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Aug 26, 2010

5 Important Lessons in Financial Management

Every chief finance officer, even those not in the field of higher education, has the secret wish to teach. The inspiration comes from the need to remind their presidents and board members of some budget lessons that repeatedly are forgotten, often with unfortunate results.

I informally surveyed the chief finance officers at some universities to find out the lessons they wanted to teach their deans or presidents. Here is what they said:

1. Avoid the pitfall of assuming more money is the only way to achieve greater quality.

2. Budgeting is about making choices and setting priorities.

3. Be sure you anticipate what effects your budget will have on staff behavior.

4. Development and maintenance of human resources is as necessary as development and maintenance of buildings and equipment.

5. Decisions to invest in bricks and mortar should focus most heavily on what happens after the ribbon is cut.

The need to refresh your organization with these financial lessons is just as important in the largest and most prestigious universities as it is in a small social service agency. For more lessons in financial management, pick up a copy of More Than Just Money: Practical and Provocative Steps to Nonprofit Success.