Tuesday January 28, 2020 comments Tags: nonprofit, accounting, mission, vision, tools, financial reports, balance sheet

Any accounting business, or tax advice in this podcast is not intended as a thorough in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If you need any help with that, please reach out. 

Hey it is another week, another time for the NonProfit Nuggets Podcast. I realized, when I was telling you last week's story, I did not ever finish it. So here's part two about why your stories are important, and why the financials matter, and you should be looking at them.

So what happened last week, if you did not hear that episode, was that we had ... In my past life as an auditor we had an organization where the bookkeeping person was just manually updating the numbers on the financial statements and not actually thinking about, "Oh this is what actually truly happened," and letting it flow through their accounting system. So the tips I shared last week was, hey be sure to read the balance sheet. See if it makes sense. Look at your ... Makes sense as in, "If cash is high are we not paying people or have we just received a lot of monies? Was there a big fundraiser that happened?" I'm looking on your income statement to see, "Hey did we have our expenses high because we had three payrolls versus two or even one? Is it that we are gearing up for a fundraiser and so things are really out of whack?" We're looking at that in context and saying, "Hey compared to our budget," or, "Compared to last year this time," or, "Last month this is what it is."

So what happened with that person? That person did lose their job. I don't recall if they actually filed charges, but that person did lose their job. The organization was able to figure out what happened, get back to a sense of normalcy.
But I want to take you into the other side of that and why it's important for you as a leader in the organization to be aware of what's happening. Is because while you can put your trust into these people, be that in someone you hire internally or someone you outsource to, while you can put your trust in them, if you are saying those people, that person, a John, a Jane, a Jackie, they're going to handle it. You now put yourself at a disadvantage. You don't want to do that. You don't ever want to say, "I was relying on them to do the thing." You want to have an idea of what's happening at your organization. That's why I recommend that you be the one to do all the coding and you can ...

You I use loosely. You being someone at the organization. So someone in the development team is doing the coding. You when you're writing checks, you're doing the coding. That way you have an idea of, "Oh no, I know we fundraised this much at our annual gala," or, "I know we spent this much for supplies," so that when you see the financials you have a frame of reference as to what happened and why. It's not enough to just say, "Oh I know we spent money."

Well but do you know? Are those categories correctly? That's why it's really important for you to take ownership. This is your thing. You don't have to be in the weed. You don't have to be the one to enter the data. You don't have to be the one to run the reports, but you should be the one who knows, "This is what's happening at my organization and contextually this is what I should be seeing. I know this month we should be high on payroll because it was three payrolls instead of two." You should be able to say, "We are high on food because we're in the summer months and so instead of just doing an afterschool program we're doing a full day summer camp, so we're spending a lot more on food." You should be able to say those types of things and have the frame of reference, so that when you're getting the financial statements you can tell if something is truly out of whack, if something is probably miscoded.

This is another reason why you should be getting your financials at least a week, aiming for a week, before your actual meeting, so that you can dig in and ask those types of questions. So that's my tip for you. If you are currently having someone else prepare your financials ask them if you can get those a week before your meetings, so that you can take the time to dig in, ask questions, see if there's anything that just looks out of whack that you can say, "Hey can you run me the detail on this?" So that you can see if they're doing their job and you can feel more confident talking about the money, talking about how we're using it, how it's making an impact. How you're feeding so many kids over the summer versus in the winter or in the fall when school's in session.

Hope this helps. Hope you feel ... Hope you don't feel more worried, but hopefully you definitely feel a little less anxiety and know that you have a little bit of control over what shows up in your financials and what the story it's telling. Have fun. Be sure to tag us on social media @SynergyAdvisory or use #NonProfitNuggetPodcast to let me see what you're saying about the podcast and how I can support you. Have fun.

Hey, hope you enjoyed this episode of the podcast. Do you need a little bit more? Look into the transcripts, you will see a link to my calendar. You can schedule a free, again a free, 30 minute strategy session with me to talk specifically about your organization and what you need.


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Download: Questions to Ask About Your Financials