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.