Danosky & Associates

Consulting for Non-profit Organizations

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Financial Information for your Nonprofit Board

June 13, 2023 by Susan Rosati

Financial Information for your Nonprofit Board

By Susan Rosati

What financial information should be given to your board each month? Let’s start with some basics. The board should receive an income statement showing the revenue and expenses. The Statement of Activities otherwise known as a P&L should be compared to the budget and to the prior year.  The board should also receive a comparative year over year balance sheet which shows the assets and liabilities.  At times, it is also recommended that the board receive a cash flow projection and forecast for the balance of the year.

I’ve also found one more report that is especially helpful with board reporting. This is the dashboard. The dashboard provides a summary of both the profit and loss and balance sheet along with other notable metrics that are helpful to the organization. By presenting data in an easy to understand format users can analyze key performance indicators. This allows your board to get a handle on the overall financial picture.

The information the board receives needs to be accurate and timely. Receiving financial statements that are over three months old can be costly to an organization. It leaves the organization vulnerable because the board has very little time to respond to critical matters. Also, the board needs to understand what bank funds are available for general use and what funds are restricted. If a large portion of the bank account is restricted this could mean serious cash flow problems for the organization. Board members need to understand the difference. The reports the board receives each month should be designed to communicate information in a clear and easy to understand format.

Filed Under: Blog

Does Your Development Department Get Along With Finance?

June 13, 2023 by John Brooks

Does Your Development Department Get Along With Finance?

By: John Brooks, Senior Consultant


In large and small non-profits, there is sometimes a disconnect between different departments. You know – the “Silo Effect.” Everyone is so caught up in the day-to-day and what they have to accomplish that they sometimes overlook the fact that their work has a direct impact on other departments and vice versa.

Program officers need to make sure the communications team has what it needs to effectively inform donors, volunteers, and the media. Facilities need to let program know about repairs that may impact how program staff carry out their work and your volunteer manager needs to know if those repairs will impact the important work volunteers perform. Obvious? Maybe. But what about the communication between development and finance?

What happens when a major donor moves or has a life-changing event that could significantly impact their contribution? Does the finance office know when one of the organizations’ major donors has passed away or lost a spouse? How about when the family foundation is suddenly dissolved or there are significant changes to a donor advised fund (DAF) that negatively impact your organization? On the flip side, one of your donors tells you that their DAF or family foundation did really well last year and, as a result, they are doubling their gift this year. Of course, the development team is aware and perhaps the executive director knows but what about the finance officer?

I made it a point over the years as chief development officer to hold monthly meetings with the chief finance officer. We would discuss any situation that could have an impact on the annual budget that was not anticipated when the budget was finalized.

This ongoing communication was invaluable to the finance department. It helped our CFO anticipate cash-flow and, if adjustments were needed, the CFO could make them before there were any negative impacts to the overall budget. Often, unexpected losses of major gifts or large grants could be offset with unfilled staff vacancies. When we were notified of gifts, grants or bequests that would be larger than budgeted (or completely unexpected), this information was also shared with the finance office. If the increased contributions were unrestricted, the CFO would have the flexibility to shift revenue to those programs that may have been operating with a deficit, make purchases that had been put off or even fund an unfunded staff position.

Successfully running a non-profit organization – large or small – is a rewarding but extremely stressful undertaking. Ongoing communication between development and finance is essential to the fiscal health of your organization by helping to mitigate some of that stress. I was never afraid to get out in front of a potential deficit before it became a bigger problem. Often, we found solutions that helped us all sleep a little better.

Best wishes for a good night’s sleep as you continue to make a difference!

Filed Under: Blog

Springtime Brings Budget Planning for Non-Profits

June 13, 2023 by Karen Milton

Springtime Brings Budget Planning for Non-Profits

By: Karen Greve Milton, Senior Consultant, Danosky & Associates


Spring is here and for non-profit organizations that means financial planning for the upcoming fiscal year should be well underway. Every non-profit organization, regardless of size, should develop and implement a financial plan — an operating budget — for each fiscal year. 

Financial planning is the key to a non-profit’s success and sustainability. A well-developed operating budget allows for future use of limited non-profit resources and focuses on the priority goals and objectives of the organization. Non-profit organizations functioning without an annual budget are operating in the dark and risk being unable to navigate a changing fiscal landscape. Annual budgets shed light on the organization’s financial picture and keep the organization focused on its programmatic purpose as the fiscal year progresses.

Developing the operating budget is a team effort involving board members, staff, volunteers and other stakeholders. If the non-profit organization has paid staff, the responsibility for developing a proposed annual budget for the upcoming fiscal year falls to the staff. Board members have responsibility for reviewing the proposed budget carefully and ultimately approving the budget for the next fiscal year. Where the non-profit entity relies solely on volunteers, the responsibility for developing the annual budget falls to the board’s finance committee members or other volunteer members of the organization.

A non-profit’s annual operating budget serves as a financial management tool for the organization.  It provides a guide to the organization’s financial functioning during the fiscal year. The approved budget allows the board and staff to gauge how the organization is operating during the current 12-month fiscal year and whether adjustments to any financial assumptions included in the budget need to be adjusted. 

In preparing an annual budget for your non-profit, it helps to use a step-by-step checklist of basic steps: 

  1. Set the timeline for budget preparation, review and Board approval.
  2. Agree on the non-profit’s budget goals for the new fiscal year.
  3. Understand the current financial status of the organization.
  4. Use the current and prior fiscal years to forecast financials for the next fiscal year.
  5. Develop an income budget of anticipated revenue from all sources.
  6. Develop an expense budget of all anticipated expenses.
  7. Review the draft budget with the Board Finance Committee.
  8. Obtain full Board approval of the budget.
  9. Implement the budget at the beginning of the new fiscal year.
  10. Monitor the budget throughout the fiscal year and adjust as necessary.

You can find checklists, templates and advice from various associations and entities, such as The National Council of Nonprofits (www.councilofnonprofits.org), and Propel Nonprofits (www.propel.org), among others.  

Good budgeting signals good fiscal health and represents a key component of financial sustainability. The annual operating budget is one of the fundamental building blocks of sound financial management.  Non-profits can use the annual budget as the basis for financial reports to donors, lenders, foundations and government agencies and the new Form 990. See https://www.councilofnonprofits.org/running-nonprofit/administration-and-financial-management/budgeting-nonprofits   

A few recommended tips for getting started: 

  • Set a reasonable timeline several months before the start of the new fiscal year.
  • Identify your income by categories (individual donors, institutional donors, foundations, events, programs, etc)
  • Separate firm expenses (rent, insurance, etc.) from variable expenses
  • Major events/programs and capital projects should have their own budgets
  • Keep fiscal assumptions realistic and note them separately in the budget

Preparing the annual budget should be viewed as an opportunity to review financial priorities, assess the organization’s financial health and forecast for the future. Remember, the operating budget is not “etched in stone,” but constitutes your financial management guide for the fiscal year. It should be reviewed at each Board meeting during the fiscal year and adjusted as necessary.

The next question is whether the annual operating budget needs to be balanced. We’ll address that issue in our next article. Meanwhile, let’s get started on our spring-budgeting for your non-profit. 

Filed Under: Blog

Spring 2023 – Principles of Fundraising Certificate Program

April 17, 2023 by Sharon Danosky

Now in its 15th year, the Principles of Fundraising series of workshops continues to provide high-caliber, basic-skills development in the art and science of fundraising for nonprofits. Created by the Connecticut Chapter of the Association of Fundraising Professionals (AFP), the series provides five introductory-level workshops focusing on the theory and practice of fundraising taught by AFP members who are experts in their respective fields. All sessions will be held virtually online using the Zoom platform.

  • Organizing and Running a Successful Development Program: Wednesday, April 12th (9:00-10:30am)
  • Building a Sustainable Annual Giving Program: Wednesday, April 19th (9:00-10:30am)
  • Grants from Foundations and Corporations: Wednesday, April 26th (9:00-11:00am)
  • Engaging Your Board & Volunteers to Raise Money: Wednesday, May 3rd (9:00-10:30am)
  • The Art of Soliciting Major Gifts: Wednesday, May 10th (9:00-10:30am)

Please register online here: http://www.cvent.com/d/f6q6rg.

Filed Under: Blog, Uncategorized, Workshops

When Banks Fail: Board Fiduciary Responsibilities

April 17, 2023 by Karen Milton

When Banks Fail: Board Fiduciary Responsibilities
By Karen Greve Milton, Senior Consultant

Late on the evening of Wednesday, March 8, 2023, a local bank in California, Silicon Valley Bank  (“SVB”), decided to sell its entire $21 billion portfolio of long-term fixed income assets, netting the bank a $2 billion loss.  At the time of the sale, SVB’s total assets exceeded $200 billion. A $2 billion loss against bank assets far exceeding that amount should not cause any concern among the bank’s depositors, right? Wrong.

The actions taken by SVB that fateful Wednesday evening turned out to have a seismic impact on SVB as well as the nation’s banking system. The SVB portfolio sale triggered a mass panic among the bank’s depositors which led to a run on the bank and ultimately, the federal government taking over the bank on March 10. Ultimately, the federal government backstopped SVB depositors with liquid assets over the FDIC-

The implosion of SVB and the recent banking crisis provide a cautionary tale for non-profit boards of directors. In his book, Ten Basic Responsibilities of Nonprofit Boards, Richard T. Ingram writes that boards of directors have a duty to “protect assets and provide financial oversight” for the non-profit organizations entrusted to their care. See Ten Basic Responsibilities of Nonprofit Boards, ch. 7, pp. 51-64.  Generally, boards carry out their fiduciary duties through a finance committee of selected board members. The finance committee ensures that the non-profit’s financial resources are managed appropriately without being subject to undue risk.  See Ingram at pp. 58-59.

The caveat about not subjecting the non-profit’s financial assets to undue risk ties into the issues raised by the March 2023 banking crisis. Under the FDIC, bank deposits — for both individuals and businesses alike—are only ensured up to $250,000. Unlike the federal government’s actions regarding SVB and Signature Bank, deposits in excess of this limit may or may not be recovered in the event of a run on the bank and an ultimate bank failure.

There may be strong business reasons for non-profit organizations to maintain liquidity of financial resources in excess of the FDIC threshold. But board finance committees need to think about the best ways to protect these financial assets within the current FDIC-insured limits. 

I am a member of a non-profit board of directors where I also serve as the organization’s Treasurer. This non-profit has its banking operations headquartered with one of the four largest banks in the country. Last year, due to complaints about the lack of customer service from the organization’s current bank, the finance committee approved a recommendation from the executive director and chief financial officer to move the organization’s banking business to the regional bank where the non-profit’s investments were being managed. The transfer of the bank accounts, for reasons beyond the scope of this article, dragged on for months and still had not occurred at the time of the SVB implosion. 

So, what actions did we take and what actions should a board finance committee take? The good news is that our investment management team reached out to us almost immediately to assure us that our organization’s investment portfolio was safe. We remained in almost daily contact with them throughout the banking crisis.

Secondly, we decided to “pause” the transfer of the organization’s bank accounts to this regional bank until we had the opportunity to re-assess the situation. Ultimately, the executive director and I asked the chief financial officer to research several other community banks near the organization’s offices and provide a recommendation to the finance committee. 

We also checked in with sister organizations to learn how they handled their banking business, including the need to maintain liquid cash in amounts exceeding $250,000. What we learned from our sister organizations reinforced for us the need to maintain bank accounts at multiple banks to satisfy our need to maintain cash amounts in excess of $250,000 and to ensure that all the non-profit’s cash resources were within FDIC protection limits.

Lessons learned from the banking events of March 2023:

  1. Develop and implement a financial plan to manage all the financial assets of the non-profit organization
  2. Engage in strong financial oversight and management of the non-profit’s financial resources. 
  3. Develop, implement, and follow financial policies pertaining to fiscal management and investment of the non-profit’s financial resources
  4. Maintain liquid cash assets in anyone banking institution within the FDIC-insured limits
  5. Consider spreading cash assets in excess of $250,000 among multiple banking institutions
  6. Investigate whether large amounts of cash resources can be invested in investment vehicles that provide both higher rates of return with the ability to liquidate these investments quickly and without penalty
  7. Bank where the non-profit can develop a strong banking relationship with good customer service.  Notwithstanding the SVB implosion, community and regional banks provide firm financial support to non-profit organizations located within their communities
  8. Be proactive about managing the non-profit’s financial resources. Ask questions. Gather information. Take the actions necessary to carry out your fiduciary duty

Filed Under: Blog

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