Transcript of Audrey Wells Interview
Interview with Audrey Wells
Interviewer: Andrew Zezas, SIOR
Following is the transcript of a CFO Studio video between Andrew Zezas, CEO of New Jersey based Real Estate Strategies Corporation and Audrey Wells, CFO of Family Services of Morris County.
Visit www.CFOstudio.com to read about this interview and to watch the entire video interview.
Role of Not-For-Profit CFOs
Andrew Zezas: Hi this is Andrew Zezas, your host at CFO Studio. I have the pleasure today of being joined by Audrey Wells, CFO of Family Service of Morris County. Family Service of Morris County has a very specific mission: to strengthen the community by empowering individuals and families to meet and overcome life’s challenges.
Ms. Wells has a very interesting background – having served in auditing, manufacturing, accounting, and distribution primarily for for-profit organizations.
Audrey, it’s nice to have you here on CFO Studio.
Wells: Thank you for having me.
Zezas: Audrey, Family Service of Morris County – tell me more about it.
Wells: Well, we’re about a $3.2 million dollar organization – we have about 90 employees. We’re located in Morris County and do services for the most part in Morris County, although we do go outside the county on occasion. You mentioned our mission before – we concentrate on four areas of impact.
The first is giving children the best start in life. The second is keeping seniors independent and in their homes. The third is maintaining healthy families, and the fourth is preventing substance abuse.
Zezas: So it starts with children and it goes all the way through the rest of life.
Wells: Yes. We have about twenty different programs, running the gamut from adult daycare centers — we have a child care center; we run the Intoxicated Driver Resource Program in Morris and Warren County; we have care management programs; we have social workers who work with children in daycare centers; we have some volunteer programs for visually impaired individuals, and financial literacy for seniors — really runs the gamut.
Zezas: It sounds like a very large organization. Did you say how large the organization is? You mentioned employees, you mentioned number of programs, from a financial perspective how large is the organization?
Wells: $3.2 million.
Zezas: $3.2 million dollars, OK. So we’re talking about a not-for-profit organization that is truly about delivering service to people.
Zezas: But as the CFO of that organization, you’ve got some interesting focuses and some very important roles that you play. There are many in the for-profit world who would suggest that, you know, not-for-profits isn’t really about business, it’s about other things, and that not-for-profits should run themselves more like for-profit organizations. How do you respond to that kind of thought?
Wells: Well, I mean I totally agree with that assessment. But a lot of not-for-profit organizations, and I’d like to think that ours is one of those, already runs itself like a corporation to a certain extent. There are many, many things that we can learn from what corporations do well, while still keeping the different sort of atmosphere you have in a not-for-profit organization. A not-for-profit organization usually has a very passionate workforce, very mission-driven, maybe a little more laid-back than a corporation, but there are certain things that you can definitely carry over from the corporate world.
For example, streamlining of procedures – you know touch each thing once and move it along. Don’t do things that aren’t necessary. The second area would be the area of technology. We should be making better use of technology to make our jobs more efficient, to be able to collect data more efficiently, analyze and report more efficiently. And the third area is doing complete financial analysis. You’d be surprised how many organizations haven’t figured out how to analyze their programs separately. Figure out, you know, where their actual revenues are going and how they’re being used. We may not do the same thing with the analyses that a for-profit corporation would do, but it’s really important to know where your dollars are going and at least have a basis for making good decisions.
Zezas: And there’s, you’ve shared with me before, that there is really a primary difference between how a for-profit and a not-for-profit views its ultimate objective. You know, a for-profit’s job is to maximize revenue, minimize expenses, and return as much back to the shareholders as they can. But I’ve heard you say that from a not-for-profit perspective you have a different focus – not on shareholders but stakeholders, and that you focus on revenue and expense differently. How do you…?
Wells: Well, given the same revenue stream that you would have in a for-profit corporation, we focus on maximizing the efficient use of the limited resources we have. And obviously this is an oversimplification, but we try to use every bit of it to provide services to the end-user, our clients, and they are the ultimate stakeholders. We’re not necessarily working for a bottom-line profit.
Zezas: Right, right, understood. So the economy’s been pretty funky in the last few years as we all know, how has that affected funding sources, revenue in your case, but funding sources – have they increased, have they been static, or are they declining? And how do you deal with that?
Wells: We’ve actually been pretty lucky, even during this time, we’ve actually grown a little bit. And the way we’ve done that is we’ve added a daycare center, we’ve also just gotten a new contract with the county to do social work at a long-term care facility.
But the mix of our revenues has changed a little bit. We have noticed that private donations have declined somewhat. We’re lucky we have a pretty loyal donor base, but even so, we’ve definitely noticed a slippage there. Foundation giving has definitely declined, definitely. And, a lot of foundations are now putting a little bit more stipulation on the money also – this is only for startup, and after this you have to go find alternate means of funding the same program, well it’s been a little more difficult to bring in revenue that way. We found that we have to place a bit more reliance on fee-for-service programs to supplement any kind of grants or contracts that we have.
Zezas: OK so, funding is holding but challenging, and I’ve got to imagine that you’re looking at the expense side – so have expenses risen, have they been declining, and how are you getting in control of those?
Wells: Well you know like any good for-profit organization, we at Family Service, we’ve also done analysis of our expenses and seen how we can keep them in check. And being that over 80% of our expenses are payroll and payroll-related expenses, it’s been somewhat of a challenge. What we have done is we have maybe streamlined certain positions, possibly combine certain positions, but we’re really doing the best that we can to keep our good employees, and make sure that they can continue to deliver the services to the clients. So to that end we had to be a little creative with the way we staff certain things.
Zezas: And you’ve said that you’ve got an increase in volunteerism as well.
Wells: Yes, actually we do. We’ve been using volunteers in certain areas where we may not have used them in the past. For example we have a volunteer who helps us with computer issues. We’ve got another one that does marketing for us. We’ve got another one who upkeeps our website. And those are positions that we don’t have to pay to staff. It really helps a lot.
Zezas: Having that kind of employee-base says a lot about the organization and what people think about it. I want to take you back because I wanted to make sure I ask you one question. You talked about how certain organizations are placing collars around their funding, and giving you more descriptions – are they also looking to measure how that funding is being spent and measure the results?
Wells: Absolutely. That’s actually a huge area right now where not-for-profits have to come up to speed. A lot of funders these days – government organizations and private and corporate foundations – are looking for impact-based programs…
Zezas: Across the board? All kinds of funders?
Wells: Yes, absolutely. You know it’s one thing to say that you saw this many pre-schoolers and help them get ready for kindergarten, but funders are much more likely to give you continued funding if you can show that your contact with these children actually made a difference. So, they’re really looking for a measurable impact on the community. And organizations that can come up with the best ways to measure that are the ones that are most likely to get funded.
Zezas: Wow. I can appreciate that and I can’t imagine how you can measure this stuff, but it’s got to be very complicated.
Wells: [laughter] It’s very difficult.
Zezas: Let’s talk about the role of the CFO specifically. Not-for-profit, for-profit – is the role very different when the CFO is performing services for not-for-profit versus a for-profit organization?
Wells: Well, in general the mechanics of the job are the same. But as we spoke about earlier, it’s really the perspective that you’re going in with. If you’re working for a for-profit organization, you’re looking to maximize profits, obviously. If you’re working for a not-for-profit, you’re seeing it from a slightly different angle. There’s more of a personal feel for clients, and programs, and things like that. You know, the job is the same but there’s just more of a personal self-fulfillment working for a not-for-profit. Feeling like, you know, your actions are actually helping end-users.
Zezas: As compared to just focused on profit. And I would imagine too that as we’ve talked about measurement a few moments ago, that you’re measuring success differently in a not-for-profit because for for-profit: how much profit did we make? In a not-for-profit, did we deliver the service? How well did we deliver the service? And can we continue to deliver the service?
Zezas: That makes perfect sense. Is that different from the perspective of a large versus a small company? And you can answer that based on for-profit or not-for-profit.
Wells: Well, I think in general between a large and a small company whether it’s a for-profit or not-for-profit, it’s very similar. But in a smaller company, the job is much more hands-on, simply because there are much fewer staff members to do some of the everyday day-to-day functions. So a CFO on a smaller organization will find himself or herself doing things like bank records and even possibly cutting checks or things like that. It’s not a terrible thing.
Zezas: It’s probably a lot of fun.
Wells: It is, it is. It’s certainly – it gets you in on a level of detail that’s important in a smaller organization. Obviously, smaller transactions make a bigger difference in a smaller organization.
Zezas: Especially with a not-for-profit.
Wells: Exactly. And so you know, if you can spot a trend or an anomaly early, by being in on the details, it’s all the better. I think that the job of the CFO in a smaller organization also is a little bit broader. Again, there just aren’t as many staff members. For example, my job not only encompasses finance and accounting but information technology, human resources, and facilities management.
Zezas: Lots of fun. [laughter]
Wells: So you can imagine that I do some very interesting things on a day-to-day basis.
Zezas: Well you know, you’ve proven something that I’ve said many times before – that in smaller companies and in mid-cap companies, for-profit or not-for-profit, in many cases the CFO is really the COO. And doing a lot more than just what you would expect a CFO to do.
Wells: Certainly that is the case.
Zezas: In that regard, how closely do CFO and CEO align in not-for-profits or for-profits?
Wells: I think the answer is the same again, whichever you choose to look at. I think that for most issues in any kind of organization, the CEO and the CFO need to be involved maybe one more from a strategic perspective, one more from a financial perspective, but certainly they need to work closely together. It’s nice to bounce off ideas from one another and it also helps sometimes if the two don’t necessarily have the same perspective on everything. For example, if one is a little bit more big picture and the other is a little bit more detailed. Certainly you might get the best of both perspectives that way when you work together.
Zezas: That makes perfect sense. Audrey, we’re almost out of time, I have time for one more question. I really wanted to get a personal perspective from you – you’ve been in finance for a while, you’ve been a CFO for a few different companies, and now you’re in the not-for-profit world. What do you like the most about being a CFO for a not-for-profit?
Wells: Well, I love the fact that what I do has an impact on people’s lives out on the community. To me, that was what was missing when I was working at a for-profit company and I’m just thrilled to be able to do what I like, which is accounting and finance, plus [other things] as we’ve discussed before, and actually be able to help people at the same time.
Zezas: That’s wonderful, must be very rewarding.
Wells: Yes it is.
Zezas: Audrey, this is wonderful. I wish you many, many more years of rewarding service in not-for-profit organizations and thank you for being here today on CFO Studio.
Wells: Thank you very much.
Zezas: This is Andrew Zezas, your host at CFO Studio with Audrey Wells of Family Service of Morris County, saying thank you for watching.
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