Finance in the Tax-Exempt Sector


As Seen in CFO Studio Magazine Q1 2017 Issue

screenshot-120Anna DeJesus, the Chief Financial Officer for the Family & Children’s Service of Monmouth County, joined Family & Children’s Service in 2011. FCS is the oldest not-for-profit service agency in Monmouth County, caring for 18,000 underserved individuals and families annually, from children to seniors. Andrew Zezas, Publisher of CFO Studio magazine and host of CFO Studio On-Camera, spoke with Ms. DeJesus about the role of the CFO in the tax-exempt sector.


(ANDREW ZEZAS) Your organization services the whole gamut, from young children to seniors. What is the most unique feature of FCS and its mission?

DEJESUS: Without us, our clients would have nowhere else to turn. It’s extremely unique because there aren’t any other agencies in Monmouth County that provide some of the services that we do. We have a “Rep Payee” program in which we manage Social Security monies for clients who may not be able to handle their own budgets. Going on right now is Operation Sleighbells. It’s a great program. It provides toys, clothing, and even gift cards for the parents of children in the Christmas season. Other programs are KIDS Corps, offering opportunities for teenagers to volunteer; and Reading Buddies, where seniors go into slightly underprivileged schools and read to children to spread literacy.

How do you think the role of CFO differs in the not-for-profit world vs. the for-profit?

DEJESUS: It is similar on the level of reporting finances, as my role is to be sure that the agency is fiscally sound. Management of revenue and expenses— that’s all very similar to what a CFO does in a for-profit.

But you’re not just a rear-view compliance officer.

DEJESUS: No, I am not. My goal is to keep this agency fiscally sound so that we can continue to serve our clients. I don’t have to worry about the bottom line, so to speak; or making sure that our stockholders get a dividend at the end of the year. I have to be sure that this agency stays in a position where we can continue to operate.

What are the most important steps that a CFO can take to have the greatest positive influence within their tax-exempt organization?

DEJESUS: When I first came into the agency, there were no reports. A lot of our departmental managers and directors are nurses and social workers—not businesspeople. So, it’s important to me, to explain to them how their departments are doing, but also how to keep everyone solvent.

Would you characterize your management style as aggressive? tough? You explain it.

DEJESUS: I think it’s a combination of a lot of things. I try to be fair and honest. I can be direct. I like to get to the point, especially with finances. What I strive to do is show a path.

The CFO as Chief Service Officer


As Seen in CFO Studio Magazine Q3 2016 Issue


Fifteen CFOs, mostly from tax-exempt organizations, gathered at the Community FoodBank of New Jersey where they sorted and repacked food for distribution to more than 900,000 hungry people in New Jersey. What made this volunteer endeavor particularly impactful was that it was held two days before Thanksgiving. They came together as part of the CFO Studio Executive Dinner Series, and though this one was held in an unusual location, it featured excellent conversation and food for thought for CFOs of tax-exempt organizations — as well as an impressive dinner prepared by a culinary team that is part of the Community Kitchen, the FoodBank’s Food Service Training Academy.

Bob Barry, Chief Financial Officer of the Community FoodBank of NJ, led a tour of the facility, explaining all that goes into running such an expansive operation, and then hosted the dinner. Cheryl Marks Young, Chief Financial Officer of Easter Seals New Jersey, led a lively two-hour discussion of “The CFO as Chief Service Officer —Balancing Internal and External Customers, Partners, and Other Beneficiaries in Tax-exempt Organizations.”

“In our roles as CFOs, we are not just number crunchers, we are not just data crunchers,” said Ms. Marks Young in an interview. “We are human beings who serve others. The numbers and the data help us tell a story about the impact we make on the consumers we serve. That’s the story we have to get across.”

The group discussed all that goes into becoming a charity of choice. Mr. Barry gave specific examples from the Community FoodBank. He explained that Kathleen DiChiara, who started the organization by feeding the hungry out of the trunk of her car in 1975, instilled in the staff the fact that “no” is not an option.

Ms. Marks Young’s mantra is similar. “There is no room for failure in our roles because we need to continue to provide quality services to those most in need.” Since 2006, Ms. Marks Young has overseen all of the financial functions for Easter Seals New Jersey, ensuring its resources are properly allocated to achieve its long-term strategic goals.

Easter Seals New Jersey is a 501(c) (3) not-for-profit organization that since 1948 has enriched the lives of people living with disabilities and special needs, and those who care about them, by providing opportunities to live, learn, work, and play in their communities. Annually, nearly 9,000 people or families in New Jersey affected by developmental disabilities, including autism, physical disabilities, and mental illness, participate in programs designed to help them address life’s challenges and achieve their personal goals on the path toward independence.

Among Ms. Marks Young’s accomplishments is boosting funding for services by $22 million, enabling the organization to increase by nearly 20 percent the number of people with disabilities or special needs served. She has also served as a consultant and advisor to other Easter Seals affiliates across the nation by sharing her expertise in cash management, financial systems, and financial leadership.

“In my discussions, I use the numbers to tell the story about how what we do impacts those we serve and support,” she said. “It’s the lives touched that is most important. We all have state-specific and regulatory issues to contend with as well as business model issues. At the end of the day, it’s not really about all that. It’s about how we, in all of our individual businesses here, serve that end-consumer.”

Many in the group admitted not-for-profit work was not on their radar while they were in school. “My goal was to be the CFO of a Fortune 1000 company making money for shareholders,” said Mr. Barry. “Here I am in a not-for-profit for 30 years, working for shareholders who are the people we serve. We have to be there to help our respective organizations remain financially viable so we can continue serving those who are impacted by our mission.”

The participants agreed that running a not-for-profit can be a balancing act. A solid infrastructure is vital, as is balancing overhead costs. Transparency is key as well. Open communication with donors, the executive leadership team, staff, and board of directors is important, but there are many more populations that must be addressed.

Many in the room referred to the book Uncharitable: How Restraints on Nonprofits Undermine Their Potential, by Dan Pallotta, which examines the constraints put on not-for-profits by the public. A parallel theme in the book and at the CFO Studio Executive Dinner was that not-for-profits must be allowed to use the tools of commerce to thrive and accomplish their missions.

A successful Chief Service Officer doesn’t just talk the talk but walks the walk, said Ms. Marks Young. “Bob [Barry] shared a story about his staff coming in on a weekend to make sandwiches during Hurricane Sandy. That’s being of service internally to the staff as a role model and externally to the consumer we all service,” said Ms. Marks Young. “That’s what it is all about.”

She said it is important to focus on the population being ministered to. “It’s about how we serve our end-consumer or customer to live their best life, to have what it is they need, what brings value to them, and that holds true whether you are for profit or not for profit.”

Tips for Not-for-Profits


As Seen in CFO Studio Magazine Q4 2015 Issue


The concept behind not-for-profits —also known as tax-exempt organizations— is admirable: enhance the social good without worrying about profits. But in practice, the CFOof a tax-exempt organization shares many concerns with his or her cohorts in corporate life.

Cutbacks in local and federal aid, coupled with a growing number of people who need assistance, are forcing many tax-exempts to try to do more with fewer resources, according to CFOs who took part in a panel discussion at the CFO Innovation Conference, attended by more than 440 CFOs, and held earlier this year at MetLife Stadium in East Rutherford, NJ.

“Like for-profit companies, we’ve been affected by issues like the Affordable Care Act [ACA],” said panelist Michael Kawas, CFO of the Musculoskeletal Transplant Foundation, an Edison, NJ–based organization that works with, among others, donors of organs to provide tissue for transplants. “We distribute tissues to hospitals, and we’re finding our reimbursement rates are being reduced because of the ACA, even as our costs are rising. We’re considering a series of actions to reduce costs, and we’ve already instituted ‘lean’ operating practices.”

Other tax-exempts face similar challenges. Robert Barry, CFO of the Community FoodBank of New Jersey, noted that the CFBNJ has invested in warehouse logistics systems, like a new order pick system, to help streamline operational costs. “We’ve also collaborated with other tax-exempts to utilize a network of purchasing power in order to gain discounts,” he said. “For example, by partnering with other organizations, we were able to shave 18 to 27 percent off our insurance premiums.”

One of the biggest cost drivers at the Musculoskeletal Transplant Foundation is tissue processing, and to help rein in those expenses, Kawas said that the organization has adopted Six Sigma manufacturing processes.

“We’re also trying to be creative about compensation costs,” he added. “But we’re competing for employees against medical-device companies, so there are no easy solutions.”

On top of this, tax-exempts, like their for-profit cousins, are also dealing with fallout from scandals.

“We all get tarred when one or two organizations act improperly,” said Cheryl Marks Young, CFO of Easter Seals New Jersey. “We’ve adopted Sarbanes-Oxley (a federal law that set requirements for U.S. public company boards, management, and public accounting firms), and test our decisions against those and other policies. I look for creative thinking, not creative accounting.”

Kawas considers his organization’s practices by asking himself how comfortable he’d feel “if [investigative reporters] from 60 Minutes showed up at your office, questioning some of your decisions. We have a compliance officer, and an ethics panel that deals with donor intent, and other advisory panels.” —Martin Daks

Copyright 2017