You (yes, you!) need to learn how to read financial statements

I sat at my desk, door closed, pencil sharpened, a thick ream of financial statements stacked in front of my computer monitor. 

I turned over the cover of the first packet and the tiny lines of the spreadsheet printout wriggled tauntingly at me. I sighed, placed my pencil under the first line, and typed: “what is a balance sheet” into Google. 

How did I get here?

When I took my first job as a newly minted Religious Studies grad*, I never thought that I’d need (or want) to learn about how money moved through the nonprofits where I worked. I was perfectly happy to focus on telling stories, pushing pixels, and organizing outreach. I knew I was good with words, and that was good enough for me. I’d always been a bookish kid, obsessed with reading and writing. Early on I convinced myself that all that numbers stuff just wasn’t my strong suit (an impression that was probably helped along by gendered expectations of math aptitude). I focused on what I loved and knew I was good at -- narrative. 

In the early stages of my career, I built websites, collected and edited blog posts, wrote press releases, and sent innumerable emails. Because I worked in small nonprofits, my communications work often involved fundraising. Oddly enough, I found I loved it. I had no problem asking people for money, and I loved hearing their stories about why they gave. I felt useful when people made contributions, and I enjoyed connecting people with their passions. 

I’m sure I won’t surprise anyone when I tell you that -- spoiler alert! -- fundraising involves money, which is typically measured in numerical units. The more fundraising work I did, the more important it seemed to understand organizational finances. But every time I tried to look at a financial statement, I felt overwhelmed and embarrassed. 

All those spreadsheets just didn’t make sense to me. 

I wasn’t sure how to ask for help, and when I did, it wasn’t always well-received. My questions were brushed aside, and concerns I raised were smoothed over. “You’re not reading the statements correctly,” people would say, or “that’s nothing to worry about.” 

If you work in nonprofits, maybe you’ve had that experience too. Financial statements can seem like they’re written in a special code, and folks who can decipher the code hold a lot of power within the organization. In a perfect world (and an ideal organizational culture) everyone understands the budget, and it’s deliberately made easy to understand. In a less-than-perfect world, those documents can feel like a word-find composed completely in Klingon. That was my experience -- clearly the statements made sense to someone. In fact, I sat through multiple meetings where those someones would discuss it all around me. I just wasn’t one of those people. 

Luckily for me, there’s only one thing I hate more than doing something I’m bad at. That’s being told I don’t understand something that is clearly Google-able. 

Which is how I found myself shut in my office on a crisp fall evening, a stack of budget documents in front of me. It felt like I Googled every single line. I underlined. I highlighted. I looked for my specific budget numbers. I looked up the past years’ 990s on Guidestar. I found Propel Nonprofits (then the Nonprofits Assistance Fund, and MAP for Nonprofits) and fell in love. 

I realized a couple of things over that feverish week of Googling:

  1. There was room in the budget for me to get a raise. Yep, I asked for one. 
  2. Some things were confusing not because I didn’t understand them, but because they were errors that needed to be corrected. That felt good. 
  3. This stuff wasn’t hard. It was just organized in a really specific way. Once I understood the pattern and learned some key words, I could decipher the statements. That felt amazing. 
  4. This one’s the most important: numbers are narrative, too. Whoever controls the budget narrative controls the story the organization is telling about what it values. That was a lightbulb moment. 

Do you agree? I’d love to know. More importantly, do you feel like you have a firm handle on this? Can you match your organization’s descriptive value statement with its financial value statement? Would you want to try? 

I’m going to go out on a limb and say, if you haven’t done this, you should. And believe me, even if you don’t think you can understand it, you can. 

If you already have a firm grasp on your organization’s finances, if you plan your own budget, if you know how much money there is floating around, awesome! Please disregard. But if you roll your eyes every time the financial statements get passed out at a meeting, take some time to learn how to read them. 

I promise, it’s worth the Google session. 

*Yes, it is possible to major in something less useful than Philosophy.

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