Understanding Nonprofit Financial Picture

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Using a cfoSQUARE tool, nonprofit executives and board members can better understand their organization's financial picture

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Understanding Nonprofit Financial Picture

  1. 1. cfoSQUARE TM financial picture for nonprofit organizations Robert P. Seestadt, CPA cfoSQUARE is a trademark of CFOShare LLC Copyright 2012 CFOShare LLC
  2. 2. Nonprofit Finance is Unique• “Board designated” operating reserves• Operating vs. Capital• “Temporarily restricted” revenue• Funding volatility• Capital vs. income distinctions• Board dynamics; need for simple, accurate financials that tell us: “What is our financial situation?” “What do we need to do about it?” “Are we sustainable?” Copyright 2012 CFOShare LLC
  3. 3. Recent nonprofit research…• 30% of nonprofits have 0-1 month cash on hand; 60% have 0 to to 3 months cash on hand• When asked about “what types of technical assistance or capital access would be helpful to your organization?”, “38% of organizations responded “Tools to Communicate with Board” second only to “fundraising assistance”• 55% of organizations planned to “engage more closely with the board” and 33% planned to “add to reserve funds”Source: 2011 State of the Nonprofit Sector Survey of 1,935 nonprofit organizations conducted by Nonprofit Finance Fund Copyright 2012 CFOShare LLC
  4. 4. Conveying the Financial Message……key points – liquidity and performance …focus of financial conversation …high level for board review and discussion …without getting lost in details Using cfoSQUARE TM, nonprofit boards and executives can understand their organization’s financial picture in a simple, visual chart Copyright 2012 CFOShare LLC
  5. 5. will also inform…• How do we define “operating cash”?• How do we separate operating vs. capital and non-operating activity?• What is our cash reserve target? What is our policy for releasing cash reserves?• What scenarios could affect our sustainability?? Copyright 2012 CFOShare LLC
  6. 6. Where CASH SITUATION And OPERATINGPERFORMANCEintersect to tell a story… Copyright 2012 CFOShare LLC
  7. 7. Perpetuation, Strategy, Planning, direction, Long-term Longer-term horizon horizon, investment…providing a sense acontext andconversationaround financialsituation…beyondtraditional financialstatementpresentation Sustainability, Short-term outlook, Risks & Capital, Risks, Short- Copyright 2012 CFOShare LLC Scenarios term projections
  8. 8. Unique metricsinclude eighty onefinancial “positions”(nine per axis) ,providing balance ofsimplicity andprecision in avisual report(note: reserve goal of 6months can be modifiedfor Organization’s actualpolicy target) Copyright 2012 CFOShare LLC
  9. 9. Transitions from oneposition to anotherover timerepresent shifts infinancial situation Operating Likely a debtworth noting deficit repayment or incurred significant capital since last purchase review w/operating funds Copyright 2012 CFOShare LLC
  10. 10. Can be used as aBudgetPlanning tool Where we want to be next year Where we are today Copyright 2012 CFOShare LLC
  11. 11. cfoSQUARE financial picture TM helps NONPROFIT BOARDS…compute and plan targeted cash reserves …high level review of short and long-term sustainability …without getting lost in details Copyright 2012 CFOShare LLC
  12. 12. For help designing your own cfoSQUARE TMFor more information or if your nonprofit organization would like to create its own cfoSQUARE contact Robert Seestadt at TM roberts@apparatussolutionsinc.com Copyright 2012 CFOShare LLC

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