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Thursday, January 18, 2018

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By the Numbers
Marion Lee, CFRE

July, 2013

It is just numbers--right?--those pesky monthly or quarterly financial statements from the nonprofit that we serve as Board members.  Receiving, reading and understanding financial statement remains one of the single greatest obstacles that we face in nonprofit management today. 


Across the state, we continue to discover that nonprofit organizations find that producing accurate and up-to-date financial statements is a daunting challenge.  We also find that Board members are not insisting on timely accurate records and do not realize the importance of this information.


As an Executive Director or development professional, it is important to you and the health of your organization to spend the time needed to produce accurate financial records and reports, and to make sure that your Board understands its responsibility as a good steward of the organization’s assets.  We would like to offer a few suggestions and recommendations to help you ease the fears of numbers.


1.         It is the responsibility of the Board of Directors to understand your organization’s financial picture, set budgets and approve expenditures.  No one here is advocating micromanagement of the daily running of the office, but we do strongly believe that the Board must know the true picture so that it can make the best decisions.   Board members should:


v Receive a copy of the most recent financial statements during a Board orientation.  And while we are on that subject, they should be told during the getting to know you phase of Board nominations, what is the annual budget, revenue break-out and general expenses;

v Receive a Board member job description that specifically states that they are responsible for the fiduciary health of the organization.  This includes their role in choosing an independent auditor, if you have audited financial statements;

v Receive training, if needed, on how to read the financial statements;

v Be empowered to ask questions and give support and advice, and, most important,

v Have a clear picture of the organization’s assets: land, building, equipment, and people.


2.         The Executive Director and senior staff must understand their role in the process of strong financial management.  Key points to making sure situations do not get out of hand are:


v Beware of the tendency to “hide” or dissimulate financial details. We all want to put our best foot forward and no one wants to disappoint the Board, but it is not your job to “protect” the Board from reality;

v Be upfront in assessing the organization’s assets and communicating the strengths of those assets to the Board;

v Take care not to take on more and more work, without asking for additional help or resources.  Hey, we all want to do this in the most efficient way, but stretching resources too thin can have serious consequences; 

v Make sure the Board receives the financial statements prior to Board meetings and votes on them during the meeting, and

v Ask for help.  Resources can be found, either through funding or volunteer support to help you sort out even the most complex situations.


Bacon Lee & Associates was founded to provide counsel and support to nonprofit organizations.  We can help you and your Board find the comfort zone with financial reporting at


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