Filed under: CFO Bookkeeping & Accounting, Not-for-Profits
April 25, 2025
The ultimate goal of providing an organization’s board with financial reports is to help them understand where the organization stands and where it needs to go. Striking the right balance between providing meaningful, comprehensive information and engaging your readers can be challenging. Below are some tips on how to accomplish both when presenting essential financial information to the board.
Provide Training
Every board member needs to understand an organization’s financial information to make informed decisions. However, board members bring different skills and talents to the table, and not all are going to know how to read and use not-for-profit financial statements and reports. Therefore, it is a good practice to provide training to new board members as part of the onboarding process. The training should include an overview by the CFO of key financial reports, goals, and strategies. Additionally, CPA firms, law firms, and other third parties often offer board governance training related to understanding not-for-profit financial matters. These could be valuable opportunities for board members to learn about their roles and better fulfill their fiduciary responsibilities.
Example: A new board member with a background in IT might not be familiar with financial terminology. Providing a training session that includes a glossary of key terms and a walkthrough of the financial statements can help them feel more confident in their role.
Focus on the Big Picture
A common mistake in board reporting is providing too much data. Keeping it simple helps board members focus on the big picture when making strategic and operational decisions. Providing too much detail can overwhelm board members and lead to micromanaging day-to-day decisions or going down unnecessary rabbit holes. As the CFO, however, you should always be prepared with detailed information in the background to answer questions and provide clarity.
Example: Instead of presenting a detailed breakdown of every expense, summarize the major categories and highlight any significant variances from the budget. This allows board members to focus on strategic issues rather than getting bogged down in minutiae.
Be Creative, but not with Numbers
The financial information provided to a board should be transparent and accurate, but it also needs to be tailored to their needs. Ideally, financial reports provided to the board should be readable in five minutes or less. Thoughtful consideration must be given to determine what information is most important to convey. The final report should correlate to the overall mission and goals of the organization.
At a minimum, board reports should include the following user-friendly financial reports at a summary level:
- Statement of Financial Position (Balance Sheet)
- Statement of Activities
- Actual results to budget
- Cash flow projections
Many board members may find that visuals such as dashboards and graphs are easier to understand and provide more meaningful information about the current financial picture. Providing trend analysis, key ratios, and industry benchmarks are also important financial reporting tools. Management should work with the board to determine what key financial metrics and indicators would be most relevant to them for dashboard reporting. Financial statements and reports should be prepared and distributed at least one week prior to the meeting to give them time to review.
Example: Use a pie chart to show the allocation of expenses across different programs. This visual representation can quickly convey how resources are being used and whether they align with the organization’s priorities.
Include a Narrative
Providing an executive summary is an important component of the reporting package as numbers alone don’t tell the whole story. The narrative should highlight management’s interpretation of the current state of financial affairs, including any accomplishments, as well as potential red flags or concerns. It should also explain any significant new items, fluctuations from budget and the prior period, or changes to key metrics.
Example: If there has been a significant increase in fundraising revenue, the narrative should explain the reasons behind this success, such as a new fundraising campaign or a major donation. Conversely, if expenses have risen unexpectedly, the narrative should address the causes and any steps being taken to manage them.
Whether you are preparing or receiving the reports for your not-for-profit, ensuring that relevant information is communicated in a concise and understandable way will go a long way towards fulfilling your fiduciary duty to govern the organization well. For more tips and insights, connect with our team.
© Clark Nuber P.S., 2025. All rights reserved.
