How can nonprofit leaders advance their missions by using financial data in their planning and decision-making? What are the "right" financial indicators on which to focus? In this one-hour webinar, we will undertake a comprehensive analysis of one organization's financial health, using the Financial SCAN platform developed by Nonprofit Finance Fund (NFF) and GuideStar. Through this case example, we will address the ways in which nonprofit leaders can use financial trends and comparisons to inform future plans and engage with stakeholders.
Presenters: Peter Kramer, Manager, Nonprofit Finance Fund, and Scott Menzel, Product & User Experience Manager, GuideStar (moderator)
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GuideStar Webinar for Nonprofits—Financial Analysis in Action: Getting the Most Out of 990 Data
1. Peter Kramer
Manager
Nonprofit Finance Fund
Scott Menzel
Product & User Experience Manager
GuideStar
May 30, 2013
Insight Beyond Compliance:
What 990 data can say about
your organization’s financial health
2. AGENDA
Re-orienting to the Form 990
Case analysis using Financial SCAN
Brief online tour
Q & A
3. From Form 990 Instructions:
Momentum is growing to make 990 data even more
readily available
A compliance document AND
a public profile for many nonprofits
4. How can nonprofit leaders put the Form
990 to better use?
Understand your organization’s story as told
publicly by Forms 990
Use the 990 data (which must be compiled
anyway!) to conduct analysis of past financial trends
Communicate with stakeholders about how
these trends inform current plans and resource
needs
5. 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
6. Today, our analysis guide will be
Financial SCAN
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, decision making, and informing
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 (313K orgs)
*Note: Financial SCAN v. 1.0 does not include data from Form 990 EZ
7. 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:
Comparison with up to five peer
nonprofits you select
8. Meet today’s case organization:
Help for Homeless Youth
MISSION: To provide homeless and at-risk youth with
the resources, relationships, and skills to become self-
sufficient.
PROGRAMS:
Health Services
Case Management
Drop-in Center
Basic Employment Skills
RECENT DYNAMICS:
Increased demand for services
Uncertain revenue sources
Maintaining an aging facility
13. 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
14. Estimated full costs have not been
consistently covered, limiting HHY’s ability to
satisfy longer-term organizational needs
Full costs include: operating expenses, covering
depreciation, purchases of fixed assets, debt principal
payments, and savings
15. Asset composition has shifted over time,
reflecting a decline in liquid assets and
growth in fixed assets
Facility ownership is its own line of business, and can
sometimes be at odds with other organizational needs.
16. While HHY’s assets have grown over the
period, its liquidity has contracted
Available liquidity represents a nonprofit’s ability to
handle risks and seize new opportunities.
17. Next steps and considerations for
Help for Homeless Youth
Reflect: What activities have been contributing to
recent deficits? Evaluate mission/financial trade-offs
within each program area.
Work to build budgets that account for full costs and
better anticipate revenue volatility
Engage board of directors regarding need for facility
reserve to care for aging fixed assets
Discuss with funders how growth has impacted
liquidity and need for rebuilding working capital