The Role of a Nonprofit Controller: Complete FAQ Guide

Thursday, December 5, 2024

Effective nonprofit financial management requires your team to navigate many moving parts. From goal-setting and budgeting to data analysis and reporting, organizations of all sizes often need additional help completing these tasks in the best possible way to support their missions and ensure compliance.

A nonprofit controller is one individual who can fulfill this responsibility. In this guide, we’ll answer some of the most frequently asked questions about the role of a nonprofit controller, including:

• What is a nonprofit controller?
• Why should nonprofits hire a controller?
• What are a nonprofit controller’s key responsibilities?
• How do you hire a nonprofit controller?

Let’s begin by defining the term “nonprofit controller” as it relates to other financial roles you might be familiar with.

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What is a nonprofit controller?

A nonprofit controller is an experienced professional who manages key financial functions for a tax-exempt organization. Their duties typically span all stages of nonprofit financial activities, from planning and day-to-day operations to analysis and reporting.

The controller position essentially combines the duties of two other nonprofit financial roles: accountant and chief financial officer (CFO). Here is a quick overview of how these positions compare:

• Accountants are responsible for financial analysis and reporting tasks. At nonprofits, these can range from bank reconciliations to tax filing to audit preparation.
• CFOs take the lead on strategy—i.e., the planning and operational side of nonprofit finance. They manage budgets, grants, cash flow, and goal-setting, among other tasks.
• Controllers typically spend some of their time doing accounting and the rest working on financial strategy. At mid-sized to large organizations, they often lead a finance team so they can delegate responsibilities as needed and effectively handle all of the tasks that land on their plate.

Controllers are distinct from bookkeepers, who manage recordkeeping and other everyday financial tasks, and treasurers, who provide financial oversight as board members. Your nonprofit should minimally have a treasurer, bookkeeper, and controller (or accountant and CFO) working on its finances to cover all of your bases and ensure proper governance.

Why should nonprofits hire a controller?

Besides rounding out your financial management structure, adding a controller to your nonprofit’s team has several unique advantages, including:

• Strategic decision-making. A good controller will use their nonprofit finance experience and intimate knowledge of your organization’s situation to set goals and create action plans to help you reach them.
• Internal and external accountability. As your controller manages your nonprofit’s finances, they’ll keep your team on track with duties and deadlines while also creating reports for external stakeholders.
• Improved compliance. Your controller should be familiar with legal requirements for nonprofits and industry standards like the Generally Accepted Accounting Principles (GAAP), so they can align your systems with these regulations.

Additionally, hiring a nonprofit controller rather than an accountant and CFO provides the benefit of only having to recruit, train, and compensate one employee. This is especially convenient when your organization is just getting started with financial management, since you can save time and money upfront and hire more team members later if needed.

What are a nonprofit controller’s key responsibilities?

Your controller's exact duties will depend on your nonprofit’s needs and existing management structure. To help you start thinking about what you might have this professional do for your organization, let’s walk through six common responsibilities of nonprofit controllers.

Budgeting

Creating your nonprofit’s annual operating budget is a team effort, requiring input from all departments across your organization and your board. However, your nonprofit controller will take the lead on this essential financial planning process to ensure your budget includes:

• Defined activities related to generating revenue from a variety of sources and allocating that funding appropriately between program and overhead costs.
• Specific time periods, including peak fundraising times and when you plan to make significant investments or expenditures.
• Realistic and measurable metrics for each revenue-generating activity, total spending, and annual savings.

Your controller will also help create other types of nonprofit budgets, like for capital campaigns, specific programs, fundraising events, or grant proposals. While other staff members (e.g., your development director, program lead, event planner, or grants consultant) might take point on these budgets because they’re more familiar with those areas of your operations, your controller can still provide useful input based on their financial background

Use our flexible nonprofit budget template to start planning your organization’s finances.

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Financial Policy Development

Fiscal policies govern your team’s day-to-day use of funds, so they’re foundational for effective financial management. Your nonprofit controller will assess your current procedures and make recommendations to improve them.

In particular, if you don’t have solid policies covering the following four areas, your controller will help you create or strengthen them:

• Gift acceptance: Covers the types of donations (both monetary and in-kind) your organization can and can’t accept and the conditions for accepting them.
• Conflict of interest: Details what to do in situations where leaders’ or board members’ outside interests could affect their decision-making for your nonprofit.
• Expense reimbursement: Explains when and how staff members and volunteers can be reimbursed when they spend their own money on behalf of your mission.
• Staff compensation: Outlines the procedure for setting and adjusting employees’ salaries and benefits.

Your controller may recommend additional policies and procedures as needed to make your nonprofit run more efficiently and manage risks effectively.

Audit Preparation

Some nonprofits are required to conduct independent financial audits for compliance, while others choose to do so for a deeper understanding of their financial situations. Whatever your organization’s reason for undergoing an audit, your controller will play a major role in your team’s preparations by helping to:

• Select an auditor whose model aligns with your nonprofit’s needs and budget.
• Compile the financial documents on the auditor’s Provided By Client (PBC) list.
• Review your accounting information to resolve any errors or discrepancies in advance.

After your audit, your controller will also review the auditor’s recommendations and take the lead on implementing them across your organization.

Financial Reporting

Financial reporting is essential for accountability at your nonprofit—to your internal team, the government, and your supporters. There are a few different types of reports your controller will compile, such as the four core nonprofit financial statements, which organize and summarize fiscal data in different ways so you can glean actionable insights. These include the:

• Statement of activities. As the nonprofit parallel to the for-profit income statement, this report breaks down your organization’s revenue, expenses, and change in net assets over a given year to provide a reference for future budgets.
• Statement of financial position. Also known as a balance sheet, this statement shows an annual snapshot of your nonprofit’s financial health and growth potential by reporting your assets, liabilities, and net assets.
• Statement of cash flows. This report explains how cash moves in and out of your organization through operating, investing, and financing activities. It’s usually pulled monthly to help keep your spending and fundraising on track with your current budget.
• Statement of functional expenses. The one financial statement that’s unique to nonprofits divides your nonprofit’s expenditures into program, administrative, and fundraising categories so you know how your expenses further your mission.

These statements help your controller file your nonprofit’s tax returns via IRS Form 990 and create the financial section of your annual report to give supporters an overview of key data from the year.

Staff Management

As mentioned previously, large nonprofits often put their controller in charge of a finance team to ensure adequate bandwidth to take care of their many financial needs. In these situations, the controller usually focuses on higher-level strategy and management and assigns more manual tasks to other team members. For example, when preparing for an audit, the controller might delegate data review and document retrieval, then make themselves available to answer questions as needed and check that everything is in order at the end.

Even if they aren’t in charge of a team right away, your controller should have strong management and leadership skills. They’ll advise the rest of your staff on financial topics and procedures as is applicable to their roles, plus they’ll be prepared to lead if your organization needs to create a larger team in the future.

Strategic Planning

Expanding your nonprofit requires a strong financial foundation. Your nonprofit controller should be involved in this decision-making process, since they can provide insight on:

• Whether your nonprofit is financially prepared for growth
• How you can get ready if you aren’t yet
• Where your organization’s resources should go in order to expand sustainably

They should also have input in creating your nonprofit’s strategic plan to ensure the financial goals in it are realistic, actionable, and relevant to your mission.

How do you hire a nonprofit controller?

If your nonprofit is ready to hire a controller, the responsibilities above should give you an idea of some of the qualities to look for in this professional. The most important skills and qualifications to consider include:

• A background in finance and experience in the nonprofit sector
• Familiarity with your nonprofit’s accounting system and other essential tools
• Leadership and team management abilities
• Strong organization, planning, and time management

These factors will help you finalize your goals for the position and write the job description. From there, follow these steps to hire a nonprofit controller:

• Start your search online. Once you’ve posted your job description on your organization’s website, expand its reach by sharing it on professional networking sites like Indeed and LinkedIn. If time permits, browse those sites for strong candidates and reach out to them directly with information about the role.
• Ask for recommendations. Reach out to other nonprofits in your network to see if they’ve worked with a nonprofit controller before, what they thought of them, and if their current controller might know someone who would be interested in working with you. Your treasurer or bookkeeper may also have useful connections in the field.
• Interview your top candidates. Vet resumes and schedule interviews as you start receiving applications. Tailor your interview questions to the role—ask them about their experience and how they’d deal with different situations related to nonprofit finance. Also, introduce them to team members they’ll work closely with to ensure a good fit.
• Make your final decision. All you have to do from here is officially offer them the job and finalize position details, and then you’ll be ready to onboard your new nonprofit controller!

While this traditional hiring process can be effective for larger nonprofits that need a full-time controller, small to midsize organizations may not have the resources to go through it—or enough work to warrant bringing on a new team member. In this case, we recommend modifying your process and outsourcing the controller role to a nonprofit financial management firm like Jitasa.

Jitasa’s affordable, scalable bookkeeping and accounting services cover the core duties of a nonprofit controller, from audit prep to reporting to financial advising from the Jitasa Strategic Advisory Team (J-SAT). If you’re looking for additional financial planning and strategic management, J-SAT offers more in-depth fractional CFO services you can leverage. Plus, Jitasa works exclusively with tax-exempt organizations, so our team understands your unique needs and will develop tailored solutions to help you accomplish your financial goals.

A nonprofit controller is a key addition to your organization’s team. Their expertise in financial strategy, analysis, and reporting will help your nonprofit continuously improve its management practices and work toward sustainable growth. Keep in mind that you don’t necessarily have to go through a full hiring process for this role, as outsourced services (like those we provide at Jitasa) can give your organization everything it needs at a fraction of the cost.

For more information on nonprofit financial professionals, check out these resources:

• Nonprofit Bookkeeper vs. Accountant: What’s the Difference? Dive deeper into the roles of two frequently confused nonprofit financial roles—bookkeepers and accountants.
• Outsourced Accounting for Nonprofits: Top 10+ Firms. Explore our recommendations for outsourced accounting and controller services to align with your nonprofit’s needs.
• Free Organizational Health Assessment by Jitasa. Review your nonprofit’s current management practices and identify areas where your controller could help you improve.

Discover how Jitasa’s affordable, scalable nonprofit controller services can work for your organization.

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