Actionable Financial Analysis: Insights for Grantmakers In an increasingly data-filled world, it can be difficult to sort through proliferating information to find what matters most. Nonprofit finance is no different, and identifying the risks and strengths in a grantee's financial picture can take expertise and time. Knowing what financial data to examine can help funders better steward grant dollars and inform candid dialogue with nonprofit leaders. How can grantmakers focus their financial due diligence to find key signs of fiscal condition and resource needs? Join Nonprofit Finance Fund and GuideStar to learn about Financial SCAN and how this data platform can add value to your grantmaking pratice. Presenters: Peter Kramer, Manager, Nonprofit Finance Fund; and Jenny Taylor, Community Manager, GuideStar USA (moderator)

1. Jenny Taylor
Community Manager
GuideStar
Peter Kramer
Manager
Nonprofit Finance Fund
June 5, 2014
Actionable Financial Analysis:
Insights for Grantmakers

2. AGENDA
Introduction to Financial SCAN
New Feature Overview
Brief Online Tour
Case Analysis
Q & A

3. Effective Solutions
Sound Financial Health
Strong Organizations
Quality Programs
We Believe that Financial Health
Supports Impact

4.  Knowing which metrics to focus on for assessing
financial health
 Having the time and skills to collect, parse and
apply financial data to inform grantmaking
decisions
 Fostering a candid dialogue with grantees about
financial health and resource needs
When it Comes to Nonprofit Finance,
Funders Face Common Challenges

5. Financial SCAN at a Glance
What: Data platform for assessing nonprofit financial
health and fostering dialogue among all stakeholders
involved in making social impact
Who: Private and public grantmakers/donors,
nonprofit organizations, philanthropic advisors,
consultants and media
How: Private and public grantmakers/donors,
nonprofit organizations, philanthropic advisors,
consultants and media
WHAT
Data platform for assessing nonprofit financial
health, making data driven decisions, and
strengthening grantmaker-grantee dialogue
WHO
Nonprofit organizations, private and public
grantmakers, individual donors, philanthropic
advisors, and consultants
HOW
Draws data directly and automatically from
IRS Forms 990,* presenting complex
information in an easy-to-analyze and
communicate format (350K+ orgs)
*Note: Financial SCAN does not include data from Forms 990 EZ

6. What’s in a Financial SCAN?
Organizational Dashboard: Five
years of key financial trends and ratios
Graphs & Explanatory Text: More
detailed overview of an organization’s:
 Expenses
 Revenue
 Profitability
 Balance Sheet
 Liquidity
Peer Comparison Dashboard: Select
peer organizations for financial
benchmarking

7. How are Funders Using Financial
SCAN?
 Adds, strengthens and/or focuses
financial component of due diligence
 Helps identify financial strengths and
red flags
 Informs conversations among
grantmakers and their grantees about
financial health and needs
 Saves time and resources
“This innovative new
tool builds the financial
management capacity of
nonprofits and helps
grantmakers engage
with their grantees
about financial health
and funding needs.”
Kathy Reich,
David & Lucile Packard Foundation

8. Financial SCAN 2.0: New Features!
 Excel Download
 Peer Group Comparison
 Customized Enterprise Access
 7 Day Nonprofit Access

9. Brief Online Demonstration

10. Key Considerations: What 990 data can and
cannot do
990 data CAN help:
 Understand an organization’s financial trajectory and recent
revenue, expense, and balance sheet dynamics
 Show how an organization compares to its peers across
standardized fields
990 data CANNOT:
 Provide the authoritative and most up-to-date financial picture
of your organization
 Tie exactly to the information presented in an audit
 Show revenue restrictions
 Distinguish between operating dollars and capital dollars

11. Meet Today’s Case Organization:
REAL WORLD SKILLS
 MISSION: To prepare underserved youth for lasting
careers and self-sufficiency
 PROGRAMS:
 Personal & professional skill-building
 Summer internship placement
 Trade programs and certifications
 RECENT DYNAMICS:
 Steady yet modest growth
 New location and dated equipment
 Beginning strategic planning process

12. REAL WORLD SKILLS

13. Dashboard: Income Statement

14. Dashboard: Balance Sheet

15. Peer Comparison Dashboard:
1 2 3 4 5 6
1 2 3 4 5 6
1 2 3 4 5 6
1 2 3 4 5 6
1 2 3 4 5 6

16. 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

17. With the exception of 2008, surpluses
and deficits have been close to breakeven
RWS has effectively managed this growth by
consistently covering its operating costs to achieve
marginal surpluses
But are surpluses
adequate to build
financial
resilience?

18. RWS’s liquidity has fluctuated somewhat over
the period, but has been consistently tight
Available liquidity represents a nonprofit’s ability to
handle risks and seize new opportunities.

19. Observations & Recommendations for
REAL WORLD SKILLS
Observations from Financial SCAN:
 Modest growth over last several years
 Reliable mix of revenue sources
 Relative to peers, few fixed assets
 Tight liquidity constrains ability to innovate
Recommendations for Funders:
 Acknowledge strengths (e.g., reliable revenue, surpluses
in most years, etc.) and encourage business planning in
strategy process
 Discuss with RWS leadership the amounts and types of
capital needed to help the organization build working
capital and reserves and adapt to the changing job
market

20. Q&A

21. nonprofitfinancefund.org 20
Thank you!
Peter Kramer
Manager, Advisory Services
Nonprofit Finance Fund
617-204-9772
peter.kramer@nffusa.org
To learn more:
www.guidestar.org/financialSCAN