Presenting financials to a nonprofit's board of directors
Guest blogger: Tom Ross, CPA, Bukaty Payroll & Accounting Services
Nonprofits pose a special challenge to providers of bookkeeping services. The financials are complex and multilayered — and they must be presented to a board of directors (BOD) that often lacks financial expertise and experiences frequent turnover. Because maintaining a variety of funding streams (public, private, grants, events, etc.) is vital to a nonprofit's survival, the ability to make clear, easy-to-follow presentations is critical.
Strike the right tone
A good nonprofit financial presentation is a tightrope act. You have to balance a high-level overview with enough specifics at the individual program level for the board to carry out its fiduciary responsibility and achieve the organization's mission.
In other words, you have to break down not only how the budget will be allocated — which expense categories go to which program — but also the sources of the funding for each program. Did the funding come through a federal agency, a grant or private donations? You have to explain any restrictions or limitations in each case. So all funds have to be categorized, and if their use is limited, that needs to be spelled out very clearly.
Let the numbers tell a story
When presenting financials to a board, it's important to remember that you aren't just crunching numbers — you're telling a story. Adding some narrative elements to the presentation is helpful because different people have different ways of learning. For example, if you're reviewing the budget, you might include a page or two of documented assumptions to provide context. Sometimes using charts, graphs or other tools to callout the highlights can make a financial statement or schedule easier to absorb.
Also, utilizing a dashboard is nice because you can include not just the financial element, but also some of the operational elements and how those correlate to changes in the financial statements. So even if somebody isn't a financial person, they can still understand that if utilized capacity drives revenue, and you're only at 60% of capacity, there will be a significant gap in performance compared to budget.
Be considerate and consistent
One of the simplest, most effective things you can do to make your financial presentation a hit is to provide the board with all relevant information well in advance of each meeting. Giving board members plenty of time to review the information is important so that if something is unfamiliar or unclear, they can ask informed questions. Informed questions lead to informed decisions.
It's also important to establish consistent formats and procedures for presenting financial information. At many nonprofits, the board members have term limits. Having an established protocol for documenting financial information makes it easier to maintain continuity as board members cycle through. It also enables apples-to-apples comparisons over the reporting periods.
Overcome the time crunch
For financial professionals crunching the numbers isn't nearly as challenging as managing the time crunch. Most nonprofits have a lean financial staff who are asked to do more with less. Having access to affordable, robust front-end financial tools and additional resources can help lighten the load. Bukaty Companies Payroll & Accounting Services offers a variety of solutions that can ensure you're BOD-ready. Whether you need technology or access to financial expertise and support, we can help. We have a team of experienced accountants and CPAs who understand the unique needs of nonprofit and for-profit businesses.
Ultimately, your goal is to provide the BOD with the roadmap they need to set the right direction. Delivering detailed financials in a meaningful format will help your cause.