Accounting credentials aren’t required for board members to provide effective oversight. In most cases, non-profit boards are composed of members from a variety of different backgrounds including fundraising, program delivery, community leadership, marketing, law, and other fields. That being said, management is often faced with the challenge of presenting financial information that’s clear, relevant, and meaningful to everyone at the table.

Start With The Right Financial Reports

Generally, a non-profit’s financial situation is represented in two documents: a statement of financial position and a statement of activities. However, providing large spreadsheets of numbers can overwhelm readers. Remember, how you present the numbers to the board is nearly as important as the numbers themselves.

Instead of relying solely on numerical formats, use bar and line graphs, pie charts, and other visual tools to convey information. These are generally more effective ways to present financial data to nonfinancial board members.

Make The Statement Of Financial Position More Accessible

The statement of financial position (or balance sheet) shows an organization’s:

• Assets (cash, accounts receivable, property, and equipment)
• Liabilities (accounts payable and long-term debt)
• Net assets (with and without donor restrictions)

 
You can use a pie chart to depict assets so board members can easily understand which portion of total assets is readily available for use (such as cash and cash equivalents) versus less liquid assets (such as property and equipment).

Bring The Statement Of Activities To Life

The statement of activities (or income statement) reports total revenue and support. It also reports program, management and general, and fundraising expenses to show the organization’s overall change in net assets. A bar chart is a good way to present this information. It can compare current revenues and expenses with those of previous periods in a single image. When updated monthly, these charts allow nonfinancial board members to easily compare revenues and expenses to the budget.

For example, you can create a bar chart showing how your annual event was funded last year with money from attendees, sponsors, and general funds. This tool can help a board make quicker, better-informed decisions — in this case, about setting or readjusting funding expectations for this year’s annual event.

Highlight Trends Before They Become Problems

Economic conditions, shifts in donor priorities, inflationary pressures, and changes in grant funding can all affect non-profit revenue streams. When support falls short of expectations, comparing key financial ratios from one year to the next can help boards evaluate whether spending levels remain sustainable.

You can also compare total revenue and support to management and general expenses, program services, and fundraising costs. These ratios, often expressed as percentages, allow your board to see whether your organization’s costs, revenue, and support are in line with expectations. For example, suppose your management and general expenses are $100,000 for the year, and your organization’s total revenue and support is $1 million. That’s a ratio of 1:10. It means that only 10% of every dollar earned is spent on management and general expenses. Comparing this ratio over time can help your board identify shifts in spending patterns and assess whether resources are being allocated as intended.

Strengthening Financial Literacy

Financial literacy doesn’t happen overnight. But small, consistent efforts can make a significant difference in board engagement and oversight. In addition to including visual elements and dashboard-style reporting in your presentations and using ratios to help evaluate financial health, consider incorporating brief financial education moments into board meetings.

Need help translating complex financial data into board-friendly insights? Contact us to discuss practical reporting strategies for your non-profit.