncertain financial future at a time when people most needed the essential services they provide.

“We lost 50% of our revenue during the pandemic,” said Evelyn Barnes, of her time as CFO of the Boston Symphony Orchestra (BSO). “We were closed down for 18 months.” 

For the people supporting a nonprofit mission, like Barnes or Caroline Croen, CFO of The WNET Group, that meant exploring new ways of keeping their organizations afloat. To maintain financial health, they needed to tap into all the creativity they could muster. 

Fortunately, both CFOs came from creative backgrounds. Croen started her career as a professional violinist before getting her MBA. And Barnes earned a master’s in ancient Greek before transitioning into nonprofit finance. 

These nontraditional backgrounds may have helped them prepare for the demanding role of today’s CFO, who is required to be more collaborative and strategic at a time when organizations are pressed to be more nimble and data-driven.

And for nonprofits, where driving the mission and growing revenue go hand in hand, CFOs face additional challenges, such as volatility in funding impacting budgets and strategic planning, resource constraints, and regulations that demand strict and timely reporting. Not to mention employee issues, systems problems, and data needs. 

So how can CFOs build a future of financial sustainability? Especially when financial wellbeing is essential to an organization’s ability to carry out its mission?

To find out, Scott Moyer, Workday’s director of product marketing for the office of the CFO and former CFO for five different organizations, sat down with Croen and Barnes. Below are takeaways from our conversation, edited for clarity. 

Evelyn and Caroline, to start us off, can you share background information about your two great organizations?

Barnes: The Boston Symphony Orchestra (BSO) is one of the most preeminent and largest orchestras in the United States. Pre-pandemic, we had $100 million in annual operating revenue and about $600 million in assets. Our operations also consist of summer performances at the Tanglewood concert venue, the popular Boston Pops Orchestra, and streaming, educational programs, radio, television, recordings, and tours. We have 1,400 employees, from part time and seasonal to union. 

Croen: The WNET Group operates the PBS flagship public television station known as THIRTEEN. We incorporated back in 1959, and we’re home to iconic presentations such as “Nature,” “American Masters,” and “Great Performances.” We have an operating budget of $155 million and an investment fund at approximately $200 million. We have a full-time staff of 400 and many seasonal fixed-term employees due to the nature of our production. 

You’ve both shared previously, that one of the reasons you were attracted to nonprofit work is that there’s a purpose behind it. How does finance help drive that purpose?

Barnes: The phrase we use in the nonprofit CFO world is, “No margin, no mission.” That’s it in a nutshell. We need the money to do what we do, and we have to know what the return is on that money. I don’t necessarily mean the financial return, although that’s a big part of it, but what’s the return on the mission investment. It’s a matter of not only understanding annual operating costs, but also making sure we’re sustainable now and in the future.

Croen: When information is stale, when it’s not accessible, we’re not able to help our colleagues make important decisions. We can answer critical business questions by connecting the data. And we’re doing that for everyone in the organization, not just a select group or the finance team. We help people enterprisewide make better decisions across the board.

Tell me about your challenges, such as having the data you need to help drive your mission, pivoting and adapting to change, and attracting and retaining talent? 

Croen: Pivoting is critical—and not just during the pandemic. We also need to pivot as we grow, so we can expand and strengthen our legacy. We wanted to become a dual licensee to include radio and operate all of the New Jersey public media outlets on behalf of the state of New Jersey, along with some targeted mission-related acquisitions. To do so, we had to bring those acquisitions online and make sure that they were working at the same speed and efficiency as the rest of the organization. By leveraging the adaptability of Workday, we were able to do that. With the foundations we already had in place, we were able to quickly add companies and employees, so it was a smooth transition. I had what I needed with Workday in addition to a skilled workforce to keep moving and growing.

Barnes: Prior to the pandemic, we’d started to run a deficit after many years of break-even operations. There are not many efficiencies you can build into a symphony orchestra. It takes X number of violins and X number of people on stage to do the piece, so you can’t really redo staff. The pieces are what they are.

But there are other ways to be more efficient. We recently implemented the Workday Enterprise Management Cloud, so I’m looking forward to using more of the insights we’ll gain from that technology update. We’ve also been using Workday Adaptive Planning, which is a powerful tool.

As I mentioned, we were closed for about 18 months. During which time, we pivoted to become a media company; we had our orchestra play on stage with no audience, and then recorded and disseminated those performances through our own platform. We had a tremendous viewership across the world.

It’s an experiment, and we’re still trying to figure out, as many orchestras are, what the future is with digital when an orchestra is really designed for an in-person experience. But our goal is to drive the mission, and to spread the music to audiences beyond those who can walk into Symphony Hall.

What challenges do you have as a CFO trying to increase revenue sources?

Barnes: We lost 50% of our revenue during the pandemic because of lost ticket sales. We were able to reduce expenses because so many were variable expenses related to concerts. And, our fundraising efforts continued and became even stronger. That’s a testament to our mission and also our trustees.

But now we’re looking at what the future holds for the BSO. What does it look like in five years and 10 years? Workday will help with that. 

What features of the product made that possible? 

Croen: Flexibility is key. Prior to Workday, we’d have to do a lot of “off-road” work in Excel or other alternate systems. In Workday, everything is integrated, and we see things in real time. We’ve created dashboards, and the reporting has been so crucial. And we enhance it all the time. Having everything in one place has been transformational.

Bringing human resources and finance data together has been absolutely helpful. If you get federal money, you’re obligated to report time. And so the functionality in time recording is exceptional. We know how each of our projects is doing, who’s spending time where, and the effect on the individual production profit and loss. 

Each funder is unique, and they have special requirements. And you must give them the customized reporting they require. Workday allows you to build those reports in real time, so we can be flexible and nimble when it comes to the onerous reporting requirements.

Barnes: That’s exactly my experience at City Year, where I worked before BSO. We had $40 million a year in federal funding, and it was all about labor. When we implemented Workday, it was night and day: the audit trail, the compliance—it was all in the system. It was a huge improvement in compliance for us. 

Can you tell us what drove you to bring Workday with you to the BSO? 

Barnes: Even before the pandemic, it was clear that we needed to upgrade our financial systems. Most everything was on-premise, and we weren’t in a cloud at all. 

Like many nonprofits, we’d preferred to spend our money on the real mission and lagged with infrastructure and technology. But we had horror stories. For example, we weren’t able to produce budget variance reports until three or four months after the end of each month. They were not very useful and weren’t taken very seriously, either.

We had a trial balance that was 125 pages long—small print. That’s over 8,000 accounts. It was cumbersome, and despite all the effort, we didn’t know exactly where we were spending our money. 

How do you collaborate with IT on something as significant as enterprise cloud applications?

Barnes: We went from an on-premise shop with a concentration of keeping the blinking green lights on to one where we’re all in the cloud. We’ve much better security and compliance, but it also frees up people to do their jobs better, and I’m not talking about the finance and IT people. You can access tools now wherever you are, which is critical as we’ve moved to a hybrid office-remote working model. That’s one of the great things about Workday. It’s handy on your mobile phone. You can do almost anything. 

Workday makes people’s jobs easier. They can spend less time on the onerous manual processes and more time on doing their jobs. 

I had a CIO client who told his team, “No one’s going to lose your jobs. They’re just going to change.” How has Workday helped you bring in and keep key financial talent?

Croen: That’s exactly right. Workday was the impetus of a whole new way of operating. And my team’s jobs have changed. My headcount may be the same, but my staff is much more upskilled. They’re analysts now. They’re not coordinators filling in fields anymore. It’s been a wonderful skill-set transformation.

Workday provided a platform for my team to experiment, learn, and grow. We’re positioning our employees to succeed in a different environment now. We do our audit almost all remotely. Unheard of four or five years ago. I always ask, “What can we do better?” Just because it worked two years ago doesn’t mean it’s going to work now. That mindset excites my team. They want to tinker. That’s another part of the upskilling benefit.

Any thoughts on best practices or lessons learned from your deployments?

Barnes: You need to supplement your staff because they have a day job. It’s  hard mapping data during a migration from one system to another. It requires expertise. Figure out if you need to bring in people to help because it’s a lot of work. And the key is to make sure you have the budget or funding for it.

Croen: Change management was a large line in our budget, and we started working on that before Workday came in. We had groups of superusers and stakeholders all across the company and talked about Workday—what it is, why we’re deploying it, and how it’s going to help all of us. 

Barnes: It’s critical to establish and engage a group of champions outside the finance and IT groups. They can see how their jobs can be improved and will spread the word.

Workday is a great system. I’ve deployed it twice. It’s a lot of work to deploy an ERP, but in my experience, Workday is worth it. 

To learn more about how Workday helps nonprofits build a sustainable financial future, visit our website.