Nonprofit Sustainability: Strategies for Long-Term Growth

Megan - 00:00:18: Today, my guest is Timothy Dunbar, CFO for American Water Works Association. Tim is an accomplished, dedicated, and highly knowledgeable executive officer with 20 years of progressive leadership experience. He is a trusted leader with a proven history of establishing a vision, creating impact, and building high-performing teams. His expertise is in leading growth-oriented operations, generating revenue, financial management, organizational governance, risk management, and strategic planning. Tim adds value by driving revenue, organization, and reputation growth, producing and implementing long-term multi-year plans to grow cash operation reserves, leading collaborative communications on high-impact projects with all members, partners, and levels, while ensuring transparency of information and cultivating strategic partnerships across the organization, serving as a visionary leader in promoting a culture of revenue generation at the staff and board levels, and creating long-term plans to grow revenue and expand market offerings across all verticals. On a personal note, Tim spends his free time reading, enjoying music, staying fit by practicing yoga and jujitsu, and watching his kids compete in volleyball and baseball. Tim, thank you so much for joining me on today's episode of CFO Weekly.

Timothy - 00:02:08: You're welcome. Glad to be here.

Megan - 00:02:09: Today, we're going to be talking about effective communication and its importance across different functions and stakeholders, particularly when handling difficult situations, which a lot of us find ourselves in these days. So I'm looking forward to learning about you and your experiences. So let's just jump right in. First, just so that we know a little bit about you, can you just talk us through your career to date and how it is that you got to where you are today?

Timothy - 00:02:34: Sure. So, I've spent pretty much my entire career in nonprofit financial management, as has my wife, our nonprofit financial management for her. But we've both been fortunate enough to work in the nonprofit sector for our entire career. And I majored in marketing, went back to school after working for a mutual fund company for a couple of years and got an MBA and then went to work as a staff accountant at a hospital. And that's kind of when I learned that a lot of nonprofits or a lot of hospitals are nonprofits. And so I've always been kind of connected to organizations that have a larger community benefit type mission. And ever since then, I've worked for a variety of nonprofits ranging in size from just a couple million dollars in budget all the way up to 50 million. And how I landed here today at American Water Works Association was about a year and a half ago. I decided to move on from Contexture and was contacted by a recruiter through LinkedIn and was fortunate to get a job here at American Water Works Association, which is a really amazing organization that works across all North America and internationally supporting water utilities and advocating for the world's most vital resource, which is water.

Megan - 00:03:55: And I'm just curious, what is it that you like about working for nonprofits?

Timothy - 00:04:01: I think it's the type of people that a mission-oriented organization attracts. So I've always had a lot of fun working with people at various nonprofits. But more than that, I think from a professional development standpoint. Get a chance to wear a lot of different hats. And so just by necessity, so over my career, I've gotten to work across finance, accounting, human resources, contracts, legal. I've gotten to do office renovations. I've gotten to do all sorts of stuff that the finance professionals that are in a very large organization may just be doing like one particular function month after month-after-month. And so it's pretty cool to get to do that. And then nonprofits, I think, in their own unique way, kind of have to be agile and flexible in pursuing funding. And so there's also a little bit of that, like a thrill of the chase of like, how are we going to make our revenue goals next year? And you know, what are we going to do to continue growing and expanding our mission?

Megan - 00:05:09: And you're passionate about both yoga and jujitsu. So how have these disciplines influenced your approach to leadership and problem solving in your role as a CFO?

Timothy - 00:05:20: So in yoga, at least I do hot yoga, so you're in a hot room. But either way, hot yoga or regular yoga, you often have to maintain a difficult posture for an extended period of time. And in jujitsu, which is close quarters grappling, you might be under intense physical pressure from an opponent for what seems like an eternity. And through these mediums, I think I've increased my capacity for handling pressure and stress. And it's very basic, you know, you just kind of have to believe that you're capable of getting through it. Take deep breaths, don't overreact, don't freak out, trust your training. And I find that, you know, I can hang in there a lot longer than I give myself credit for. And as a leader, part of my job is to help others find those qualities in themselves. And so when it comes to decision making, I think it's helped me have that ability to maybe sit with something a little bit longer to puzzle through it instead of just reacting to the first thing that comes to mind.

Megan - 00:06:24: Yeah, I guess it's mind over matter and it really teaches you how to sit with discomfort and be okay with it.

Timothy - 00:06:30: It really is. And to be okay with sort of that ambiguity that can often be painful.

Megan - 00:06:35: And in your experience as a CFO across various organizations, how is it that you've seen effective communication directly impact financial performance and organizational success? I've talked to so many leaders these days, and it seems like communication is key. And it's the difference between a well-run organization and an organization that cannot keep people in place.

Timothy - 00:07:02: Thinking about both internal and external communication. So for a decade, I worked at the Colorado Health Institute, and that's a health policy research organization here in Colorado. And I worked there from pretty much the whole 2010s. And when I started, I coincided with our new CEO, Michele Lueck. And at the time, the organization was known as the Data People. And our funding was starting to flag a little bit. And Michele came in and she really invested in communication staff with the idea that we can't just be known externally as the Data People. We have to be known as the people who are giving you insights from the data and telling you different outcomes and possibilities and ways forward with using our data. So we invested in hiring a number of communication staff who had newspaper backgrounds, who were very good at kind of getting the headlines out, and a number of very skilled graphic designers who helped us communicate our data and information and insights in interesting ways. And I saw that have a huge effect on the attention that the organization got, specifically from our funders at that time, who were many of the large foundations in Colorado. And so that experience kind of made me a career-long believer in the investment in good marketing and communication and writing externally, and that you can't always tie like a direct ROI line to the revenue, but I think it really helps when you get whatever your product is for us. At AWWA, it's information that water utilities and regulations can use, when you get that out there and you're really promoting the organization and then internally, I think communication is so crucial, because, I think our natural tendency is, to get siloed or tri-wole in our own departments. And it's not done, you know, with any like mal intent, but more just because that's how we are as humans. And so continuing to, like, I spend a lot of time outside of the finance department, talking to other departments, making sure my department is very outward focused. And in complex organizations, like you can't make decisions in silos. And so departments have to be communicating each other so that you don't get crosswise and start going in different directions. So I think both external and internal investing in good communications, people and resources, it really does have an indirect, but palpable impact on financial performance. And then I think the last thing that I would sort of tag on to that is. Like my communication as a CFO to our employees, one of the things that I say in almost every staff meeting that I have, I'm not just my staff, but the whole company, is that I believe every single employee plays a role in the financial success of the organization. And they do that by being awesome at their job. And I came to that position because I've seen cultures where employees who have the most direct effect on revenue, maybe it's sales, they get all the glory, and then a lot of the support staff are like, well, I'm not a revenue-producing FTE. But I just don't believe that's true. I think everyone has an impact on the company's financial success. And I once had a colleague kind of jokingly say to me, you want everyone to be on the finance team. And I was like, yes, I do. And I was joking, of course, but what she picked up on is that I want everyone to be engaged and educated and understand that they have a part to play.

Megan - 00:10:45: I feel like people, that know that their role has meaning to the company, enjoy their jobs more than just thinking you're some back-office disposable employee.

Timothy - 00:10:55: Exactly.

Megan - 00:10:57: And navigating mergers and acquisitions can be complex. And I know you've been through it before, but how did you approach the communication with stakeholders working through the merger of Corio and Health Current when those two are combined to form Contexture?

Timothy - 00:11:13: Yeah, that was interesting on a lot of different levels because I think there were like the obvious stakeholders that you reached out to, which were like board members on each side, major customers on each side, and people who were at the high levels in organizations that used our products or that provided funding. And so that's where the marketing and communications teams at those organizations came together and I think really shined in terms of identifying who all those organizations were and being very proactive. One of the mantras is definitely like there shouldn't be any surprises besides the fact that maybe they're, oh, that's great that you're verging. But as you move through that process, keeping them informed post-verger announcement so that they're not surprised by anything that you're doing. But what I found was interesting that was kind of an unforeseen communication challenge was the people who actually used our products who were much lower down in the organization. So those two organizations worked with health data and a lot of the people who used the products on a day-to-day basis were like clinical staff at hospitals or medical assistants or people who were getting invoices from us that work in accounts payable. They're not getting merger, news in their inbox and they're not seeing those big headlines. And so while we had that initial plan to hit all the obvious stakeholders, then we quickly realized that we had to have like a second plan to hit people who were further down in the organization. So when they got an invoice and it said Contexture, instead of one of the organizations they were used to getting an invoice from, they didn't go, I have no idea who this is. I can't pay this because we did run into that. And so we had. To find as many ways as possible to kind of repeat that message and get it out to them and get creative with like redesigning our invoices, doing a lot of personal like on-zone outreach to people just so that they knew like this isn't a new company. This is the same one you've worked with, but it's a new name. So that was hard and there was not a quick fix and it just took a lot of one-on-one time. And I even got on the phone myself to speak with some AP clerks and payable staff of our customers. But over time, it paid off.

Megan - 00:13:36: Yeah, I'm sure during times like that, people probably get scared, like what's going to happen to my job or what's going to happen to the company when they don't know the story behind what's going on. So for CFOs or other leaders who find themselves working at companies that are maybe a little more siloed in nature, what advice do you have for effective communication between the finance function and other departments? And how can these silos be broken down?

Timothy - 00:14:06: I don't think there's any substitute for face-to-face communication. So I do personally a lot of meetings with directors in other departments just to check in on how things are going with them, not just from a financial perspective, but just their department operations. And I learn a lot that way. And then my own team meets with every department on a monthly basis twice, both pre-financial close and post-financial close to make sure that they're getting all of the relevant information to close the books and then closing the books correctly and then checking back in. And one thing that I think particularly, I think for any department, a good rule of thumb is just like, there shouldn't be any surprises or you should try to minimize surprises. So that takes thinking proactively as you're making a change or taking on an activity. Like, should somebody does anybody else know about this? And if so, how can I communicate with them? And then the second thing for finance people, but I guess this really applies to any, could be marketing people, it could be an engineer, is we just default to assuming that everyone speaks our language. And so instead of starting with what you know, it's easier to start with the common frame of reference for the other person. Like, we work in spreadsheets and accounting software all day. They don't. So we come in and just start talking and finance speak, we're quickly going to lose that audience. And so always trying to find ways to simplify information or make it more relatable.

Megan - 00:15:47: That's great advice. So over the last four years, seems like we've experienced crisis after crisis. So how is it that you have managed financial communications during times like the last four years? And we've seen economic downturns. We've seen disruption due to COVID. But how do you manage communication in these crisis management situations?

Timothy - 00:16:12: Personally, I've been very fortunate to work over the last four years for companies that have been very stable financially. So, like when I was at Carrillo and Health Current, because we were working with healthcare data during the pandemic, we actually received an influx of funding to help hospitals and insurance companies and clinical staff develop heat maps for COVID and do all sorts of data metrics around COVID testing and immunization data. And then here at American Water Works, also fortunate to come into a stable. Organization. And so I haven't had to deal with, I think, a major crisis in communication. But I think where my mind is going is that whole time, whether it was a crisis or not, things were evolving on a very rapid basis. And so a lot of the communication that I worked on with other executives leaders was out to every nonprofit has a finance committee, and then we have a board. And so. There was a lot of work communicating back and forth with board members, even if it meant taking one on one phone calls with a lot of them to make sure they had more up to date information than just maybe your typical like quarterly or meeting and writing a lot more kind of expository information sort of explaining and reassuring where things were going. But yeah, I guess I would have to say I'm very fortunate to not have to communicate a lot of bad news. Over the last four or five years.

Megan - 00:17:53: And how do you foster a culture of collaboration and open communication where people are willing to share data across the organization?

Timothy - 00:18:03: I think it starts first with sharing your own data. I find that a lot of it is just in your posture. So I am a very outward-facing, friendly CFO. So I've done things like during the pandemic, when we were all online, I hosted a lot of trivia that I called music and money, where I love music. So I would do music trivia, but I would intersperse trivia about financial statements and about the company's finances and what are the biggest items in our budget or how do you calculate margin. And so I guess I'm kind of the big believer and there's this little mantra that I picked up where it says, go positive and go first. And so if you have that kind of posture, I think that it's reciprocated. And the opposite of that is that if people see that you're kind of over there with your arms crossed and your posture, not literally, physically, but just they sense that the posture of you as a person, as a department is kind of standoffish, then they're going to pick up on that and that's what's going to come back at you. So I think that with data sharing and collaboration, it's sort of you get what you give in most cases.

Megan - 00:19:19: And when you're talking with a diverse group of stakeholders, how do you adapt your communication style to make sure that you're meeting them where they're at? Like you mentioned, you don't walk into a room with your spreadsheets and start talking in finance terms to someone who may or may not know what those terms mean. But how do you adapt your communication style?

Timothy - 00:19:41: This might be a little bit of an add-on to the last question. But one of my most important personal values and one of the things that I look for in people that I hire is curiosity. And so when you go back to that question that you just asked about data sharing and information or the question that you just asked. So you can be very outgoing and share a lot of data, but you still get people that might not want to open up and share with you. And so there's different ways of asking questions. That can come across, you can ask questions of somebody else's department or their department's finances in a way that is accusatory. Or you can ask a question in a way that comes across as curious. And so I think that the curious approach wins every time. And so I try to come across with a posture of, I'm here to learn, please help me learn. And maybe ultimately, yeah, you feel that if you share this information, I'm going to take away part of your budget. Maybe that very well will happen. But you have to help educate me because it's about a larger picture of how the company is doing and how we can help the company win. I try to think about what is their level of knowledge about the finances. But then particularly with board members or external stakeholders, what is their level of knowledge about the organization? Because they've all got their own day jobs. And so they don't spend 8 to 10 hours a day thinking about the organization in the same way that I do. And that's natural. They think about their jobs. And so trying to always kind of find, okay, maybe it's like last time we were together, we talked about this. Does that sound familiar? Or I think what's especially helpful is making sure that they have information ahead. And it's time to react to. So that's just speaks to being well-prepared when you're meeting with someone externally or with a board member. Possible, giving them something to read and react to, or when you go in, kind of being clear, hey, I'm meeting with you today. Here's what I hope to communicate to you. And please let me know at the end of our conversation if I've succeeded in that goal. So you sort of give them the opening to say, actually, I thought you were going to talk about this, or no, I don't understand that concept. But yeah, allowing them the opportunity to be curious, too.

Megan - 00:22:16: That's a great answer. Thank you for sharing. And obviously, technology plays a very important part in modern finance operations. So how are you using technology in your communication approach as a CFO, specifically data analytics or decision making? You mentioned being able to turn data into insights, but how are you using technology to become a better storyteller?

Timothy - 00:22:43: I would say I am probably tech light. And so I find more that what I do to become a better storyteller is spending a lot of time preparing for whoever I'm going to tell the story to. So that may mean holding up in my office with my spreadsheets and notebooks. I know that may sound kind of silly, but as far as the technology that helps me to tell stories, there's people on my team that are way better at data analytics. And that's something that we're trying to grow in is using that stuff to help communicate to other departments and to, you know, whether it's finance committees or executive committees or boards. But for me, I guess I kind of default towards like simpler is better. I used to do a lot of public speaking in other lives. And think about when you're going to tell a story to an audience, they can probably only take away one, maybe two things. And so if you think ahead of time really hard about what that one or, you know, or those two things are that you want to get across, then it really provides focus. Because even with all the cool data, you know, that it's tools out there, you can still take all that data and then produce a dashboard that has 25 different metrics on it. And then somebody might look at that and go, I don't even know what to pay attention to. So I guess for me, it's always comes back to like simplify, simplify, simplify, figure out what the key message is, and then just kind of make sure that you've done everything you can to get that message across, including asking if it was understood.

Megan - 00:24:27: That's true. With all the data and all of the technology available today, I'm sure it's very easy to overcomplicate reports and processes. So that's wonderful advice. And I know this can be difficult at times, especially when dealing with sensitive situations. But how do you balance being transparent with stakeholders and your team with the need to be confidential and maybe not divulge sensitive data? How do you balance those two?

Timothy - 00:25:00: I think I probably would appeal to people's own personal sense of discretion. And just be explicit about it to say, I'm not trying to hide anything from you, but this is the level of detail that I can share with you at this time. And I hope you understand that, for example, and I think one thing I wanted to maybe caveat with this entire interview to go back to the beginning is most of my career has been at small to mid-sized nonprofits. And so to speak to your previous question about the tools, there's a lot of software out there that can do a lot of cool stuff. And then a lot of places that worked, we just haven't been able to afford that software or that person who can do the analytics. But to go back to your question about communicating information, I guess part of that is on me or on people on my team to really use their own discretion to figure out what's appropriate to share. And then when it comes down to it, it's just an extension of technology. Trust to the other party. But no matter what your organization is, people talk, people gossip, people share things that they aren't supposed to. And that's just part of the nature of who we are as human beings. So I think as long as I'm not deliberately oversharing confidential information or giving people things they shouldn't have, then I'm kind of doing my part. Two things that I think are particularly interesting about working in nonprofits and communicating financial information and sensitive information. So we're a nonprofit, but we finished our year and you said we had a profit margin of $2 million. Why did that happen? Are we allowed to do that? And so I don't think that's sensitive information, but it's sometimes new information for people where you're like, we're nonprofits are allowed to make money. Being nonprofit is a tax status. And it's because we lessen the burden of government and we provide benefits to the community. And that's one of those no margin, no mission mantras. But then you always have to watch and be careful because you want to have the right amount of margin for your mission. And so there is a sensitivity both internally and externally where you can't say, yeah, we're a nonprofit. We're running a mission in the inner city or we're doing, you know, we're planting trees or doing whatever it is you're doing. And then we cleared a 30% margin this year. That's not going to look good. And so you have to watch that. And I think another thing that I've encountered a lot in my career is having an appropriate amount of cash reserves for various purposes. And that's something else that can be very hard for people to understand who are very mission driven is why do we have $30 million of cash in the bank? Shouldn't we just be spending that all on our mission? Is that too much? And so helping people to understand that it's also like best practices for nonprofits to figure out what an appropriate level of cash on hand is just for operating reserves, for investing in innovation funds for unplanned expenses. You know, the rainy day fund or other different types of reserves, there's all sorts of ways the money might be set aside. But that could sometimes be very sensitive, again, both internally and externally, because you're sending audited financial statements out to your board members. And a lot of times if you're applying for grants or doing other things, you know, people can look and they may question, why is your company financially stable? And you're like, well, isn't that what you want? You want our nonprofit to be stable and sustainable and to be able to continue to do good. So that's sort of one of those double-edged swords of working in the nonprofit industry where you want to be sustainable and growing, but you kind of have to balance that with your obligation to the community and helping to educate people that it's okay to be financially sustainable. A lot of people have kind of this picture of nonprofits as always like operating on a shoestring budget.

Megan - 00:29:09: And looking ahead into the next three to five years, what trends do you see in CFOs role in nonprofits?

Timothy - 00:29:19: CFOs definitely are transitioning, will have transitioned hopefully, but you're not just the person who's like in charge of the budget, who says yes or no to things. I think CFOs have a huge role to play in operations and strategy. I know a friend of mine who's a CFO, a foundation here in Colorado, his title, I think, actually got changed to Chief of Operations and Finances. And so you're not siloed into the finance function. And a lot of nonprofits can't afford to have a COO. That's something I've enjoyed in my career to kind of go back to the beginning where I said you get to wear a lot of hats is being able to step out and learn more about operations and learn more about kind of like high impact items that are moving the company forward strategically, just in addition to the finances.

Megan - 00:30:15: Yeah, and I'm just curious for my own purposes, but as a CFO of a nonprofit, how much time do you spend in the community just kind of communicating what the mission is?

Timothy - 00:30:26: I'm not out there very much. So I think I'm external facing internally, but I'm not out there communicating with the community. We have a lot of people who are just way better positioned with what they do to speak in those kinds of situations.

Megan - 00:30:43: That makes sense. Tim, thank you very much for being my guest today.

Timothy - 00:30:47: I've really enjoyed it.

Megan - 00:30:49: Yeah, I really enjoyed speaking with you and learning from you. And thank you for finding the time to be here with us today. I know your schedule is very busy. Not at all. I like it. I'm happy to do it. I wish you and American Water Works all the best. And to all of our listeners, please tune in next week. And until then, take care.