Nothing seems to intimidate or inspire fear in more nonprofit employees than the thought of having to read their organization’s financial statements–well except for those of us who actually know how to make those numbers make sense. At last week’s Emerging Leaders Network Lunch, we—with the help of Michael Anderson from Nonprofit Assistance Fund (NAF)—turned fiscal fear into projected growth.
I started working for the Citizens League in 2008, and only a month after being hired I found out—along with the rest of our staff—that an audit done by our new accounting firm had uncovered a deficit. It showed our expenses for the year would exceed projected income. How did we stray from the shallow end to deep financial waters? As it turns out, we’d done a really good job of raising restricted funds, but had not raised enough unrestricted funds to help cover general expenses. Our new firm determined that the financial statements we were using didn’t allow us to appropriately track our restricted and unrestricted balances.
If we had better financial statements, we would have caught the problem earlier. Thankfully, we were able to rally the troops (dedicated board members), develop a strategy, and send for reinforcements—which which came in the form of a loan from the NAF.
I’m proud to report that we turned our financial situation around, and ended 2009 in the black! We now have strong financial policies in place, our board actively monitors financial statements on a monthly basis, and almost our entire staff has been through at least one training by our loan officer at NAF.
As a young nonprofit professional, you’re wondering what proactive steps you can take to try to make sure this doesn’t happen to your organization.
- Get to know the Nonprofit Assistance Fund. I learned very quickly in my nonprofit career the importance of being financially literate, and realized the vital role the Nonprofit Assistance Fund plays in Minnesota’s nonprofit sector. NAF is dedicated to building financially healthy nonprofits that foster community vitality.
- Attend a training or workshop on financial management. The next Fundamentals of Nonprofit Finance training hosted by the Nonprofits Assistance Fund will be held on Tuesday, Sept ember 28th, from 9:00am – 12:30pm.
- Get to know your organization’s balance sheet. The balance sheet, or statement of financial position, is one of the key documents you should understand. This document provides a clear and comprehensive picture of your organizations financial situation.
To see a full list of the resources showcased by Nonprofit Assistance Fund at last week’s ELN, checkout YNPN-TC's resource page.
What are some other resources, trainings or workshops out there that have helped lower your financial learning curve? Share them, along with your thoughts on financial management, in the comments feed.