Does your nonprofit organization need a CFO? After all, it's not about the money but the mission. The reality is that to pursue the organization's mission successfully you need financial support. That’s where the CFO steps in to achieve financial success, even in a nonprofit world, and where Dave Damond will help us understand that better.
Dave is responsible for developing and implementing the overall financial strategy and stewardship of the March of Dimes, the management of accounting, budget, compliance, internal audit, and bank relationships. He also spent over 20 years at the headquarters of the American Red Cross, where he was the head of finance for the blood division that generated over $2 billion in revenue.
Today, Dave reveals what it takes to become a successful CFO in the nonprofit space.
Welcome back to CFO Weekly, where we're talking with financial leaders about how to build efficiency in their teams, create time for strategy, and ultimately get results, with your host, Megan Weis. Let's jump right in.
Megan Weis: Today, my guest is David Damond. David is the CFO of the March of Dimes and the head of strategic accounting and finance functions for the organization. David is responsible for developing and implementing the overall financial strategy and stewardship of the March of Dimes. He is charged with the development of the long-term financial plan, management of the accounting, budget, compliance, internal audit, and bank relationships. He is also responsible for chairing the finance committee and is a member of the Board of Trustees.
Prior to the March of Dimes, David spent over 20 years at the headquarters of American Red Cross, where he was the head of finance for the blood division that generated over $2 billion in revenue and accepted over 40% of the nation's blood supply. David holds a BSBA from Georgetown University and an MBA from the University of Pittsburgh. Dave, thank you so much for joining me on today's episode.
David Damond: Glad to be here.
Megan: Today, we're going to be taking a look at your career and your current organization, March of Dimes, and discussing what it takes to become a successful CFO in the nonprofit space. Let's start with you, and if you can look back on your career and tell us about your journey to date.
David: Really, I started in public accounting and consulting at KPMG, so one of the Big Four, was Big Six back then. Being in Washington, DC, we focused a lot on government and nonprofits, so really started gravitating towards that area. I went back to business school, and then coming out of it, I got a job at the Red Cross' national headquarters here in Washington, DC. I think like a lot of people, I didn't expect to be here all that long. I started when I was in my late 20s, but ended up being there over 20 years.
Really, the reason I stayed was, when people who work for nonprofits, they come for the work where they really stay for the mission, and that was primarily one of the reasons why I stayed. It was also because the work kept changing and I kept growing in my career. I started as an analyst and then moved my way up to a CFO of a smaller business line and then the CFO of the largest business line, which is a blood division, and really, finished there. Then got the opportunity to be the CFO of the entire organization at the March of Dimes. Really, just kept moving up over the years and kept learning and always in the nonprofit space. That's really how it happened.
Megan: When you were at KPMG, were your clients nonprofits?
David: Yes, government nonprofits. Really, got a feel for that and really liked the mission, and really, the reason why people get up in the morning and the good that they do and how that resonated with me.
Megan: Must be nice to have really meaningful work.
David: Yes. Really was. It really motivated me. Then as I got older, really, I think even more so.
Megan: As you look back again, are there stories or career moves that stand out in your mind as turning points throughout your career?
David: I think so. For the listeners, I think the big thing would be is take risks. When I was in the Red Cross, I was, really, head of the department which [unintelligible 00:04:11] analyst, but it wasn't in a business line. The business line that I got a job, people kept saying, "Oh, they're not doing well. They're going to go out of business soon. Why would you want to be in that business?" We ended up propping it up, doing much better, and then selling it after about six years. It was a really great opportunity to help grow it, help turn it around. Then actually to be involved in something that was a merger and acquisition for another organization.
I grew into a bigger position from there, but I wouldn't have had that opportunity hadn't I taken the risk from going to that line of business. Then the same thing holds true for the March of Dimes, when I got the opportunity for the March of Dimes, they were losing money I think seven straight years, their cash had gone down about the same amount, over $100 million. Again, a lot of people had thought that they were not going to survive. Four years later, since I've been here, our new CEO has been here, we have broken even every year, we've put more money in the bank every year, we're net asset positive for the first time. We really turned the organization around.
We're doing more in terms of our mission as well. All of those things, really, would help turn it around. Again, if I was fearful of moving, I would have never taken a job. I think that's what I would say to people who really want to grow and keep moving up, is take some risks once in a while.
Megan: Yes, I think that's great advice. It's really easy for us to become complacent, but it's doing us a huge disservice.
David: Yes. I think sometimes the easy thing to do is just stay where you are and you really get complacent. If you want to continue to learn and grow and meet new people and those type of things, and that I think there's always challenges out there you can go to.
Megan: Let's talk about the March of Dimes. I think most people have probably heard of that organization. What exactly is it that they do?
David: Most people heard of the March of Dimes probably because we've been around since 1938 and FDR started it. We were the organization that really helped fund or did fund the cure to polio. FDR, who had polio, created the March of Dimes. It wasn't called that at the time, but it became that, and funded the research that really eradicated polio by the 1950s, late 1950s. Then we had to pivot. Like a lot of organizations do, we had to pivot our mission. We started focusing more on birth defects of children.
Then as things have changed, we focus now more on moms and the healthy moms and strong babies. What that means is that we do everything for the mom and for the baby from-- Some of the programs that we do is we have a NICU Family Support program. We try to solve for prematurity. That's one of the things that our research does. We have a NICU Family Support program that should that happen, we're in the NICU with the families, we do everything from education, we do everything from support, bringing them dinners, bringing them moral support, how to care for the baby, everything from those different standpoint.
We have Supportive Pregnancy Care programs which we bring in moms to talk about their issues, and that really helps them to relieve stress. We have buses that go out to maternity deserts, so areas where there's not hospitals with maybe a 25-mile radius, and we help with not only prenatal care, but post as well. We do education to consumers, we do advocacy down on the hill to help with legislation that will help with moms and babies. We do all of that.
Just like a lot of nonprofits, we're heavy into research trying to solve preterm birth. We do education, we do training, we do advocacy. If you look at a lot of nonprofits, they're all in the type of space, especially ones that are healthcare-related type things or disease-related type things.
Megan: Just curious, where did that name come from, March of Dimes?
David: It was originally called Infant Paralysis Foundation, I think, by FDR. One of the Hollywood stars at the time, Eddie Cantor, who you probably don't know, had said, "We want to see a March of Dimes coming into the White House." The White House was taking all the money. At the time, they were asking for dimes. That's why one of the reasons why FDR is on the dime is because he heard of that, but he was saying, "We want to see a March of Dimes coming into the White House to fund the research to help eradicate polio," and just took off from there.
Megan: That's interesting. You were previously the vice president, Biomedical Finance at American Red Cross and you're at Red Cross for over two decades. What was it like for you to transition to a new corporation when you went to March of Dimes?
David: It was a little bit of culture shock or a lot a bit of culture shock. [chuckles] I think when you've been any place for 20 years, a large organization with 20,000 employees or more to a smaller organization with I think about 800 at the time was a bit of a culture shock. Then being in the CFO role was different as well, being the head of CFO. Then with all of the problems they were having, certainly it was stressful at the time. It's much better now, but I had to meet new people, I had to understand their culture, I had to understand how to engage in change in the best way possible without disrupting too much, with getting some consensus on it. It was pretty difficult in that regard.
In terms of the nonprofit piece of it, running a nonprofit, not as much. Nonprofits operate in the same way. They all have same similar type financial statements and 990s, which is the IRS statement. Not as much that way, but more maybe, like I said, the culture and turning it around and what we had to do.
Megan: Yes, I can imagine that that was a trial by fire in many ways.
David: Certainly was.
Megan: Before you were hired at March of dimes, you had an opportunity to see their org chart. What did you think of it at that time and how did you approach their org structure as an interviewee?
David: I think the big thing is I looked at it and I said, "This is pretty much wrong in terms of how we're going to turn around the organization." It was heavily focused on transactions and people just doing business with themselves, and we really needed a finance group. We're still getting there, really, to be honest with you, our group that helps the organization move forward, helps with forecasting, helps with analysis, business case analysis, helps with business plans within our different chapter system. That was what I had designed the finance group to look like.
Also, we had significant pension problems, so I hired a treasurer that knew a lot about pensions and investments, and so we worked on that problem as well. Really tried to look at the problems that we were facing, tried to stay current with what other finance groups were doing, and move that in that direction.
Megan: Just curious, do you think that helped you to land the opportunity with March of dimes?
David: I think so. I think it did help because I think they were looking for someone who would get them out of the old way of looking at things. I think it's good and bad to have a CFO come from your internal organization and they had that for over 30 years, but the problem was that they didn't change their structure, they didn't change a lot. They had an antiquated financial system that was over 30 years old. They didn't change their policies and procedures that much. It was one of those things where it was good to have somebody fresh in this case come from the outside and look at it in a different way.
Megan: For all of those out there who are going through the interview process at the moment, what advice would you give them for making a lasting impression?
David: I think tell people how you can potentially do things differently, but you won't shake up things to the point of breaking things. I think how you're going to put your own mark on the organization and what you want to get out of it as well as what they want from you.
One of the things I said was, at this point in my career, that I really wanted to make this the legacy that I have, was an organization that was really going out of business and turning them around and helping them grow to a sustainable business model. I think those are all things that helped them say, "Yes, this might be the right person." It's really how you'll put your mark on the organization, how you might change things, and how you might help them in the areas that they need for success.
Megan: Grand advice. You've spent your entire career at nonprofits. What, in your opinion, does it take to be a successful CFO, first of all, and secondly, a successful CFO at a nonprofit?
David: I think in any case, especially in a nonprofit, you have to look at it as a business, but you have to be cognizant of there is a push and pull on that. What I mean by that is, because you're mission-related, sometimes you have to do things that may not make the most financial sense but may help the most people. If you said, "Well, we're only going to help people but in areas of the country where we get the most money," you wouldn't be helping probably the majority of the people in this or in a country that actually need help. You have to take money from one chapter and maybe move it over to another one in order to get some work done.
There are things like that where you lead by mission, but you have to make sure that you're operating with good financial vigor and you're looking at it as a business. I think if you do that, you'll be a good CFO for any kind of nonprofit.
Megan: As an organization, how does March of Dimes and you as well and the leadership team, how do you all make sure that you're doing the most amount of good with the money that you're given?
David: That's a big piece of what we want to do, is we want to be good stewards of the money that we get. We do look at, and it shifts from year to year, where the biggest need is in the country and what the pending issues are that relate to our mission of moms and babies. If it's in a certain area of the country or is a certain thing that's happening, we will focus on as areas.
We look at our programs and we do a business analysis on those. What's going to provide the most bang for the buck, where do we need to be, what do we need to be doing, and we try to gravitate our strategy around that. That's where we may focus for that particular year or for a number of years, depending on how systemic the problems are.
Megan: You mentioned this a couple times, but that you joined the organization when they were losing money and that they had been for years, and that there was a legacy pension plan that was dragging down the balance sheet. First of all, how did they get into that position?
David: Well, anyone who had defined-benefit plan, because the interest rates were going down, discount rates going down so low it probably was upside down. The March of Dimes had a really lucrative retirement defined-benefit plan. The unfortunate thing was that they did not freeze it or even cancel it, terminate it like other organizations had done in the early mid-2000s. They had still continued to have it until about 2016 or so, which really made the problem a lot worse. They were looking at contributions of almost 5 to 10% of their revenue, and that would take away from mission. We really had to come in and take a look at how we could reduce that, which we did.
Also, I think they started funding a research that was on contracts for two to three years and those contracts just kept adding up and adding up. There were obligations the organization had, but revenue had continued to go down. They were in a position where they couldn't fund a lot of that research, and so we had to look at doing away with some of these three years research and do one year and then reduce it to the percentage of revenue that we were getting in. It really was just taking a fresh look at the organization where they were spending their money and then trying to get in an alignment.
Megan: Are they still in a position where they're losing money today or that revenue is continuing to decline or has that changed direction at all?
David: Yes. In 2021, revenue was up over the previous years. It was still down over a few past years. A lot of the reason we were down was because of the pandemic, but we were back up in 2021. Since I've been here, we have not lost money. We've had positive margin every year and we've increased our cash reserves, which had been obviously going down when you're losing money. We've been adding to the treasury to get it back up to where it needs to be.
Megan: You've mentioned analyzing things, forecasting things. Are there tools or technologies that you're using or your department's using that's helping to make life easier for you? I'm always interested to hear what's new out there.
David: We're trying to focus more on the analytic piece and less on the transaction piece. One of the things we did was they had a very antiquated accounting system and we moved over to Oracle NetSuite, which gave us a lot of more analytic power to use in terms of how we set up the budget, how we monitor, and then doing more business case analysis on things. That was one of the things we used, but we go to these conferences and we look for tools like that, like NetSuite or add-ons to NetSuite that can help us with transactions or travel or closing the books.
We have Concur, wee have things like that for travel, we're looking at ones to help close the books on a monthly basis. We're continually trying to evolve our finance organization to stay current with the technology and talk to other groups. I'm a member of Gartner Group, where we talk about best practices, what other finance groups are doing, and I'm always trying to stay current, if it's for-profit or nonprofit. I think that's kind of my mantras.
Megan: Technology is changing so fast these days and is hard to keep up.
David: Yes. It really is. All these organizations, most of them are from the Palo Alto area. They all have really good things that they're doing. Some of them are in different states, but I think in the long run, they're really going to have some really good solutions that can help.
Megan: I actually remembered the question I was thinking of earlier. In such an excellent cause, where does most of your money come from? Is it government funding?
David: No, we get very little government funding. About $150 million, we may get $5 to $10 million in government grants. Most of it comes from individuals and corporations that see this as one of the causes that their organization wants to fund. Then individuals, some of who've been impacted by preterm birth or having a NICU or those type of things. We still even get money bequeathed of us from polio survivors. That's really where it comes from, is mostly people.
Megan: As a CFO, what is the biggest challenge that you're facing now this quarter?
David: I think two things. I talk to other CFOs and it resonates throughout the whole industry and probably in the for-profit industry, which is obviously inflation is a big issue right now for everyone. It's not as much for us because we don't rely so much on goods and services as much as other folks do, especially fixed assets and things like that. That is still a big issue for us in terms of our people and trying to continue to have them not leave the organization and resign and move along. I think that's a big issue. It's really the inflation and then staffing and hiring are the two things right now that are probably the biggest issues for us as they are for probably most companies in the country.
Megan: I know accounting talent has always been scarce, but it seems to be extremely scarce these days.
David: Yes. For sure.
Megan: Lastly, what's keeping you up at night at the moment as you look out into the future?
David: It is those last two things that I said, it was staffing not only from finance, but from the whole organization, making sure we get people in that can do the job and stay. I think it's still trying to rebound a bit from the pandemic. We do a lot of events, and getting people to come back to events on premises is a concern that I have. As inflation goes up, is people donating? Is that going to go down? Those are the type of things that keep me up at night.
We look at the trends and we look at if we have to pivot somewhere where we can do that quickly so we don't get in too much trouble and we can keep everything balanced and keep on budget. Those are the type of things that really keep me up at night that I keep my eye on every day.
Megan: As a nonprofit, do you guys have trouble attracting talent or do you find that you can compete pretty well?
David: It's hard. I think, again, a lot of the people-- It's a certain type of person who wants to come into a nonprofit and do good. Once they get here, depending what it is, we can keep them longer, depending on their involvement in strict mission investments. I think that we do have a little bit of an advantage there, but obviously, we may have a disadvantage in terms of some of the back office and some of those folks that might be able to get paid more in industry.
Megan: Dave, thank you so much for being my guest today.
David: Okay. Thank you. Thanks for having me. It was nice talking to you.
Megan: I really enjoyed speaking with you and hearing about all of your experiences and the resulting insights. I appreciate you being here with us today. I wish you and March of Dimes all the best. Sounds like you guys are both doing amazing things. To all of our listeners, please tune in next week, and until then, take care.
David: Okay. Thank you.
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In this episode, we discuss the role and responsibilities of a CFO in the nonprofit space, hiring the right CFO, what it takes to Become a Successful CFO at a Nonprofit Organization, and much more.
Taking Risks May Pay Off
When working for the Red Cross, Dave took on a job in a business line people around him believed would fail. But he ended up propping it up, improving it,, and eventually selling. Dave took March of Dimes on a similar journey, as the company was losing money when Dave became CFO.
“That's what I would say to people who want to grow and keep moving up is take some risks once in a while.”
Hiring the CFO That You Need With Financial Success for Your Nonprofit in Mind
Before joining March of Dimes, Dave saw various flaws in their organizational structure. For example, it was heavily focused on transactions, and people were doing business with themselves. Thanks to his expertise and interest in changing things for the better, the organization’s financial position improved.
“It's really how you'll put your mark on the organization, how you might change things, and how you might help them in the areas they need for success.”
What Does it Take to Become a Successful CFO at a Nonprofit Organization?
Operate the organization with financial rigor, and look at it as a business. But also make sure that you're devoted to its mission and helping the most people, even if it means sacrificing numbers.
“Because you're mission-related, sometimes you have to do things that may not make the most financial sense but may help the most people.”
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