Presenting finances to your nonprofit board: 4 tips
Board members need to be in the know about your nonprofit’s finances to be effective leaders. Here are four tips for presenting finances to your board.
Your board members help determine your organisation’s guiding priorities and the ultimate vision for where your nonprofit is headed. To lead your organisation down the right path, your board members need an idea of what your nonprofit’s finances look like.
Your finance team likely pulls together financial reports to determine your organisation’s health and to ensure you appropriately allocate your expenses. These reports can be confusing to non-accountant team members, so you need to interpret them before presenting them to the board of directors.
In this guide, we’ll cover several tips that you can use to explain your organisation’s finances to your board members. We recommend the following:
- Double-check your reports for accuracy.
- Sync up with your fundraising team first.
- Consider the context in which you’re presenting finances.
- Find new and engaging ways to deliver reports.
Whether you’re experiencing a fundraising boom or working to stay afloat during a dry spell, board members should understand the financial priorities your team needs to keep in mind. Effective communication between your organisation’s various departments is critical to help you work through financial challenges.
1. Double-check your reports for accuracy.
Imagine there’s a typo on your statement of activities and revenue is recorded incorrectly. If someone accidentally typed $135,000 instead of $125,000, it may look like $10,000 went missing from the account!
Not only could the person recording the monies get into trouble for this mistake (the worst-case scenario is that they could be accused of theft), but the numbers presented to the board members will also be misleading or confusing. To protect your nonprofit and your team members, your organisation should always ask more than one person to look over the various statements and reports you pull.
Having a verification process ensures strong internal controls for your organisation’s finances.
In addition to being accurate, the metrics you present to your board members should also be relevant to your organisation’s activities. Telling your board members irrelevant information results in wasted time and resources.
When you set up your nonprofit software, configure it to show your organisation’s most important key performance indicators front and center. Then, include those numbers in a prominent position within your financial report as the most relevant activities that board members should focus on.
Verifying the accuracy and relevance of your reports is the first step toward creating a clear financial presentation for board members.
2. Sync up with your fundraising team first.
Your financial team isn’t the only group presenting to your nonprofit board. Your fundraising team will also need to report their progress to board members. However, if you provide one metric for revenue and your fundraising team provides another, your board members could become incredibly confused.
Generally, any discrepancies between the fundraising metrics and accounting reports are first caught by your executive director (still not ideal), but the last thing you want is for them to be presented to your board without context.
When your fundraising team reports on the revenue they help to generate through various campaigns, they often provide totals. For example, your fundraising team may say they raised $50,000 during the last campaign. This sounds like a great number! However, if $10,000 of those dollars is restricted, the accounting team will report $40,000 as revenue that can be freely allocated.
Discrepancies happen due to the differences in reporting between the fundraising and accounting teams. Because your accounting team uses fund accounting processes to take into consideration the restrictions placed on money and your fundraising team works with whole numbers, you can usually track down the discrepancies in reporting rather than accusing one team of being incorrect in their numbers.
Before either team presents numbers to the board of directors, your accounting and fundraising teams should sync up with one another to identify discrepancies, find the reason for those discrepancies, and explain them proactively.
3. Consider the context in which you’re presenting finances.
To make sure you’re delivering the most relevant information to your board members, you need to consider the context in which you’re presenting the financial information. Consider whether you’re presenting board members with a regular financial check-in or a report after a full-fledged audit.
For example, toward the end of the year, you’ll probably need to give an overview of your annual finances. This is also the time when you’ll need to discuss tax documents and reports for board approval. Meanwhile, a regular monthly or quarterly check-in will probably include some key information that impacts the board’s upcoming decisions and highlights since the previous meeting.
You should also plan to present finances to your nonprofit board after a financial audit. Jitasa’s nonprofit auditing guide explains that after the audit is complete, you’ll have a letter of recommendation from the auditor containing two main parts: internal controls issues and operating inefficiencies:
- Internal control issues describe the processes and procedures at the organisation that need to be adjusted in order to ensure proper reporting of finances in the future.
- Operating inefficiencies are like red flags, describing the areas of reporting and financial management that could become issues in the future. Nonprofits should make changes to address these inefficiencies to prevent problems from arising.
When you receive this letter of recommendation, you’ll need to present it to the board, ideally also explaining how you’ll address the issues outlined. Therefore, before you present to your board members, you should be sure to ask any questions you have to the auditor and auditing committee. This will help you proactively answer any questions that come up with your board members as well.
The context in which you present your finances will help paint the picture your board members actually need to know from the meeting. Not only that, but the context will also allow you to more appropriately prepare for the presentation to the board, proactively addressing any questions they may have.
4. Find new and engaging ways to deliver reports.
Your board members may not be financial experts themselves. Therefore, the reports you present to them should be interesting, easy to understand, and show the most relevant information.
Spreadsheets of numbers and the statements and reports compiled by your accounting team can be hard for non-accountants to read, so instead, try to present financial information in the form of:
- A slideshow presentation. A slideshow allows you to organise your reports and present them in a clear, straightforward way. However, don’t include too many slides, or too much information on each slide. Use your slides to present visuals, such as graphs and charts, and keep them light on text content so audience members can focus on what you’re saying.
- A story. Be Brilliant Presentation Group recommends creating a narrative to keep your audience engaged, rather than listing off data points. Place the numbers in context by telling a story about why certain outcomes happened. For example, you might explain that your high fundraising ROI was likely a result of your organisation’s expanded prospect research efforts. You might tell the story of one prospective donor that your organisation was able to convert to an actual donor and how that is indicative of a larger, positive trend.
- Infographics. It can also be helpful to organise your financial reports into an infographic that summarises all of the most important information in one place. Infographics can help facilitate understanding by using a combination of text and visuals, which is more engaging for audience members than text alone.
Keep the presentation succinct to maintain engagement. Use the digital tools at your disposal, from design tools like Canva to free image sites like Unsplash, to develop a visually appealing, organized presentation.
Once you have the format and strategy of your financial presentations down, you can create a timeline, ensuring you present your finances to your board of directors regularly and keep them in the know. Use the custom reporting features within your donor management system to build reports and schedule them to be created at specific intervals.
As you present financial information to your board, make sure to answer any questions board members have and provide contact information for members to send follow-up questions or comments. This way, you can facilitate complete financial understanding and set your board up for success as they plan your organisation's strategy.