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Budgeting & Reporting Tips for Non-Profits (Part 3 of 3)

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Budgeting & Reporting Tips for Non-Profits – Part 3 of 3

By James Meyer

In Parts I & II of this three part series on creating a world class budgeting and financial reporting solution, we talked about 1) what to budget, 2) the advantages of using budgeting software, 3) allocating overhead, 4) making it easy for people to manage against their budgets, 5) implementing web-based requisitioning with real-time budget verification and 6) showing historical trends.     In Part III, we continue that discussion by looking at additional ways to make your financial reporting more meaningful.

TIP # 7 Use benchmark comparisons.   Rather than show the financial results of your organization in a vacuum, show how it compares to similar organizations.   Do your numbers look better than your peers or worse?   Either way, it gives you another basis for measuring your performance and making management decisions.    If you’re not sure what the financial averages are for your industry, check out your industry trade association(s).  For example, if you are an association, you can reference the American Association of Association Executives’ ASAE Operating Ratio Report which shows comprehensive industry averages broken down by size, type and geography.

TIP # 8 Do ratio analysis.  Don’t just report on your Financial Position and your Revenue and Expense Activities.    Also report your key operating ratios like your Current Ratio, Quick Ratio and your Expendable Net Assets to Total Expenses Ratio.     Better yet, show how your ratios have changed over time (good or bad).    Many organizations calculate these ratios manually using Excel, but with a good financial reporting application like Dynamics GP you can generate these automatically.

Last, but not least, make your data interesting.

TIP # 9 When presenting financial information to your board and other key stakeholders, try presenting some of the information using colorful graphs and charts.    Visual presentations are generally much more effective than numbers in telling your story.  For example, a pie chart showing how your budget is broken down by program is a great visual to supplement your numbers.    There are many Business Intelligence (BI) applications that can help you with this, including some that you may already own including Microsoft Excel and SQL Reporting Services.    Please feel free to contact me if you would like to learn more about how you can leverage these tools.

TIP # 10 Provide your key stakeholders with financial dashboards or flash reports that highlight key performance indicators (KPIs) and provide a single snapshot or view of your organization’s financial health.    Dashboards are also useful for combing data from multiple systems.   For example, an association may have both Association Management Software (AMS) and a financial accounting software package.    Using dashboard technology like Excel PowerPivot or BI 360, you can pull and display information from both software applications and display it together on the same screen or report.

Maner Costerisan is a Michigan-based CPA and Technology Consulting firm specializing in Not-for-Profits.    As a CPA firm, we not only understand technology, we understand the unique reporting requirements of 501(c)3’s and other non-profit organizations.   Whether it’s for your internal use or for your board, we’ll make sure that you have the information you need when you need it.   For more information on Microsoft Dynamics GP, BI 360 and other budgeting & reporting solutions for not-for-profits, contact James Meyer at jmeyer@manersolutions.com.

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One question

  1. Shirell Burris says:

    Hi,
    I am the treasurer for a non-profit and use the zero-based budgeting methodology for our budgets each year. We currently have some funds in our checking account that are above our reserves and would like to use these funds to pay for additional programs in the current year.

    When we compare 2013 to 2014, we have additional expense of about 10K that is included in the budget without any offsetting expense. How would we show the use of the funds in our checking account in our income statement to offset the expense and get us to “zero”?

    Thanks!

    [Reply]

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