Scott Menzel Product & User Experience Manager GuideStar Peter Kramer Manager Nonprofit Finance Fund December 10, 2013

Weaving Financial Data Into Your Nonprofit’s Story: Interpretation and communication with Financial SCAN

AGENDA

Introduction to Financial SCAN

New Feature Overview

Brief Online Tour

Case Analysis

Q & A

Knowing which metrics to focus on for assessing financial health

Having the time and skills to collect, parse, and report financial data

Communicating your financial situation and resource needs

When it Comes to Finance, Nonprofits Face Common Challenges

Effective Solutions

Financial SCAN demystifies nonprofit data and illuminates nonprofit financial health, providing the field with knowledge and tools for building and sustaining healthy, effective organizations.

Sound Financial Health

Strong Organizations

Quality Programs

Financial SCAN: A New Analysis Filter on 990 Data

Financial SCAN at a Glance

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, making data driven decisions 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 does not include data from Forms 990 EZ

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: Select peer organizations for financial benchmarking

How are Nonprofit Leaders Using Financial SCAN?

To engage staff, board members, and funders in conversations about recent dynamics and current needs

To map visually the organization’s financial story

To benchmark against peer organizations, assessing financial similarities and differences within and across sectors, sizes and markets

To provide historical context to inform budgeting and planning

“My organization never thought about strategically and proactively planning its financial future until I presented them with Financial SCAN.

Executive Director, Diversified Community Services,

Philadelphia, PA

Financial SCAN 2.0: New Features!

Excel Download Peer Group Comparison 7 Day Nonprofit Access

Brief Online Demonstration

Key Considerations: What 990 data can and cannot do

990 data CAN help: Illustrate your organization’s financial trajectory and recent

revenue, expense, and balance sheet dynamics Show how your 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

Meet Today’s Case Organization: REAL WORLD SKILLS

MISSION: To prepare underserved youth for lasting careers and self-sufficiency

PROGRAMS: Personal & professional skill-building Summer internship placement Trade programs and certifications

RECENT DYNAMICS: Steady yet modest growth New location and dated equipment Beginning strategic planning process

REAL WORLD SKILLS

Dashboard: Income Statement

Dashboard: Balance Sheet

Peer Comparison Dashboard:

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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

With the exception of 2008, surpluses and deficits have been close to breakeven

RWS has effectively managed this growth by consistently covering its operating costs to achieve marginal surpluses

But are surpluses adequate to build financial resilience?

RWS’s liquidity has fluctuated somewhat over the period, but has been consistently tight

Available liquidity represents a nonprofit’s ability to handle risks and seize new opportunities.

Observations & Recommendations for REAL WORLD SKILLS

Observations from Financial SCAN: Modest growth over last several years Reliable mix of revenue sources Relative to peers, little fixed assets Tight liquidity constrains ability to innovate

Recommendations for Leadership: Make business planning a part of strategy development;

build on historical strengths (e.g., reliable revenue, surpluses in most years, etc.)

Consider amount and types of capital needed to build liquidity and adapt to the changing job market

To meet resource needs, discuss areas of fiscal strength and vulnerability with funders

Q&A

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Thank you! Peter Kramer

Manager, Advisory Services Nonprofit Finance Fund

617-204-9772 peter.kramer@nffusa.org

To learn more:

www.guidestar.org/financialSCAN