Assessing Your Grantees Financial Health

Transcription

1 Assessing Your Grantees Financial Health City & County of San Francisco Rebecca Coker, Lead Consultant Roxanne Hanson, Senior Consultant November 7, 2017

2 What are you hoping will be different for you after this workshop?

3 Financially resilient organizations Stay focused on the long-term while continually assessing and responding to current needs. They understand and are able to tell their financial story. 3

4 Financial Resilience in Nonprofit Organizations 4

5 Order of statements in the audit Statement of Financial Position BALANCE SHEET Statement of Activities INCOME STATEMENT Statement of Functional Expenses Statement of Cash Flows Opinion Letter Notes 3a Complete package 5

6 Revenue restrictions 6

7 Depreciation 7

8 Balance Sheet What is Owned What is Owed Net Worth Assets Cash Receivables Investments Fixed Assets Liabilities Bills due Line of Credit Deferred Revenue Debt (short-and long-term) Net Assets Unrestricted (Board Designated, Fixed Assets, Other) Temp. Restricted Perm. Restricted 8

9 Accessibility Assets & Liquidity Cash Receivables Investments Property & Equipment 9

10 Statement of Activities What does a financially resilient organization look like? & Statement of Functional Expenses What was Earned What was Spent Results Unrestricted Revenue Expenses Surplus (Deficit) Statement of Functional Expenses 10

11 Statement of Cash Flows Cash from Operations Cash from Investing Cash from Financing Change in Cash 11

12 Financial Health Analysis Tool 12

13 Working Capital Ratio Cash and Other Assets Converted to Cash within the Next 12 Mos. What is Owed in the Next 12 Mos. 5 How Assets Can Cover Liabilities in the Short-Term Total Current Assets Total Current Liabilities Working Capital Ratio 6b Working capital ratio is greater than 1 13

14 Liquid Unrestricted Net Assets (LUNA) Unrestricted Net Worth Unavailable Net Worth 6 Operating Reserves Unrestricted Net Assets Illiquid Net Assets Liquid Unrestricted Net Assets 7 Months of Operating Reserves 14

15 Months of Cash-on-Hand Money in the Bank What was Spent on Average Per Month 7 Operating Runway Cash and Cash Equivalents Average Monthly Operating Expenses Months of Cash on Hand 3m 3k 3l In current audit agency has at least 60 days of cash (doesn t include non-cash in operating expenses) Total unrestricted net income is positive over 2 years Total change in cash is positive over 2 years

16 Operating Results What was Earned What was Spent 1 Results Unrestricted Revenue Expenses Surplus (Deficit) 6f YTD net income is either a positive number or has an explanation of how it will be positive by the end of the fiscal year 16

17 Operating Revenue Mix Revenue from Source Revenue for the Year 2 Amount of Revenue Source Relative to Total Unrestricted Revenue Source Total Unrestricted Revenue Revenue Source %

18 Expense Mix Total Expenses Program Management & General Fundraising Overhead 18

19 Functional Expense Mix: Program What was Spent on Program (Direct and Shared) What was Spent in Total 4 Amount Spent on Program relative to Total Program Expenses Total Expenses Program Expense % 19

20 Auditor s Opinion 3b Unmodified opinion 3e Audit completed within 6 months of end of fiscal year 20

21 Notes to the Financial Statements Basis of accounting Fixed assets Debt Restricted net assets Related party transactions Subsequent events Commitment and contingencies 3c No material weaknesses or going concern in the notes 21

22 Management Letter 3f 3g Letter signed by audit firm For prior year findings, reasonable explanation of correction action

23 IRS Form 990 Federal 990 return filed for most recent tax year 4a or request for extension submitted on time 23

24 Internal Financial Reports Budget-to-Actual Revenue & Expenses for program, contract and/or org-wide Budget Owners Leadership Team Board of Directors X X X Performance Dashboard X X X Management Narrative X X Statement of Activities X X Balance Sheet and supporting schedules Cash Flow Projection (if needed) X X Year End Projection X X X X 6a Balance Sheet is current 6d P&L is current 6f Ytd net income is positive 6c Current bank reconciliation 6e Includes ytd revenue and expense by program, 24contract or funding source

25 Up Next Wednesday, November 29 Financial Planning Wednesday, December 13 Internal Controls + Cost Allocations 25

26 Resources Public Website: onprofits Training Materials Monitoring Form Resources for Nonprofits Internal Website (login needed): g/csa/performance/nonprofitmon itoring/sitepages/home.aspx Monitoring Workflow Contractor Libraries Monitoring Resources 26 Laura Marshall (Program Lead) Project Manager (415) Marnie Purciel-Hill (Technical Assistance) Sr. Performance Analyst (415) Jeff Pomrenke (SharePoint) Performance Analyst (415) Charity Espiritu (General Assistance) Sr. Performance Analyst (415) Emily Vontsolos (General Assistance) San Francisco Fellow (415)

27 Resources The Key to Long Term Financial Health Liquid Unrestricted Net Assets (LUNA), Hilda Polanco, New York Nonprofit Press, May 2012: Keeping it in Reserve: Grantmaking for a Rainy Day. Hilda Polanco and John Summers, Nonprofit Quarterly, May 2016: Operating Reserve Policy Toolkit for Nonprofit Organizations. The National Center for Charitable Statistics, Dec Nonprofit Audit Guide StrongNonprofits.org 27

28 Fiscal Management Associates (FMA) Established in 1999 to serve not-for-profit organizations around the country Provides customized financial management, accounting, software, organizational development, human resources, and other consulting services Works directly with organizations or through funder-supported management and technical assistance programs FMA's mission is to empower not-for-profit organizations with the knowledge and skills to successfully serve their constituents and fulfill their missions Rebecca Coker New York Chicago Oakland /FiscalManagementAssociates linkedin.com/company/fiscalmanagement-associates-llc