Make Your Financial Statements Stand Out in Nonprofit Fundraising
Maybe you’re applying for a grant for which you’ll need quality financial information or communicating your financial standing to your board or general membership. Having accurate, comprehensible and timely information can provide potential funding sources the confidence needed to make strategic decisions based on the financial health and success of your organization. This often requires going beyond basic bookkeeping services.
What do federal agencies awarding grants look for in the award process?
Good stewardship, first and foremost. Make sure you’re showing how you responsibly and carefully spend resources your donors entrust you with. Also, avoid the appearance of “borrowing” from restricted funds, meaning you don’t want negative unrestricted net assets when you have positive donor restricted net assets.
Other things to consider:
- Minimize G&A expenses and maximize funds allocated to program or mission.
- Minimize internal control deficiencies or weaknesses.
- Provide clear, concise footnotes that explain mission and purpose of organization and support financial statement line items.
Do private donors look at financial statements?
While they may not scrutinize your financial information, they may conduct some general research, mostly on the Internet, to ensure nothing misleading financially is out there. The most obvious place they’ll start is GuideStar.
How can I create accuracy and transparency in our financial reporting?
Give care and attention to the allocation of expenses presented on the Statement of Functional Expenses.
Line item descriptions should be clear and understandable as to the nature of the expense(s). Avoid overkill and over-generalization in descriptions – be reasonable and logical.
How can I use our financial statements to tell our story?
A common mistake is thinking a statement that bleeds red ink will cause a donor to give. The opposite likely is true: a financial statement that shows an upside-down organization will scare donors away
Your grant application and other documents will demonstrate the need for additional funds for new programs, etc.
How do I get my organization to adopt sound business practices?
Everything starts with board involvement. Remember, this can all be done regardless of the size of the organization.
- Formalize policies and procedures over the receipt and spending of funds
- Establish oversight responsibilities and hold each other accountable
Budget constraints can oftentimes lead volunteer boards and nonprofits to operate “blind” from a financial standpoint. However, aligning with strategic advisors can help you establish better leadership and administrative structures, which can result in improved systems and controls to support financial success.
Click here to learn how the Ericksen Krentel team can help your nonprofit, whether you’re a startup or well-established organization, small or large entity.
About Ericksen Krentel
Ericksen Krentel CPAs and Consultants, founded in New Orleans, Louisiana in 1960 with offices in New Orleans and Mandeville, believes that serving as the clients’ most trusted adviser is grounded in going beyond the numbers.
That includes helping clients achieve their business and personal financial goals by providing innovative and exceptional services in the following areas: audit and assurance services, tax compliance and planning, outsourced CFO services and business valuations for a variety of industries; employee benefit plan audits; fraud and forensic accounting; business planning; IT consulting; loss calculations; and estate planning.
Learn more at www.ericksenkrentel.com.