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Actionable Financial Analysis: Insights for Nonprofit Leaders In an increasingly data-filled world, it can be difficult to sort through proliferating information to find what matters most. Nonprofit finance is no different. And because healthy finances enable social impact, much is at stake in clearly articulating nonprofit financial condition and resource needs. How can nonprofit leaders make sense of financial data to create a clear picture of their organization's financial situation? Join Nonprofit Finance Fund and GuideStar to learn more about Financial SCAN and how this data platform can add value to planning and decision-making conversations. Presenters: Peter Kramer, Manager, Nonprofit Finance Fund; and Scott Menzel, Product & User Experience Manager, GuideStar USA (moderator)
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Scott Menzel Product & User Experience Manager GuideStar Peter Kramer Manager Nonprofit Finance Fund June 5, 2014
Actionable Financial Analysis: Insights for Nonprofit Leaders
AGENDA
Introduction to Financial SCAN
New Feature Overview
Brief Online Tour
Case Analysis
Q & A
Effective Solutions
Sound Financial Health
Strong Organizations
Quality Programs
We believe that financial health supports impact
When it comes to finance, nonprofits face common challenges
Knowing which metrics to focus on for assessing
financial health
Having the time and skills to collect, parse, and
report financial data
Communicating about an organization’s financial
situation and resource needs
Financial SCAN at a Glance
What: Data platform for assessing nonprofit financial health and fostering dialogue among all stakeholders involved in making social impact
Who: Private and public grantmakers/donors, nonprofit organizations, philanthropic advisors, consultants and media
How: Private and public grantmakers/donors, nonprofit organizations, philanthropic advisors, consultants and media
WHAT
Data platform for assessing nonprofit financial health, making data driven decisions and informing grantmaker-grantee dialogue
WHO
Nonprofit organizations, private and public grantmakers, individual donors, philanthropic advisors, and consultants
HOW
Draws data directly and automatically from IRS Forms 990,* presenting complex information in an easy-to-analyze and communicate format (350K+ orgs)
*Note: Financial SCAN does not include data from Forms 990 EZ
What’s in a Financial SCAN?
Organizational Dashboard: Five years of key financial trends and ratios
Graphs & Explanatory Text: More detailed overview of an organization’s:
Expenses
Revenue
Profitability
Balance Sheet
Liquidity
Peer Comparison Dashboard: Select peer organizations for financial benchmarking
How are Nonprofit Leaders Using Financial SCAN?
Engaging staff, board members, and
funders in conversations about recent
dynamics and current needs
Visually mapping the organization’s financial
story
Providing historical context to inform
budgeting and planning
Benchmarking with peer organizations,
assessing financial similarities and
differences within and across sectors, sizes
and markets
“My organization never thought about strategically and proactively planning its financial future until I presented them with Financial SCAN.
Executive Director, Diversified Community Services,
Philadelphia, PA
Financial SCAN 2.0: New Features!
Excel Download
Peer Group Comparison
7 Day Nonprofit Access
Brief Online Demonstration
Key Considerations: What 990 data can and cannot do
990 data CAN help:
Illustrate your organization’s financial trajectory and recent
revenue, expense, and balance sheet dynamics
Show how your organization compares to its peers across
standardized fields
990 data CANNOT:
Provide the authoritative and most up-to-date financial picture
of your organization
Tie exactly to the information presented in an audit
Show revenue restrictions
Distinguish between operating dollars and capital dollars
Meet Today’s Case Organization: REAL WORLD SKILLS
MISSION: To prepare underserved youth for lasting
careers and self-sufficiency
PROGRAMS:
Personal & professional skill-building
Summer internship placement
Trade programs and certifications
RECENT DYNAMICS:
Steady yet modest growth
New location and dated equipment
Beginning strategic planning process
REAL WORLD SKILLS
Dashboard: Income Statement
Dashboard: Balance Sheet
Peer Comparison Dashboard:
1 2 3 4 5 6
1 2 3 4 5 6
1 2 3 4 5 6
1 2 3 4 5 6
1 2 3 4 5 6
Topics Explored in Financial SCAN Graphs:
Expense detail & composition
Revenue detail & composition
Profitability
Full cost of doing business
Asset composition
Depreciation of fixed assets
Liability composition
Liabilities as a % of assets
Liquidity
With the exception of 2008, surpluses and deficits have been close to breakeven
RWS has effectively managed this growth by
consistently covering its operating costs to achieve
marginal surpluses
But are surpluses adequate to build financial resilience?
RWS’s liquidity has fluctuated somewhat over the period, but has been consistently tight
Available liquidity represents a nonprofit’s ability to
handle risks and seize new opportunities.
Observations & Recommendations for REAL WORLD SKILLS
Observations from Financial SCAN:
Modest growth over last several years
Reliable mix of revenue sources
Relative to peers, little fixed assets
Tight liquidity constrains ability to innovate
Recommendations for Leadership:
Make business planning a part of strategy development;
build on historical strengths (e.g., reliable revenue,
surpluses in most years, etc.)
Consider amount and types of capital needed to build
liquidity and adapt to the changing job market
To meet resource needs, discuss areas of fiscal strength
and vulnerability with funders
Q&A
nonprofitfinancefund.org
20
Thank you!
Peter Kramer
Manager, Advisory Services
Nonprofit Finance Fund
617-204-9772
To learn more:
www.guidestar.org/financialSCAN