guidestar webinar for nonprofits—financial analysis in action: getting the most out of 990 data
DESCRIPTION
How can nonprofit leaders advance their missions by using financial data in their planning and decision-making? What are the "right" financial indicators on which to focus? In this one-hour webinar, we will undertake a comprehensive analysis of one organization's financial health, using the Financial SCAN platform developed by Nonprofit Finance Fund (NFF) and GuideStar. Through this case example, we will address the ways in which nonprofit leaders can use financial trends and comparisons to inform future plans and engage with stakeholders. Presenters: Peter Kramer, Manager, Nonprofit Finance Fund, and Scott Menzel, Product & User Experience Manager, GuideStar (moderator)TRANSCRIPT
Peter Kramer Manager Nonprofit Finance Fund Scott Menzel Product & User Experience Manager GuideStar May 30, 2013
Insight Beyond Compliance: What 990 data can say about your organization’s financial health
AGENDA
Re-orienting to the Form 990 Case analysis using Financial SCAN Brief online tour Q & A
From Form 990 Instructions:
Momentum is growing to make 990 data even more readily available
A compliance document AND a public profile for many nonprofits
How can nonprofit leaders put the Form 990 to better use? Understand your organization’s story as told
publicly by Forms 990
Use the 990 data (which must be compiled anyway!) to conduct analysis of past financial trends
Communicate with stakeholders about how these trends inform current plans and resource needs
Key Considerations: What 990 data can and cannot do
990 data CAN help: Understand an organization’s financial trajectory and recent
revenue, expense, and balance sheet dynamics Show how an 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
Today, our analysis guide will be Financial SCAN
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, decision making, 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 v. 1.0 does not include data from Form 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: Comparison with up to five peer nonprofits you select
Meet today’s case organization: Help for Homeless Youth
MISSION: To provide homeless and at-risk youth with the resources, relationships, and skills to become self-sufficient.
PROGRAMS: Health Services Case Management Drop-in Center Basic Employment Skills
RECENT DYNAMICS: Increased demand for services Uncertain revenue sources Maintaining an aging facility
Help for Homeless Youth
Dashboard: Income Statement
Dashboard: Balance Sheet
1
1
1
1
1
2
2
2
2
2
3
3
3
3
3
4
4
4
4
4
5
5
5
5
5
6
6
6
6
6
Peer Comparison Dashboard
Standardized 990 fields allow for side by side comparison
Contrasts operating and balance sheet characteristics
Offers broader environmental context for consideration
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
Estimated full costs have not been consistently covered, limiting HHY’s ability to satisfy longer-term organizational needs
Full costs include: operating expenses, covering depreciation, purchases of fixed assets, debt principal payments, and savings
Asset composition has shifted over time, reflecting a decline in liquid assets and growth in fixed assets
Facility ownership is its own line of business, and can sometimes be at odds with other organizational needs.
While HHY’s assets have grown over the period, its liquidity has contracted
Available liquidity represents a nonprofit’s ability to handle risks and seize new opportunities.
Next steps and considerations for Help for Homeless Youth Reflect: What activities have been contributing to
recent deficits? Evaluate mission/financial trade-offs within each program area.
Work to build budgets that account for full costs and better anticipate revenue volatility
Engage board of directors regarding need for facility reserve to care for aging fixed assets
Discuss with funders how growth has impacted liquidity and need for rebuilding working capital
Brief demonstration of online interface
Q&A
nonprofitfinancefund.org 19
Thank you! Peter Kramer
Manager, Consulting Services Nonprofit Finance Fund
617-204-9772 [email protected]
To learn more:
www.guidestar.org/financialSCAN