Guest post by Susan C. Lowe, CPA, CGMA
As a nonprofit finance leader, you are accountable to many stakeholders – especially your Board of Directors. Your role is critical and complex as you know and understand the financial operations of your organization inside and out – and are ultimately responsible. You are a master of your companyʼsʼ financial data – and there is so much of it to manage.
As CFO, at certain points throughout the year – in addition to your ongoing daily tasks – you must present key performance metrics (KPIs) and reports to your Board of Directors. The biggest challenge is figuring out how to take all this financial detail and put it into a presentation that will be useful to your Board of Directors so that they then can carry out the strategy of the organization.
It's all about balance: The nonprofit CFO role & presenting to the board
As with your other responsibilities, do not go it alone. You communicate with your CEO and know his or her thoughts and strategies. You know what the fiscal challenges are from your program leaders along with their goals and objectives. You then have your financial statements – cash flows, performance, budgets and audits. All this information needs to be taken into consideration and whittled down to a short presentation that then fits into the time constraints of the meeting agenda.
How do you prepare a presentation that gives your Board of Directors the right information, with the right level of detail, so they make the informed, strategic decisions they need to make while fulfilling their fiduciary responsibilities – no pressure, right?
First, the financial information that you report to your CEO, the bank, program leaders, funders, auditors, and government agencies is necessary and useful to you and these particular stakeholders. However, providing this same level of detail to your Board of Directors, in the same way, is not the best option.
Keep in mind, board members are volunteers, and are not as focused on your organization as you are. They do not need to know the level of detail that you do to be effective in their roles. And remember, your board members are busy people too. Many do not have a lot of time to wade through copious amounts of financial data and reports, nor do they have the financial knowledge to make sense of numerous spreadsheets.
When building your board presentation, you want to balance the level of detail and information you give: too much, and the board spends their valuable time in the weeds when you want them to be strategic and not operational in their thinking. As the financial leader, your role is important as you provide not only detail that is current and accurate, but information that is relevant to the financial health of the organization.
You need to drive the process of determining what information is most critical and how to present it in a concise, meaningful way so your Board of Directors can make strategic decisions for the company.
Involve your finance committee when presenting to the board
Your organization most likely has a Finance Committee – as the staff leader of the Finance Department, you work closely with this committee. Plan to work with them early in your board presentation development stage. They are the committee that will be most helpful to you as you think about the financial data and your presentation at the board meetings.
Look at the Finance Committee as your ally and thought partner. Give yourselves enough time to meet and openly discuss the financial challenges, questions and information you have so the Finance Committee can assist you in developing priorities for your board meeting.
If your committee has non-board members, this is a great way to get some outside perspective. Hopefully your committee has nonprofit financial expertise to help you think through your goals and objectives of the meeting.
Investing time with the Finance Committee is a great way to learn more about board perspectives, to hear their questions – as many board members probably have the same ones. It enables you to start sketching out the key points you want to make to at the board meeting.
Once you meet with the Finance Committee (make sure you schedule these meetings well in advance of each board meeting), you should prepare an outline of the presentation to review with the CEO. It is very important to ensure that the Finance Committee, the CEO, and you align in what will be presented, which priorities you should highlight, and what questions/challenges you should raise.
You should iron out any differences during these meetings, not during the board meeting. When you are all on the same page, it will make your preparation time smoother and your presentation much clearer. You are now ready to sit down and develop the presentation.
The most effective way to present information to a board (remembering that many of them are not financial people) is using visuals. As you put together the data, think about how the use of technology can assist in creating visuals such as graphs and charts showing trends, comparative data, and KPIs.
As a nonprofit CFO, the most frequently asked questions by a board member to me have been, “What does this mean for the board?” and “What is it you want us to do about it?" The “it” can be anything from investments, to budget shortfalls, to cash flow challenges.
Remember to give the board context to all your information. Be concise but be specific. As mentioned above, while you develop your materials for the board meeting, anticipate the questions the board may ask – they will most likely mirror those from the Finance Committee, so you should be well prepared. Be sure your presentation answers as many of them as you can anticipate.
It is now time to work on the presentation. The most effective way to present information to a board (remembering that many of them are not financial people) is using visuals. As you put together the data, think about how the use of technology can assist in creating visuals such as graphs and charts showing trends, comparative data, and KPIs. A visual can be extremely helpful in getting your points across to an audience with mixed levels of financial expertise.
Consider the systems and technology you have:
- Can you use them to manage the data and create the presentations you need?
- Can you set up templates that allow you to update the data for each meeting?
There will be core financial metrics you always present, such as cash flow, the statement of financial activities, and the statement of financial position. Decide the key pieces that need to be called out. Perhaps it's endowment performance, perhaps facility costs, or maybe staffing challenges.
If you use technology to set up the visuals you need, you can update the data in future months without having to start from scratch each month. Technology will also help you mine your data as your organization evolves and your presentations change.
Keep these questions in mind as you prepare your presentations
- Is the number you present (cash balance, expense item, revenue item) “good” or “bad”?
- How does your data compare with other similar organizations?
- What action do you think the board should take based on the numbers you provide?
- What are the organizationʼs trends?
- Is the number presented merely a single data point or part of a pattern?
- What does the number mean?
- Is the data answering a question or generating data for conversation?
Your presentation should accomplish many things
- Present to the Board of Directors the current financial picture of the organization
- Show trends, both positive and negative
- Anticipate questions the board may have when looking at the data
- Incorporate the thoughts of the CEO and Finance Committee
- Include information that will help the board with the fiduciary responsibilities and be useful for other items on their agenda
- Include data that is current and well as forward thinking
- Highlight key metrics for your organization
- Be respectful of the boardʼs time and fit into the time allocated to you on the agenda.
In addition to your visuals you should have concise financial statements to use as back up data.
These should be:
1) The Statement of Cash Flows
2) The Statement of Financial Activities
3) The Statement of Financial Position
Also key is to add a few simple notes to these statements that will draw the board membersʼ attention to any specifics you want them to take note. If you give them context in your materials, the board will gain more insight and knowledge, making their roles on the board more impactful.
You should review your presentation to ensure it is concise and covers the key points you wish to make. Practice the presentation, perhaps with members of your finance team, to see if your points are clear and if you are presenting within your allocated time on the agenda.
If your presentation is too long, take a critical look at what you are presenting. Make sure it is all necessary to make your points. Do not be afraid to cut things that are not key to your message.
As the CFO of your nonprofit, you are in the unique leadership role to take all the financial information and data, know it inside and out, and turn it into meaningful knowledge that will lead to better strategic decisions. Invest your time with the Finance Committee, use technology to help you streamline your work and your board presentations will be meaningful and helpful to your organization. You will be viewed as the go-to person for these valuable insights.
Centage's FP&A software gives nonprofit Finance teams the tools they need to manage complex cash flow forecasts and create detailed reporting for board member and other stakeholders. Book a demo to see how we can help your nonprofit.
About the author: Susan has more than 25 yearsʼ experience as a senior level finance executive in the non-profit sector. Her experiences include serving as the CFO/COO/CAO and being a strategic thought partner for CEO at organizations with budgets between $1-$80 million. Susan is a graduate of Bucknell University with a BA degree in Economics and Political Science and Bentley University with an MS in Accountancy and Business Ethics. She is a CPA licensed in Massachusetts and a Chartered Global Management Accountant (CGMA). Susan is a member of the AICPA and a member of the Massachusetts Society of CPAs. Susan has worked for organizations focused on healthcare, mental health, special education, human rights, youth development, elder services and social justice. During her career she has worked on simplifying complexity, creating effective and efficient financial operations, presented to boards, implemented systems, and hired, trained and mentored staff.