Money may talk, but most of us aren’t very comfortable talking about it. Not only are finances an emotionally charged issue, when it comes to nonprofit finance, many of us don’t think we know enough – and we don’t want to show it! The result at many nonprofits is a lack of communication about financial matters. Organizations that encourage positive communication and understanding of financial matters are able to strengthen and empower their staff and board members and tell their story to the community. Talking productively about money builds trust and an understanding of reality internally, and greater accountability to the public.

Communicating financial information can become a powerful tool for the organization if you follow some fundamental principles:

• Confront and remove the taboos
• If money has been “off limits” in the past, the leaders of the organization have to start the conversation and change the culture.
• Train and explain
• Provide an introduction and overview of financial reports to board members and staff. This will familiarize them with the terms used, report format, and key items to monitor. Reports to review include a report of income and expense compared to budget, and the annual balance sheet report. The IRS 990 report is a helpful – and public – report as well.
• Interpret the information
• Even the best quality financial reports need interpretation to be accessible to staff, volunteers, donors, and board members. Develop a short narrative report form – even a list of bullet points – to use along with the quarterly or monthly financial reports for staff and board meetings. For donors and other outside users, summarize financial information and connect it to the work of the organization.
• Maintain an open book
• Once the staff and board understand the financial picture, keep the door open for questions and suggestions.

As fundraising guru Kim Klein says, as long as money remains private and mysterious only those persons willing to learn about it can really control it. Once the mystery is removed, everyone involved with the organization is informed and empowered.

Authored by Kate Barr, Executive Director of the Minnesota Nonprofits Assistance Fund (MNAF), a program of Nonprofits Assistance Fund.   MNAF provides flexible loans and practical financial management training and advice to nonprofits.  Other resources and articles on nonprofit financial management topics can be found on their web site at www.nonprofitsassistancefund.org.  You can contact Kate Barr at 612/278-7180.