Webinar for Grantmakers—Financial Analysis in Action: Getting the Most Out of 990 Data


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How can funders use financial data in the grantmaking process to better support nonprofits? What are the "right" financial measures to examine in due diligence? In this one-hour webinar, we will undertake a comprehensive analysis of one organization's financial health, using the Financial SCAN platform developed by Nonprofit Finance Fund (NFF) and GuideStar. Through this case study, we will address the ways in which grantmakers can put financial trends and indicators to use in their philanthropic practices.

Presenters: Peter Kramer, Senior Associate, National Consulting Services, Nonprofit Finance Fund, and Scott Menzel, Product & User Experience Manager, GuideStar (moderator)

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Webinar for Grantmakers—Financial Analysis in Action: Getting the Most Out of 990 Data

  1. 1. Peter KramerManagerNonprofit Finance FundScott MenzelProduct & User Experience ManagerGuideStarMay 30, 2013Financial Analysis in Action:Getting the most out of 990 data
  2. 2. AGENDA Re-orienting to the Form 990 Case analysis using Financial SCAN Brief online tour Q & A
  3. 3. From Form 990 Instructions:Momentum is growing to make 990 data even morereadily availableA compliance document ANDa public profile for many nonprofits
  4. 4. How can funders put the Form 990 tobetter use? Use 990 data to conduct analysis of pastfinancial trends during the due diligence process Engage with grantees in conversation abouthow these trends inform current plans and resourceneeds
  5. 5. Key Considerations: What 990 data can andcannot do 990 data CAN help: Understand an organization’s financial trajectory and recentrevenue, expense, and balance sheet dynamics Show how an organization compares to its peers acrossstandardized fields 990 data CANNOT: Provide the authoritative and most up-to-date financialpicture of your organization Tie exactly to the information presented in an audit Show revenue restrictions Distinguish between operating dollars and capital dollars
  6. 6. Today, our analysis guide will beFinancial SCANWhat: Data platform for assessing nonprofit financialhealth and fostering dialogue among all stakeholdersinvolved in making social impactWho: Private and public grantmakers/donors,nonprofit organizations, philanthropic advisors,consultants and mediaHow: Private and public grantmakers/donors,nonprofit organizations, philanthropic advisors,consultants and mediaWHATData platform for assessing nonprofit financialhealth, decision making, and informinggrantmaker-grantee dialogueWHONonprofit organizations, private and publicgrantmakers, individual donors, philanthropicadvisors, and consultantsHOWDraws data directly and automatically fromIRS Forms 990,* presenting complexinformation in an easy-to-analyze andcommunicate format (313K orgs)*Note: Financial SCAN v. 1.0 does not include data from Form 990 EZ
  7. 7. What’s in a Financial SCAN?Organizational Dashboard: Fiveyears of key financial trends and ratiosGraphs & Explanatory Text: Moredetailed overview of an organization’s: Expenses Revenue Profitability Balance Sheet LiquidityPeer Comparison Dashboard:Comparison with up to five peernonprofits you select
  8. 8. Meet today’s case organization:Help for Homeless Youth MISSION: To provide homeless and at-risk youth withthe resources, relationships, and skills to become self-sufficient. PROGRAMS: Health Services Case Management Drop-in Center Basic Employment Skills RECENT DYNAMICS: Increased demand for services Uncertain revenue sources Maintaining an aging facility
  9. 9. Help for Homeless Youth
  10. 10. Dashboard: Income Statement
  11. 11. Dashboard: Balance Sheet
  12. 12. 111112222233333444445555566666Peer Comparison Dashboard Standardized 990fields allow for sideby side comparison Contrasts operatingand balance sheetcharacteristics Offers broaderenvironmentalcontext forconsideration
  13. 13. Topics explored in Financial SCAN graphs: Expense detail & composition Revenue detail & composition Profitability Full cost of doing business Asset composition Depreciation of fixed assets Liability composition Liabilities as a % of assets Liquidity
  14. 14. Estimated full costs have not beenconsistently covered, limiting HHY’s ability tosatisfy longer-term organizational needsFull costs include: operating expenses, coveringdepreciation, purchases of fixed assets, debt principalpayments, and savings
  15. 15. Asset composition has shifted over time,reflecting a decline in liquid assets andgrowth in fixed assetsFacility ownership is its own line of business, and cansometimes be at odds with other organizational needs.
  16. 16. While HHY’s assets have grown over theperiod, its liquidity has contractedAvailable liquidity represents a nonprofit’s ability tohandle risks and seize new opportunities.
  17. 17. Next steps and considerations forfunders of HHY Use 990 data as a starting point for additionaldiligence Engage in a data-based conversation with HHYleadership about how recent growth has impactedthe organization’s financial health Use insights from data and conversation with HHYleadership to inform grantmaking Consider providing for full costs of services in futuregrants and/or funding reserves
  18. 18. Brief demonstration of online interface
  19. 19. Q&A
  20. 20. nonprofitfinancefund.org 19Thank you!Peter KramerManager, Consulting ServicesNonprofit Finance Fund617-204-9772peter.kramer@nffusa.orgTo learn more:www.guidestar.org/financialSCAN