Posted on July 18, 2012 by PM Team
Raising the bar for non-profit financial data
"Understanding a non-profit's financial story can be daunting,
since the way money flows in and out of the sector is complex and
counterintuitive," says Rebecca Thomas, vice president, strategy
& innovation, NFF.
GuideStar, the non-profit information company, together with the
Nonprofit Finance Fund (NFF), a provider of financing, consulting,
and advocacy services to non-profits and funders, has launched
Financial SCAN (Situation and Comparables ANalysis), an online
platform to provide a comprehensive picture of a non-profit's
financial health both over time and in relation to its peers.
"Understanding a non-profit's financial story can be daunting,
since the way money flows in and out of the sector is complex and
counterintuitive," says Rebecca Thomas, vice president, strategy
& innovation, NFF. "Financial SCAN provides non-profit leaders
and their supporters and advisors with greater clarity about how to
interpret and use this data in decision-making and strategy."
Financial SCAN draws data from IRS 990 forms and presents the
information through a series of financial dashboards and graphs.
The financial health dashboard, for example, provides a five-year
comparison for an individual non-profit across a range of
indicators at both aggregate and granular level, including
expenses, revenue sources, profitability, balance sheet composition
and liquidity. A peer comparables dashboard provides a similar view
across a number of organisations for a particular year. "We
saw an opportunity to improve the use of Form 990 data by adding a
layer of education and analysis, and we knew NFF was the right
partner to help us create this new financial resource," adds Lee
Glenn, GuideStar's senior vice president, who expects the tool to
form the basis of a new industry standard for interpreting
non-profit financial data. An educational component in Financial
Scan interprets the data in the report and poses questions to
provoke dialogue about a non-profit's current situation and future
goals.
The 2012 results of the NFF's annual survey of the state of the
non-profit sector points to a need for a more open conversation
among funders, boards, and non-profits. Covering more than 4,500
respondents at non-profits across the US, the survey found that
only 20% of non-profits feel comfortable discussing cash flow
concerns with their funders and only 6% feel comfortable talking
with funders about debt. Some 38% of survey respondents suggested
that their boards are not able sufficiently to understand and
communicate their expense drivers. "This tool helps grant-makers
engage with their grantees about financial health and funding
needs," says Glenn. "By creating a new standard for non-profit
financial analysis, Financial SCAN underscores the relationship
between strong finances and effective programmes."
Financial Scan is sold as an annual subscription.