keynote%20 %20 seestadt[1]

Financial Oversight by Nonprofit BoardsThe Experienced, the New, and the Absent

©2009 Robert Seestadt/CFOShare LLC

cfoshare.com248.714.9400

Board OversightThe experienced, the new, and the absent©2009 Robert Seestadt/CFOShare LLC

Board Engagement: Communicating Financial Matters

7%

67%

57%

30%

43%

39%

52%

22%

4%

26%

13%

54%

22%

17%

46%

33%

65%

0% 10% 20% 30% 40% 50% 60% 70% 80%

No change- business as usual

Reduce staff or salaries

Freeze all hires and current salaries

Reduce staff hours (short weeks, furloughs, etc.)

Reduce staff benefits

Reduce or eliminate programs

Collaborate with another NPO to provide programs

Collaborate with another NPO to reduce administrative expenses

Merge with another organization

Reduce or refinance occupancy costs

Sell assets such as a building or securities

Use reserve funds

Delay payments to vendors

Speed up the collection of receivables

Engage more closely with your board

Funder conversations to explain situation and/or use of currentlyrestricted grants

Develop a ‘worst-case scenario’ contingency budget

Source: Nonprofit Finance Fund March 2009 survey of 47 MI nonprofit leaders; used with permission

Plans and actions to weather the recession

26%

46%

49%

26%

33%

31%

0% 10% 20% 30% 40% 50% 60%

Assistance negotiating withbanks or other lenders

Financial scenario planning

Tools to communicate financialpicture to board and/or funders

Merger feasibility analysis

Program finance analytics(revenue/expense breakdown

per program)

Assistance analyzing your currentfinancial situation

% of organizations

Which of the following types of technical assistance would be helpful now to your organization?

Source: Nonprofit Finance Fund March 2009 survey of 47 nonprofit leaders; used with permission


Tools for Financial Communication: Portraying the Key Message


Tools for Financial Communication: Presenting Financial Condition

• OnBOARD SM Nonprofit Assessment • Capital position (liquidity) and forward momentum (outlook)• Assess board focus and consensus on financial condition • Useful in reporting change over time, dynamic • Focuses attention on financial reporting and data• Identifies disagreements / opportunities; CEO vs. finance vs. outside board?

Board OversightThe experienced, the new and the absent©2009 Robert Seestadt/CFOShare LLC

OnBOARD SM Nonprofit Assessment: Capital Position

• Liquidity • Access to cash • Ability to pay bills when they come due• Adequate reserve • Balance sheet focus• “Noun”


• Performance-oriented• Look at recent trends and outlook • “Verb”• Are we going in the right direction with enough “mass”?

OnBOARD SM Nonprofit Assessment: Forward Momentum

Factors 0-3 4-6 7-10Cash reserves and investments

Serious concerns over short-term

Sufficient for short-term

Sufficient or better in short/mid term

Receivables & other liquid assets

Insignificant Moderate Significant

Payables and debts Aging is excessive and/or upcoming debt svc issues

Some vendor delays but reasonable aging

Current and manageable

Financing & access to outside capital

Nominal access to line of credit or other financing

Some financing available such as line of credit

Significant financing available if needed

OVERALL ASSESSMENT (0-10):

Little/no liquidity for operating needs

Sufficient liquidity for short term

operating needs

Sufficient capital for current and

mid-term operating & investment

needs

©2009 Robert P Seestadt/CFOShare LLC

OnBOARD SM Nonprofit Assessment:

Self Assessment: Capital Position

Factors 0-3 4-6 7-10Management track record in generating surplus

Mostly deficits over past 3-5 years

Balance of surplus and deficits

Mostly surpluses over past 3-5 years

Short-term financial projections

Anticipate losses in short-term

Likely near or at break-even

Projected operating surplus

Backlog & pending awards

Insignificant Moderate Significant

Budget adaptability Difficult to adjust expense structure in short-term

Some ability to manage costs to fit budgetary need

Able to materially adjust budget to fit resources

Recent trends & economic environment

Very challenging and concerning

Some hurdles, but with planning can overcome

Positive economic environment

OVERALL ASSESSMENT (0-10):

Short/mid-term outlook negative/

challenges significant

Outlook neutral opportunities & challenges are

balanced

Outlook favorable for short and mid-

term



Self Assessment: Forward Momentum

Slow burn All

Cylinders

Running on

Stalled Empty

Capi

tal P

ositi

on

Forward Momentum

5 10

5

100

0



Example A

Slow burn All

Cylinders

Running on

Stalled Empty

Cap

ital P

ositi

on

Forward Momentum

5 10

5

100

0



Example B

Slow burn All

Cylinders

Running on

Stalled Empty

Capi

tal P

ositi

on

Forward Momentum

5 10

5

100

0



Example C

Slow burn All

Cylinders

Running on

Stalled Empty

Capi

tal P

ositi

on

Forward Momentum

5 10

5

100

0



Example D

Slow burn All

Cylinders

Running on

Stalled Empty

Capi

tal P

ositi

on

Forward Momentum

5 10

5

100

0



Example E

Slow burn All

Cylinders

Running on

Stalled Empty

Capi

tal P

ositi

on

Forward Momentum

5 10

5

100

0



Example F

Slow burn All

Cylinders

Running on

Stalled Empty

Capi

tal P

ositi

on

Forward Momentum

5 10

5

100

0



Example G


For the “New”


For the “New”

• Inquiry is key to understanding • Simple is good• Response is verbal and non-verbal• Follow up • Curiosity and interest most important

Board OversightThe new, the experienced and the absent©2009 Robert Seestadt/CFOShare LLC

For the “Experienced”:Taking it to the Next Level


The Tough Questions

Are we meeting our potential?

Capital position

Forward momentum

Capacity utilization What is it?

“Cost to Serve”

How to Measure?


For the “Absent”:


For the Absent

• Welcome “non-accountants” to participate

• Responsibility is year-round and comprehensive

• Where to start

• Management letter as a tool


For You Facilitating Change in Board Oversight


Additional Resources:Tools and Tips

ArtServe MichiganBoardSourceBoardWALKBridgespan City Connect DetroitCommunity Legal ResourcesCompass Pointe Detroit Executive Service Corps Lawrence Tech University Center for

Nonprofit Management (Learning Circle)

Michigan Nonprofit Association

Additional Resources (not all-inclusive)

NEWNonprofit Finance Fund Society for Nonprofit Organizations

(National)United Way of Southeast MichiganVolunteer Centers of Michigan


Questions? [email protected]

keynote%20 %20 seestadt[1]

Business