The document provides an overview of financial reporting for nonprofit boards, including: - Standard reports include the statement of financial position, statement of activity, statement of activity budget vs actual, cash flow statement, and net asset rollforward. - The statement of financial position (balance sheet) reports the organization's financial position at a point in time, including assets, liabilities, and net assets. - The statement of activity (income statement) reports income and expenses for the fiscal year, including understanding the organization's business model and categories of revenue and expenditures. - Unique aspects of nonprofit accounting include the concept of with or without donor restrictions on net assets and the administrative slippery slope in expense allocation.

1. Understanding Board
Financial Reporting
Presented by:
Christy Cubbage, CFO/Director of Client
Accounting

2. Agenda
• Overview of financial reporting at a board level
• Unique aspects of non-profit accounting
• Support Kansas City observations related to board reporting
• Examples
• Tools and Resources

3. Overview
Things to be aware of as a board member that will help in understanding
financial statements
• Do I understand the organizations business model?
• Can I get answers to my questions?
• Is the organization on the cash or accrual basis of accounting?
• When is the year end?
• What are the filing and reporting requirements of the organization?

4. Overview
Standard report presentation for the board
• Statement of Financial Position
• Statement of Activity
• Statement of Activity – Budget vs Actual
• Cash Flow
• Net Asset Rollforward
The board should always receive a full set of financial reports, even if they
are accompanied by a financial dashboard or other summary
Board reports can be summarized where committee reports can be more
detailed
These reports are typically presented by the treasurer during the board
meeting for approval, therefore the treasurer must have a full understanding
of the financials

5. Statement of Financial Position
Statement of Financial Position – AKA Balance Sheet
This reports presents the financial position at a point in time
• Cash – understand the purpose of multiple cash accounts and availability
for general operations
• Investments – understand the purpose of investment accounts and
availability for general operations
• Liabilities - What is the collectability of accounts receivable?
• Liabilities - Are all accounts payable or liabilities captured?
• Net Assets (Equity) – restricted vs unrestricted
• Very important to understand the concept of equity

6. Statement of Activity
Statement of Activity – AKA Income Statement
This reports presents income and expense activity for the current fiscal year
• Revenue
• Understand the business model of the organization
• Fee for service
• Grant
• Donations
• Expenditures
• Typically wages are large part of budget
• Program expenses – what does this mean?
• Deeper dive reports
• By functional category – Program, Admin and Fundraising
• Trending
• Comparative

7. Statement of Activity – Budget vs
Actual
Statement of Activity – AKA Income Statement – budget vs actual
This reports presents income and expense activity for a period against a
board approved budget
• Understand variances from actual
• Focus on year to date vs interim periods

8. Statement of Cash Flows
This reports presents the change in cash from accrual basis accounting
activity
• Hard to understand if not from accounting background
• Presents change in cash based on operating, investing and financing
activities

9. Net Asset Rollforward
This reports presents the change in restricted and unrestricted positions in
equity – a detailed breakdown of equity activity during a year
• Provides detail on restricted funds
• Can explain how funds awarded in one year remain to be spent during the
following year
• Can provide information as to liquidity outside of restricted cash

10. Unique Aspects of Non-profit
accounting
• No such thing as a “loss” – increase or decrease in net assets
• Funds reinvested for mission
• The concept of with and without donor restrictions
• It can appear that an organization is cash flush, but in reality they
can’t pay for all their expenses
• Functional expense allocation
• The administration slippery slope
• Fundraising
• Program

11. Support Kansas City Observations
• For board presentation, less is more
• Be careful with dashboards and ratios – what are they really telling the
board?
• The most difficult conversation is around showing a “negative” net income
when actually the organization is using reserves to deliver the mission
• The budget should align with strategic plan
• A well thought out chart of accounts and reporting will reduce confusion
and increase transparency and understanding
• Spend time with Support Kansas City – board members, staff, volunteer
• Meet with new board members to explain the financial reports
• Don’t be afraid to ask questions

12. Support Kansas City Observations
• Many times new board members will have “ideas” on dashboards, ratios
and report formats
• Ensure these align with your accounting and your strategic plan

13. Examples
A quick overview of a sample report

14. Tools and Resources
Google it! Understanding financial reporting for nonprofit boards
Support Kansas City staff

15. Thank you!