The demise of Sam Bankman-Fried’s FTX cryptocurrency exchange offers a lesson to nonprofit leaders on the importance of timely and accurate financial information. It’s also a reminder that we should always listen for signs of trouble within our organizations before things spiral out of control.
When I first arrived at Applied Materials I could see that there was sloppiness in some parts of the company. I called an all-hands meeting, created flipcharts, and walked the staff through my thinking about company-wide goals. I made four points, among them stressing the need for timely financial reporting. This is just as applicable to nonprofits.
The other lesson from FTX is the importance of listening for warning signs within your organization. The collapse appeared sudden, but surely there were distress signals before the fall. I always emphasize the importance of a culture of observant listening, which enables you to “hear” sounds of trouble before you learn about it through official channels — or in a front page newspaper story!
Bad news is good news — if you do something about it.
- Does your organization routinely provide managers with timely and accurate financial information?
- How can you ensure that management is receiving the financial data it needs, ASAP?