Illustrations by David Urban
Curious about the financials at your schools? New to the board? It doesn’t matter what your position is, you should know something about the finances, but the CFO wants you to know a few other things as well. In Trust listened to several CFOs and asked what they wanted their board to know, and their answers pertain to everyone interested in the operation and governance of theological schools. Here’s a sampling.
The bottom line doesn’t show everything
Take time to look at the financials and ask questions. “One or two numbers are not giving you all the picture,” one CFO said. “You have to look at the whole picture.” That means having some experts on the board and people who know those questions. It also means asking questions and understanding that not all parts of the seminary are equal. “There are different businesses within a seminary, and each of those businesses can be measured – academics, recruiting, registrar, library – everything,” said another CFO, pointing out that academic margins are thin if not negative and development usually makes up for that. “We need to look at it all.”
Seminaries are usually fairly tight financially
Newcomers often think there’s a lot of budgetary fat, but one longtime CFO puts it this way: “We don’t have an expense problem. We have a topline problem. We’re lean.” Another CFO put it more bluntly: “There’s no fluff. Most of the time, we’re pretty under-resourced in key areas.” While administrative bloat can be real, new board members may not understand that what looks like bloat is what it takes to run a school including the time and resources to keep up with accreditation, compliance, and a variety of regulations. And those under-resourced areas? They may be in marketing, admissions, and fundraising, and a lack of resources in any of those areas can hold the institution back from succeeding. When it comes to cuts, another CFO said, “It means cutting people and turning those tasks to someone already wearing four hats.”
Ask for information
Many institutions provide financial dashboards to help boards and their communities understand the financials, but there’s much more information to be had. CFOs said they’re happy to provide information in whatever way the board wants it. They want to provide information. More than that, CFOs want their boards to encourage departments to work together to move the school forward.
There’s more than just numbers for the CFO
CFOs have taken on expanded portfolios to include oversight of human resources, facilities, financial aid, custodial, investments, endowments, compliance, and risk management. “Don’t forget the ‘auxiliary services,’” said one CFO, adding that could mean a bookstore, food, or housing. In fact, many CFOs have become de facto operations officers. While that makes them incredibly busy, it also means they’re deeply involved in the institution, giving them a unique and insightful view of the school and how it operates.
Change is hard in higher education
For board members coming from outside a theological school, it can be difficult to understand the culture of higher education, particularly if a school is steeped in tradition. In general, one CFO said, “The business leaders on the board are more nimble and entrepreneurial than the academics. This is an industry that’s often afraid to change.” Another CFO noted that makes it difficult to innovate, despite board requests to do so. The pandemic has forced change, and many seminaries realized what they thought would take months or years to do – such as moving to online classes – they could do in days or weeks. But to see other change, the schools need board encouragement.
Academics is the heart of the institution
The “product” is the education, and academics rules the roost. It’s not that business expertise isn’t appreciated, but the worldview inside is based around academics. That can be difficult for someone coming from outside of higher education to understand. The result, one CFO said, is that a “businessperson or CFO has to work hard to make changes. You’re listened to but not as much as the provost.” Another CFO said the result is that academic programs that aren’t performing or helpful can often hang on long past the time when a business would jettison them because of an institution’s academic traditions.
Not every dollar is created equal
The bottom line may look flush, but schools often have funds that are tightly restricted, such as scholarships, endowments, donor gifts, and grants. As a result, people may misunderstand some of the numbers, one CFO said. Endowments, for example, aren’t a savings account to be drawn on – accreditors see dipping into an endowment as a red flag. Other funding – like grants – may be prestigious but could actually pull from the school’s mission.
Take the CFO to lunch (seriously)
If you’re new to the board – or a leadership position – do this. It’s not that they need a meal, but time away from the office for a personal discussion and to build a connection will help you shape a fuller understanding of the institution. It’s not about spilling the tea (figuratively); it’s about having time to ask questions that may not come up in the board meeting. “You’ll get more information there and more quickly up to speed – where there are no pressures – in one lunch than you will in 16 board meetings,” one CFO said. “You’ll get a transparent look at what’s going on.”
Work with us
CFOs are trying to not only make the current budget work but prepare for the future. That takes the help of everyone, including the board. “I think it comes down to the old adage, ‘you can’t cut your way to prosperity,’ which has been the historic nature of seminaries,” one CFO said. “We have to figure out how to generate more revenue. How do we focus on more revenue streams?” Said another: “I can’t build you a financial model that’s going to save the seminary myself. We have to decide together how we’re going to build this. It involves all parts of the institution.”