Executives too often feel they must drown their nonprofit Board members with information when they present their monthly financial reports. They feel that this is a way to keep from showing the Board that they are on top of the finances. What they do is completely confuse most Board members who really aren’t interested in financial minutiae. Surveys have shown that most Board members don’t understand the monthly reports, which often look like a profit and loss statement in business or a bank statement. What they want to know is “are we living within our budget?” or “are we going to face a cash flow problem?” or “if we are having problems, where are they?”
I recommend to my clients:
1. Limit your monthly financial reports to two pages; a one page summary of actual-to-dates compared with budget-to-date, your current year budget, comparison figures from last year at the same time, and a cover explanation page that points our the differences and highlights any serious problems in simple language.
2. The report should be given by your Budget/Financial Chair who has credibility with the Board. He/she should assure the Board that the Committee has reviewed the figures carefully and that this is a summary of their findings.
3. Make sure that this report goes out one week in advance of the meeting along with a Consent Agenda,
4. Ask for any questions or concerns.
5. If you have Board members who just keep digging, invite that person to meet with the Chair after the meeting. Don’t waste everyone else’s time.
In this way you can move the meeting along to more important agenda items.
Tags: Board meeting, budgets, finances, nonprofit