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What questions should nonprofit leaders ask their finance team? Barbara Enright, Director and Market Leader with Your Part-Time Controller (YPTC), shares five deceptively simple questions that can turn nonprofit financial reporting into a far more strategic management tool!
A financial statement may contain plenty of numbers . . . .but are they complete, final, reconciled and ready for leaders to act on? Barbara begins with the wonderfully uncomfortable question: Can we trust the numbers? She explains why preliminary figures matter, including one organization where an uncollectible pledge turned what appeared to be a surplus into a deficit.
The conversation quickly moves beyond accounting mechanics. Barbara encourages nonprofit executives and boards to ask, What do I need to know right now? As she puts it, “If you're running out of cash, the board needs to know.” A lengthy variance discussion isn't terribly useful if the organization is missing the financial issue that demands attention today.
Then comes the forward-looking question: What are we expecting next? Forecasting, projections and scenario planning help organizations prepare before circumstances force a reaction. Barbara offers a memorable blue sky, gray sky, dark sky framework and uses a hypothetical $1 million grant pipeline to show how leaders can prepare for multiple revenue outcomes.
The discussion also tackles one of nonprofit finance's perennial headaches: restricted versus unrestricted funding. Having $1 million in the bank doesn't necessarily mean an organization has $1 million available to operate. Finance, development and program teams need to coordinate before funding commitments create restrictions that become operational problems.
Finally: Are we ready for the audit? Barbara recommends beginning preparations months in advance and notes the goal of completing the audit within six months after year-end. Controls, documentation, policies and even cybersecurity can become part of that readiness conversation.
Key Takeaways:
Verify whether financial reports are complete, final and reconciled before making decisions.
Give boards an executive-level financial summary, not simply pages of numbers.
Use forecasting and scenario planning before financial conditions change.
Make restricted versus unrestricted cash visible to leadership and boards.
Connect finance, development and programs before grant commitments are made.
Treat audit readiness as an ongoing management discipline, not a year-end scramble.
00:00:00 Questions Leaders Should Ask Finance
00:03:12 Can You Trust the Numbers?
00:05:49 When a Surplus Becomes a Deficit
00:06:50 What Do I Need to Know Right Now?
00:09:53 What Are We Expecting Next?
00:11:07 Blue Sky, Gray Sky, Dark Sky Planning
00:12:42 Finance Questions Anyone Can Ask
00:13:33 Why Budgets Need Forecasts
00:14:32 Restricted vs. Unrestricted Funding
00:16:02 Where Development and Finance Break Down
00:20:10 Are We Ready for the Audit?
00:22:12 Internal Controls, Policies and Cybersecurity
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