Financial reporting for small nonprofits

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[ Origin story ]

The Case for Numbers

Numbers help us make decisions

Unbiased

Unbiased Unemotional

Unbiased Unemotional Completely rational

Unbiased Unemotional Completely rational Totally transferable

Numbers tell a story

Well if numbers are so great then why does all of this have to be so complicated?

[ soap box ]

Nonprofits don t make any sense

Intentionally biased

Intentionally biased Super emotional

Intentionally biased Super emotional Not rational

Intentionally biased Super emotional Not rational Nontransferable

The Basics:

The Basics: What we already know

Cash

Cash Assets

Cash Assets Liabilities

Cash Assets Liabilities Income / Revenue

Cash Assets Liabilities Income / Revenue Expenses

Cash Assets Liabilities Income / Revenue Expenses Net assets

Cash Assets Liabilities Income / Revenue Expenses Retained earnings

Cash Assets Liabilities Income / Revenue Expenses Net assets

The Basics: Part II

The Basics: Part II The Statements

Balance Sheet

( also called Statement of Financial Position )

Balance Sheet

Balance Sheet Statement showing current picture of financial situation

Balance Sheet Statement showing current picture of financial situation Cumulative as of a specific date

Balance Sheet ( as of a specific date ) Assets Liabilities Net assets

Balance Sheet as of June 30, 2018 Cash $500 Furniture 200 Total Assets $700 Debt $200 Net Income 300 Net Assets 200 Total Liab and Net Assets $700

Income Statement

( also called Statement of Financial Activities )

Income Statement

Income Statement Statement showing revenues and expenses over a defined period

Income Statement Statement showing revenues and expenses over a defined period Live feed of financial situation

Income Statement ( start date through end date ) Revenues - Expenses = Net Income

Income Statement ( start date through end date ) Revenues - Expenses = Change in Net Assets

Income Statement July 1, 2017 June 30, 2018 Grants $900 Membership Dues 300 Total Revenues $1,200 Consultant Fees $700 Rent 200 Total Expenses $900 Net Income $300

Balance Sheet as of June 30, 2018 Cash $500 Furniture 200 Total Assets $700 Debt $200 Net Income 300 Net Assets 200 Total Liab and Net Assets $700

Some Wrenches

Class Financials

Class Financials Program Fundraising Management

Cash vs Accrual

Cash vs Accrual Cash: It counts when it s cash

Cash vs Accrual Cash: It counts when it s cash Accrual: It counts when it s earned

Cash vs Accrual Accrual Examples: Receivables Payables Depreciation Deferred Revenue

Tiny Opera House Cash Basis Financials

Restricted vs Unrestricted

Restricted = Can only be spent for a pre-determined purpose

Unrestricted = Free money

There are a lot more wrenches

Some Pro Moves

Reading Financials

Reading Financials It s the space between numbers that matters

Reading Financials It s the space between numbers that matters Where are there big changes? How fast are changes happening? How do numbers compare to each other?

Reading Financials Look at it in small chunks

Reading Financials Take it slow and practice

Preparing and Presenting Financials

Preparing and Presenting Financials Aesthetics are important how do your numbers look in space

Preparing and Presenting Financials Aesthetics are important. Wages $1,023.23 Wages $1,023 Rent $ 650.00 Rent 650 Office Expense $ 212.95 Office Expense 213 Insurance $ 110.22 Insurance 110 Utilities $ 75.66 Utilities 76 Other Expense $.35 Total $2,072 Total $2,072.41

Preparing and Presenting Financials Aesthetics are important. Wages $1,023.23 Wages $1,023 Rent $ 650.00 Rent 650 Office Expense $ 212.95 Office Expense 213 Insurance $ 110.22 Insurance 110 Utilities $ 75.66 Utilities 76 Other Expense $.35 Total $2,072 Total $2,072.41 48% fewer characters

Preparing and Presenting Financials Aesthetics are important. Wages $1,023.23 Wages $1,023 Rent $ 650.00 Rent 650 Office Expense $ 212.95 Office Expense 213 Insurance $ 110.22 Insurance 110 Utilities $ 75.66 Utilities 76 Other Expense $.35 Total $2,072 Total $2,072.41 actually 47.5% fewer characters

Preparing and Presenting Financials Math is important make sure things add up

Preparing and Presenting Financials Allocate expenses for a more accurate picture

Preparing and Presenting Financials Consider the audience.

Preparing and Presenting Financials Consider the audience. How much detail do the need to see?

Preparing and Presenting Financials Consider the audience. Probably not as much as you think.

Preparing and Presenting Financials Consider the audience. What do you want them to focus on?

Preparing and Presenting Financials Example: We didn t raise as much money as last year

Preparing and Presenting Financials Example: We didn t raise as much money as last year Show current year vs prior year

Preparing and Presenting Financials Example: Board giving is behind projections

Preparing and Presenting Financials Example: Board giving is behind projections Line item for board giving vs budget total

Preparing and Presenting Financials Example: We have more money to spend on a certain program

Preparing and Presenting Financials Example: We have more money to spend on a certain program Comparative program financials

Preparing and Presenting Financials Example: We re too dependent on government grants

Preparing and Presenting Financials Example: We re too dependent on government grants Revenue by source with % of total column

Preparing and Presenting Financials Example: We re too dependent on government grants Maybe even an industry standard column

Preparing and Presenting Financials The board doesn t need to see all the detail

Preparing and Presenting Financials And there is a decent chance that they don t know as much about this as you think they do.

How Can Help

Webinars and workshops like this!

Templates and blog resources

Office hours and consultations

Tiny Opera House Forum

Our platform.

Next Week:

Next Week: Financial Management Part 2

Next Week: The Future - Allocations, Budgets, Cash Flow

Questions?

Thank you!

T. Hampton Dohrman hampton@tinyoperahouse.com 619.738.0850 @thamptondohrman