One of the primary roles of a nonprofit board of directors is to provide fiscal oversight for the organizations they serve. Yet there are different approaches to financial oversight by boards. What are the best and most effective practices? What can your staff and volunteer leaders do to increase the financial literacy of your board? Does your board know how to read and understand the financial statements being presented at every meeting? During this webinar, we will explore some of the key components for your board members to enhance their role in providing effective governance oversight for the nonprofit’s financial management policies and activities. The learning objectives will cover these topics: • What are the typical financial responsibilities and misunderstandings of board members? • What are the fundamental fiduciary duties for nonprofit board and its members? • Learn how to read, interpret and understand the financial reports for the nonprofit you represent

1. Financial Training For Board Members
Advanced Webinar, June 28, 2018
Dan Kimball
Product Specialist at Aplos Software

2. About Aplos
We’re the #1 solution in online donor
management software for nonprofits.
At Aplos, we believe in changing the world by making it simpler to
manage nonprofits and churches. We make it faster and do the
hard part so you can focus more on your mission.
Visit aplos.com for more information.
"Nonprofits all across the country are
praising the so4ware's ease of use,
reasonable price, and great customer
service." - NPTechNews
#Aploswebinar

3. Dan Kimball
Dan Kimball is a seasoned fundraiser with over
twenty years of experience in strategic fund
development and nonprofit management.
His role at Aplos as a product specialist includes
helping develop Aplos’ Donor Management
Platform to help nonprofits connect with (and
cultivate!) their donor base.
“Fundraising is a relationship business.”
Twitter: @fugativedmk
@aplos_software

4. Introduction
One of the primary roles and responsibilities of a nonprofit boards of directors is providing
fiscal oversight of the organizations they serve. Yet there are different approaches to
financial oversight by boards. What are the best and most effective practices? What can
your staff and volunteer leaders do to increase the financial literacy of your board? Does
your board know how to read and understand the financial statements that are being
presented at every meeting?
During this webinar we will explore some of the key components for your board members to
better understand and enhance their role in providing effective governance oversight for the
nonprofit’s financial management policies and activities.
What are the typical financial responsibilities and misunderstandings of board members?
Fundamental fiduciary duties for nonprofit board and its members?
Learn how to read, interpret and understand the financial reports for the nonprofit you
represent.

5. Board Responsibilities & Financies

6. Board Responsibilities & Financies

7. How Nonprofits are Different
•A nonprofit is an organization that
uses surplus revenues to achieve its
goals rather than distributing them as
profit or dividends.
• The mission of the organization is
the main goal, however profits are
key to the growth and longevity of
the organization.

8. The Three D’s of a Nonprofit Board
The board acts as trustee of the organization's assets and ensures that the nonprofit is well managed
and remains fiscally sound. In doing so, the board must exercise proper oversight of the organization's
operations and maintain the legal and ethical accountability of its staff and volunteers.
The main legal responsibilities of a nonprofit board are often summarized in the "three Ds”:
Duty of care: Board members are expected to actively participate in organizational planning and
decision-making and to make sound and informed judgments.
Duty of loyalty: When acting on behalf of the organization, board members must put the interests
of the nonprofit before any personal or professional concerns and avoid potential conflicts of
interest.
Duty of obedience: Board members must ensure that the organization complies with all
applicable federal, state, and local laws and regulations, and that it remains committed to its
established mission.
In addition to its legal responsibilities, the board acts in a fiduciary role by maintaining oversight of the
nonprofit's finances. Board members must evaluate financial policies, approve annual budgets, and
review periodic financial reports to ensure that the organization has the necessary resources to carry
out its mission and remains accountable to its donors and the general public. The board must also
ensure compliance with federal and state regulations.

9. What Are the Basic Responsibilities of Nonprofit Boards
1. Determine mission and purpose. It is the board's responsibility to create and review a
statement of mission and purpose that articulates the organization's goals, means, and primary
constituents served.
2. Select the chief executive. Boards must reach consensus on the chief executive's
responsibilities and undertake a careful search to find the most qualified individual for the
position.
3. Support and evaluate the chief executive. The board should ensure that the chief executive has
the moral and professional support he or she needs to further the goals of the organization.
4. Ensure effective planning. Boards must actively participate in an overall planning process and
assist in implementing and monitoring the plan's goals.
5. Monitor and strengthen programs and services. The board's responsibility is to determine which
programs are consistent with the organization's mission and monitor their effectiveness.

10. What Are the Basic Responsibilities of Nonprofit Boards
6. Ensure adequate financial resources. One of the board's foremost responsibilities is to
secure adequate resources for the organization to fulfill its mission.
7. Protect assets and provide proper financial oversight. The board must assist in developing
the annual budget and ensuring that proper financial controls are in place.
8. Build a competent board. All boards have a responsibility to articulate prerequisites for
candidates, orient new members, and periodically and comprehensively evaluate their own
performance.
9. Ensure legal and ethical integrity. The board is ultimately responsible for adherence to legal
standards and ethical norms.
10. Enhance the organization's public standing. The board should clearly articulate the
organization's mission, accomplishments, and goals to the public and garner support from the
community

11. What Are the Basic Responsibilities of Nonprofit Boards
Great leadership of a healthy nonprofit starts and ends with the Board, no matter the size of
the organization or budget. So what should you focus on?
One of the most important ingredients for success: The relationship between
the Executive Director/CEO and the board, especially your board chair.

12. Financial Leadership- Having A Healthy Board
Key responsibilities of the Board
• Hiring/firing and Accountability of the ED/CEO
• Commitment to the Mission of the Organization/Church- Resources (includes
overhead)
• Fiduciary Oversight
• Legal
Board Training & Financial Literacy
• Does the board know and understand the financial statements they are getting?

13. Financial Responsibilities of Board Members
Ensure effective planning
Ensure adequate financial resources
Protect assets and provide proper financial
oversight
IRS/Most CommonTypes of Financial Statements
There are three main types of nonprofit financial
statements. They are:
• Statement of Activities- Income & Expense…Not P&L
• Statement of Cash Flows
• Statement of Financial Position

14. Common Nonprofit Accounting Terms
Some of the more common nonprofit accounting terms that will help you as you serve on the
board:
• Assets – An item of current or future economic benefit to an organization.
• Audit – A financial statement of a certain date, usually covering 12 months, prepared by a
CPA, that includes an opinion letter, statement of financial position, statement of activities,
statement of cash flows, and notes.
• Balance Sheet – Statement of showing an organization’s financial position at the close of
business on a given day.
• Board Designated Funds – Unrestricted net assets that have a defined use or purpose,
as determined by an organization’s board of directors.
• Liabilities – items owed by an organization or claims against its assets.
• Permanent Restricted Funds – Funds with donor-imposed stipulations that the principal
not be spent.
• Statement of Cash Flows – Summary of the sources and uses of cash that reconciles
cash at the beginning of the year with cash at the end of the year.
• Unrestricted Funds – Funds that have no external restriction as to use or purpose.

15. How Financially Literate Is Your Board?
Consider the follow quiz questions. Could your board members answer these without flipping
through a pile of paper?
▪ What is your organization’s annual budget?
▪ What are your current sources of income – and what would be the best mix of income for your
organization?
▪ What are your largest expenses? What percentage of the budget do they consume?
▪ Does your organization have a reserve fund? How much is in it, and under what circumstances
can it be used?
▪ What is your biggest financial risk?
▪ How do you use financial management tools to measure your impact? Does your organization
compute the cost per unit of service: for example, for each client you help, or audience
member you entertain, or acre you protect?
▪ What would help you better understand your organization’s financial situation?
If each of your board members can answer these questions with confidence and clarity,
congratulations. If not, develop a training program to increase their financial literacy. The quiz
questions above would be a great way to begin the training.

16. Read, Interpret and Understand the Financial Reports for the
Nonprofit you Represent
Cash Basis vs. Accrual Basis
• Cash Basis- Revenues and expenses
are not recognized until money is
exchanged.
• Accrual Basis- Revenues and
expenses are recognized when an
obligation is made.

17. Read, Interpret and Understand the Financial Reports for the
Nonprofit you Represent
Unaudited vs. Audited
• Unaudited- Usually Cash Basis/
Prepared internally or through a
bookkeeper/accountant/Prepared more
frequently (Quarterly or Monthly)
• Audited- Accrual Basis/Prepared by a
CPA/Prepared yearly/Have an Auditor’s
Opinion

18. Read, Interpret and Understand the Financial Reports for the
Nonprofit you Represent
Financial Statements
Statement of Activities = Income Statement =
Measures the revenues against the expenses
Revenues – Expenses = Change in Net Assets = Net Income
Statement of Financial Position = Balance Sheet
Measures the assets against the liabilities and net assets
Assets = Liabilities + Net Assets (Funds)
Statement of Cash Flows- Measures the changes in cash

19. Read, Interpret and Understand the Financial Reports for the
Nonprofit you Represent
Statement of Activities
Revenues
Service revenues
Contributions
Grants
Fundraising
Expenses
Program
Management
Fundraising

20. Read, Interpret and Understand the Financial Reports for the
Nonprofit you Represent
Things to Consider
• Trends for both revenues and
expenses
• Restrictions placed on revenues by
donor/grantor
• Relationship between fundraising
revenues and fundraising expenses
• Key revenue sources
• Largest expense categories

21. Read, Interpret and Understand the Financial Reports for
the Nonprofit you Represent
What is Fund Accounting?
Fund accounting is a method of accounting
used by a nonprofit organization that illustrates
accountability, rather than profitability. In a
business you want to know how much was
spent, how much was earned, and how much
was left over. With a nonprofit you want to
know these things, but you also want to make
sure that the money you have, receive, and
spend is allocated for the proper purpose.
Welcome to fund accounting.
What features will help provide internal controls and transparency in your organization’s bookkeeping.

22. Tracking Your Funds Correctly is Essential
for Nonprofit Reporting
Cash Balance by Fund
Income Statement by Fund
Balance Sheet
a

23. Foundation
Balance Sheet: Compare by Fund
as of 12/31/2017
Account Number Account Name General Fund Missions Fund Building Fund Amount
Assets
Cash
1000 Checking $1,461,291.80 $659,481.22 $340,096.99 $2,460,870.01
1001 Savings $1,300.00 $1,000.00 $0.00 $2,300.00
Total for 1000 - Checking $1,462,591.80 $1,000.00 $0.00 $2,463,170.01
1002 Petty Cash $12,000.00 $0.00 $0.00 $12,000.00
1202 WePay $0.00 $0.00 $0.00 $0.00
1234 Endowment $0.00 $0.00 $0.00 $0.00
Total Cash $1,474,591.80 $660,481.22 $340,096.99 $2,475,170.01
Accounts
Receivable
1100 Accounts Receivable $0.00 $0.00 $0.00 $0.00
1101 Membership Receivable $0.00 $0.00 $0.00 $0.00
1201 Receivables $0.00 $0.00 $0.00 $0.00
Total Accounts Receivable $0.00 $0.00 $0.00 $0.00
Other Assets
1200 Building $0.00 $0.00 $0.00 $0.00
Total Other Assets $0.00 $0.00 $0.00 $0.00
Fixed Assets
1235 Land $0.00 $0.00 $0.00 $0.00
1235.1 Land -
Accumulated
$0.00 $0.00 $0.00 $0.00

24. PAW
Balance Sheet
as of 06/27/2018
Account Number Account Name Amount
Assets
Current Assets
1001 Checking $20,184.19
1010 Savings $26,019.95
1501 WePay $280.00
1502 Receivables $15,863.00
1503 Inventory $5,000.00
Total Current Assets $67,347.14
Fixed Assets
1600 Computer 1 $906.66
Total Fixed Assets $906.66
Accounts Receivable
1601 Receivables $500.00
Total Accounts Receivable $500.00
Total Assets $68,753.80
Liabilities
Current Liabilities
2000 Credit Card $4,560.00
2100 Accounts Payable $800.00
Total Current Liabilities $5,360.00
Long Term Liabilities
2500 Bank Loan $10,000.00
Total Long Term Liabilities $10,000.00
Debt/Bills
2501 Payables $1,357.26
Total Debt/Bills $1,357.26
Total Liabilities $16,717.26

26. Foundation
Income Statement
for the period of 04/01/2018 to 06/27/2018
Account Number Account Name Amount
Income
General Income
4000 Tithe Income $2,483.33
Total General Income $2,483.33
Merchandise Income
4104 Miscellaneous $2,400.00
4200 Year-End Recap Video Income $2,343.99
4300 Silent Auction Income $3,000.00
Total Merchandise Income $7,743.99
Total Income $10,227.32
Expense
Event Expenses
5200 Coffee Truck $5,400.70
5201 Various Event Food/Beverage $1,933.32
5210 Event Marketing $350.00
Total Event Expenses $7,684.02
Administrative Expenses
5000 Payroll $852.21
5100 General Marketing $5,729.00
5101 Utilities $36,000.00
5300 Office Food/Beverage $1,899.99
5310 Coffee Cart $-350.00
51002 Intern $545.01
Total Administrative Expenses $44,676.21
Total Expense $52,360.23
Net Income (Loss) $-42,132.91

27. Page 1
Foundation
Income Statement by Month
for the period of 01/01/2018 to 06/30/2018
Account Number Account Name Jan Feb Mar Apr May Jun YTD Amount
Income
General Income
4000 Donation Income $350.00 $73,998.00 $3,100.00 $2,075.00 $3,050.00 $1,550.00 $84,123.00
4100 Coffee Cart Income $0.00 $100.00 $0.00 $0.00 $0.00 $0.00 $100.00
Total General Income $350.00 $74,098.00 $3,100.00 $2,075.00 $3,050.00 $1,550.00 $84,223.00
Merchandise Income
4104 Miscellaneous $12,000.00 $9,600.00 $9,600.00 $2,400.00 $2,400.00 $2,400.00 $38,400.00
4200 Year-End Recap Video
Income $11,720.00 $9,376.00 $9,376.00 $2,344.00 $2,344.00 $2,344.00 $37,504.00
4300 Silent Auction Income $15,000.00 $12,000.00 $12,000.00 $3,000.00 $3,000.00 $3,000.00 $48,000.00
Total Merchandise Income $38,720.00 $30,976.00 $30,976.00 $7,744.00 $7,744.00 $7,744.00 $123,904.00
Total Income $39,070.00 $105,074.00 $34,076.00 $9,819.00 $10,794.00 $9,294.00 $208,127.00
Expense
Event Expenses
5200 Coffee Truck $27,000.00 $21,600.00 $21,602.00 $5,400.00 $5,405.10 $5,400.00 $86,407.10
5201 Various Event Food/
Beverage $7,250.00 $5,800.00 $5,800.00 $1,450.00 $1,450.00 $2,900.00 $24,650.00
5210 Event Marketing $700.00 $0.00 $-350.00 $0.00 $350.00 $0.00 $700.00
Total Event Expenses $34,950.00 $27,400.00 $27,052.00 $6,850.00 $7,205.10 $8,300.00 $111,757.10
Administrative
Expenses
5000 Payroll $4,261.00 $3,408.80 $3,408.80 $852.20 $852.20 $852.20 $13,635.20
5100 General Marketing $11,470.00 $9,216.00 $9,293.00 $2,454.00 $2,454.00 $3,329.00 $38,216.00
5101 Utilities $60,000.00 $48,000.00 $48,000.00 $12,000.00 $12,000.00 $12,000.00 $192,000.00
5102 Office Supplies $0.00 $0.00 $400.00 $0.00 $0.00 $0.00 $400.00
5300 Office Food/Beverage $9,600.00 $7,600.00 $7,600.00 $1,900.00 $1,900.00 $1,900.00 $30,500.00
5310 Coffee Cart $0.00 $0.00 $0.00 $0.00 $0.00 $-350.00 $-350.00
51002 Intern $2,725.00 $2,180.00 $2,180.00 $545.00 $545.00 $545.00 $8,720.00
Total Administrative Expenses $88,056.00 $70,404.80 $70,881.80 $17,751.20 $17,751.20 $18,276.20 $283,121.20
Total Expense $123,006.00 $97,804.80 $97,933.80 $24,601.20 $24,956.30 $26,576.20 $394,878.30
Net Income (Loss) $-83,936.00 $7,269.20 $-63,857.80 $-14,782.20 $-14,162.30 $-17,282.20 $-186,751.30

28. Foundation
Compare Income Statement by Departments
for the period of 01/01/2017 to 12/31/2017
Account Number Account Name Administration Marketing Outreach Amount
Income
General Income
4000 Donation Income $126,981.18 $116,959.91 $116,959.91 $360,901.00
4100 Adoption Income $0.00 $0.00 $0.00 $0.00
4101 Fundraiser Tickets
Income $421.47 $421.33 $421.33 $1,264.13
4103 Grant Income $0.00 $0.00 $0.00 $0.00
Total General Income $127,402.65 $117,381.24 $117,381.24 $362,165.13
Merchandise
Income
4102 T-Shirt Sales Income $421.47 $421.33 $421.33 $1,264.13
4104 Used Kitty Litter Sales
Income $8,800.80 $8,799.60 $8,799.60 $26,400.00
4200 Year-End Recap Video
Income $9,016.89 $9,015.61 $9,015.61 $27,048.11
4300 Silent Auction Income $11,422.47 $11,420.83 $11,420.83 $34,264.13
Total Merchandise Income $29,661.63 $29,657.37 $29,657.37 $88,976.37
Fixed Assets
4301 Fixed Assets Disposal
Gain $0.00 $0.00 $0.00 $0.00
Total Fixed Assets $0.00 $0.00 $0.00 $0.00
Total Income $157,064.28 $147,038.61 $147,038.61 $451,141.50

29. Details you need to know so you can have a realistic
understanding of your finances
Questions-Check List
• Monthly Budget- Cash Forecast
• Do you have a plan for big expenses
• What Percentage of your organization is being funded by a just a few people
• What is your restricted vs unrestricted balances
• Cash on Hand
• Rainy Day Fund
• Budget to Actual
• Do you have quick access to your finances and ability to run reports
• Insurance Person and Policy…D&O Insurance

30. Conclusion/Q&A

31. Contact Me
Email
dan.kimball@aplos.com
Twitter:
@fugativedmk
@aplos_software
nonprofitchef.com