using nonprofit financials as a strategic decision making ......investment advisory services are...

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Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. | ©2017 CliftonLarsonAllen LLP

Using Nonprofit Financials as a Strategic Decision Making ToolPresented by Timothy Warren, CPAPrincipal, Nonprofit Group

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Goals for Today’s Session

Learning Objectives:

→ Understand the changing role of the lead financial individuals in a nonprofit organization

→ Understand the starting point for financial reporting and why it is important

→ Identify key users of nonprofit financial information and the delivery methods of such information

→ Start the conversations to convert your financial information into a strategic decision making tool

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Nonprofit Story Telling

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• strategist• leader• diplomat• story teller/translator?

The modern CFO is a:

Changing Role of the CFO

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Chief Story Teller

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Access to data

Analyticalskills

PresentationTechniques

Meaningfulstory of the:• Past• Present• Future

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Nonprofit Story Telling – Holistic View

CFO as a Story Teller

StrategyBoard Members/Finance

Committees

Business ModelExternal

Stakeholders/Others

Leadership/Management

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Organizational Mission

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Discussion Questions

• CFO or Director of Finance are moving towards the Chief Story Telling Officer or Director of Story Telling.

• Discussion– What does this mindset shift mean to the group?– What does it mean to story tell?– How are organizations doing today with story telling?– How does nonfinancial data play a roll in story telling?

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Key Elements of Story Telling

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Nonprofit Story Telling – A Different Perspective

Select the best presentation technique

Identify the data that is available

Determine what information is important to convey

Define the audience

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Defining the Audience

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Define the Audience

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Board members

LeadershipFinance Committees

Department managers

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Audience NeedsAudience Informational Needs

Board Members Strategic/high level while meeting their fiduciary responsibilities

Leadership Balance of strategic and operational

Department Managers Performance focused, more detailed

Finance Committees Enhanced financial insight

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Determining Information that is Important to Relay

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Strategic Plan• The strategic plan is the start of the reporting

process• Generally an outcome of strategic planning will be

strategic initiatives/imperatives or the goals developed in the plan

• Linking reporting to the activities that lead to success of the strategic imperative is a critical reporting element of any nonprofit organization

Discussion Question: Has anyone linked financial results directly to a strategic plan

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Business Model

• A rationale of how an organization creates, delivers and captures value

• Nonprofit is not a type of business model• Can serve as a “funnel” for how to report results of strategic

initiatives

The Business Model Connects and Organization’s Commitment to

Purposeful Action and its Pursuit of a Responsible Level of Profitability

Source: CFO as Business Model Strategist; Jeff De Cagna, Executive Advisor, Foresight First LLC

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Business Model Grid

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Source: CFO as Business Model Strategist; Jeff De Cagna, Executive Advisor, Foresight First LLC

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Select the Best Presentation Technique

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Presentation Techniques

• Data Visualization– Charts– Graphs– Score cards– Heat maps

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Why Data Visualization

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• Why Data Visualization?– Draw attention to what is important– Easy to understand– Information at a glance

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Specific Example – Strategy to Reporting

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Strategy: Association wanted to (a) grow membership and (b) provide more services to its membership base.

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Group Exercise

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Source: Boys & Girls Club of America December 31, 2016 audited financial statement

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Discussion Questions

Discussion Question: How would BGCA present this data to the board vs. leadership?

Discussion Question: How would this type of reporting enhance BGCA ability to use their data for decision

making?

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Summary of Learning Objectives

CFO’s/DOF’s need to become the story tellers of the nonprofit

organization

When developing financial reporting start with the key

strategies of the organization

Understand the different types of users of your information

(financial and nonfinancial) and tailor the information accordingly

Use the output of the reporting to make decisions on

direction/strategy

Financial Reporting

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twitter.com/CLAconnectfacebook.com/cliftonlarsonallen

linkedin.com/company/cliftonlarsonallen

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CLAconnect.com

Timothy Warren, CPAPrincipal, Nonprofit Group

617-984-8143Tim.Warren@CLAconnect.com

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Appendix

Sample Presentation Techniques

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Charts – Leverage Visual Indicators

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Graphs – Combination Graphs

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2017P 2016 2015 2014 2013Total Revenue 14,648,623 14,432,976 14,227,166 13,845,075 13,310,300Total Expense 14,148,623 13,809,162 13,545,085 13,409,909 12,834,957Operating Surplus 500,000 623,814 682,081 435,166 475,343

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

11,500,000

12,000,000

12,500,000

13,000,000

13,500,000

14,000,000

14,500,000

15,000,000

Dolla

rs

Revenue, Expense and Surplus - 5 Year Trend

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Graphs - Waterfall

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Graphs: Pie or Donut

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Graphs: Financial & Non Financial Data

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Score Cards

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Heat maps

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