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As 2009 comes to a close, it's a time to reflect on the last year. Although
it has been a challenging time for nonprofits and the communities we serve,
there are also bright spots.
Notably, last month 38,778 donors gave more than $14 million to 3,434
organizations during GiveMN's Give to the Max Day. This set a national record for single day
giving and reinforced Minnesota's reputation for philanthropy and commitment to
community. It speaks to the strength of our sector. Thousands of individual
nonprofits engaged their constituents and used a mix of traditional and new
media to raise awareness of the event. They made the case for their mission to
their stakeholders and cultivated new donors. The results are impressive.
Hopefully in 2010 nonprofits will continue to communicate effectively about
their value and impact and explore innovations in program delivery and
operations, as well as fundraising. For our part, at Nonprofits Assistance Fund
we'll continue to provide flexible financial support. Whether you are trying to
identify a sustainable business model, implement healthier finance practices, or
use credit as a management tool, we can help you build a stronger organization
in the coming year.
Providing Financial Management Assistance in Greater
Minnesota
Nonprofits Assistance Fund is dedicated to serving the entire state of
Minnesota. This year, a number of exciting opportunities have allowed us to
increase our work in Greater Minnesota.
Strategic Partnerships
Through a Blandin Foundation grant, we are providing assistance and
coaching to help nonprofits in Itasca County. As part of the Blue Cross and Blue Shield of Minnesota Foundation's Resilient
Organizations Fund, we are collaborating with Fieldstone Alliance, MAP for Nonprofits, and the Minnesota Initiative Foundations to deliver capacity building
trainings in Southwestern and Central Minnesota. Both of these projects enabled
us to support nonprofit leaders as they navigate the new economic reality and
think through how to build nimble, sustainable, and financially healthy
organizations. These organizations will be better prepared to deliver services
and positively impact communities.
These projects also enhance strategic partnerships with like-minded
organizations who are working to support the nonprofit community. By
collaborating, we are able to have a greater impact and best meet the needs of
organizations in different areas or fields of service. We look forward to
continuing to partner with organizations around the state and help build finally
healthy nonprofits that foster community vitality.
Enhanced Technology
We are also excited about the possibilities of using technology to connect
nonprofits and their allies to one another, as well as finding cost effective
ways to deliver services at a distance. If you have a question, you can always
email, call us, or connect on Facebook and twitter. In addition to our online resource library and
training workshops, we are also offering webinars,
specifically to help us support organizations who cannot readily attend our
workshops. We adapted our curriculum specifically for online learning. We use
the same practical examples and common sense language as workshops, as well as
taking advantage of some features unique to the interactive, online format.
Whether you are in Minneapolis or Moorhead, we can work together to develop and
hone your financial management skills.
Exploring the Balance Sheet
Why is the Balance Sheet Important?
The balance sheet - also called the Statement of Financial Position - serves
as a snapshot, providing the most comprehensive picture of an organization's
financial situation. It reports an organization's assets (what is owned) and
liabilities (what is owed). The net assets (also called equity, capital,
retained earnings, or fund balance) represent the sum of all the annual
surpluses or deficits that an organization has accumulated over its entire
history. If it happened in your financial past, the balance sheet reflects it.
The balance sheet also indicates an organization's liquidity by communicating
how much cash an organization has at present and what assets will soon be
available in the form of cash. Assets are usually listed on a balance sheet from
top to bottom by rank of liquidity (i.e. from most easily turned into cash to
those assets most difficult to turn into cash.) Understanding liquidity is
important to understand just how flexible and responsive an organization can be.
Six Key Measures
Using the balance sheet, a nonprofit can understand six key financial
indicators:
- Days cash on hand estimates how many days of organizational expenses
could be covered with current cash balances.
- The current ratio provides an indication of an organization's future
cash flow.
- The working capital ratio measures how much of an organization's
resources are unrestricted and available for current and future use.
- Recognizing temporarily restricted net assets is crucial so that
organizational decision-makers are aware of obligations in the future.
- The change in unrestricted net assets indicates if an organization
operated the most recent fiscal period at a financial gain or loss.
- The debt to equity ratio measures financial leverage.
Learn
more about the Balance Sheet and these key ratios with our new resource, the Balance Sheet Cheat Sheet.
Balance Sheet Haiku
As part of our session at the MCN/MCF Joint Conference - Change Agents:
What Will It Take to Get Your Organization to a Sustainable Business Model? -
we hosted a contest focused on praising the balance sheet. Congratulations
to Barbara Bloom for submitting the winning haiku:
Humble balance sheet—
Force proud income statement to
Tell the truth
mostly.
Visions Realized: Transforming Challenges into Opportunity
A large new grant is an opportunity to expand and increase impact;
however it also adds more complicated rules and other challenges. After
the initial excitement, things can go awry quickly, especially if you
do not have the right financial management structures and expertise.
This is what happened to the Citizens League. Fortunately, after
discovering the problems they quickly took action.
The Citizens League is an organization
dedicated to the common ground for the common good, working to build
civic capacity in Minnesota. As the state sesquicentennial approached,
the Citizens League received approximately $750,000 to celebrate
Minnesota's 150th year. In their enthusiasm for the project, they
expanded too quickly and depleted the funds needed for the final stage.
By the time the problems were discovered, their commitments exceeded
their cash. As Sean Kershaw, Executive Director, recalls, "It was a
very uncomfortable wake up call. Luckily we were able to contact
Nonprofits Assistance Fund and they helped us figure out what to do."
The Citizens League had worked with Nonprofits Assistance Fund in the
past, and Sean reached out to Janet Ogden-Brackett to help figure out
why they were having financial challenges and identify solutions to
move forward.
Janet helped the Citizens League understand the true costs of their
programs, unpack some confusing accounting, and identify
important best practices. She also approved a loan, allowing the Citizens League to access working capital while the
staff and board implemented an ambitious fundraising plan and made
other changes. Sean reflected on what the partnership with
Nonprofits Assistance Fund meant for the Citizens League: "They helped
us sort through the fog. Nonprofits Assistance Fund understands
nonprofit finance and they got our mission. They knew that were trying
to do the right thing. They gave us credit when we needed it and helped
us implement the solid systems we needed to be successful."
The Citizens League's decisive action; willingness to re-imagine their
business model, operations, and programs; and commitment to
transparency made this turnaround successful. Learn more about how the Citizens League turned this challenge into an opportunity.
From the Blogs
Training Program
Financial Management Network
We are busy planning the Financial Management Network series for next year.
If you have an idea for a topic, please
let us know. You can also share your suggestions for other parts of our
training program, including our webinars and workshops.
Notes
from previous discussions are available on our website. Whether or not you
are able to attend the network, you can benefit from the wisdom of your peers.
About Us
- Community Partners Help Us Build Capacity
- Working with Charter Schools
Community Partners Help Us Build Capacity
We are pleased to announce new grants from two community partners, the MAHADH Fund of the HRK Foundation and The Jay and Rose Phillips Family Foundation. Both grants
support our work to enhance the financial management capacity of Minnesota
nonprofits.
Nonprofits are doing their best to deliver high quality services at a time
when our communities need them most. We are here to provide strategic guidance
and support to help nonprofit staff and boards address financial challenges and
find ways to maintain impact during this recession.
With the continuing support of the HRK and Phillips Family Foundations, we
are able to increase our ability to respond to the needs of nonprofits, deliver
timely financial management training and assistance, and develop new tools and
resources that promote healthy financial practices.
Working with Charter Schools
Nonprofits Assistance Fund has taken on a leadership role in helping
Minnesota's charter schools respond to the change in the state payment
structure.
In the last
issue of Nonprofits Count, we outlined some of the current challenges and
how we're working with other interested parties to find solutions, including
hosting a forum for bankers and other financial professionals, which featured
Minnesota Department of Education Deputy Commissioner Chas Anderson. Kate Barr
authored a white paper, Cash
Flow Challenges for Minnesota Charter Schools. Read it to find out more
about why the increase in the state holdback is a critical issue, and what
options schools have to manage their cash flow.
In addition to this work, we have also approved lines of credit to 9 schools,
totaling $2,060,000. Together, these schools serve 2,300 students in grades
K-12.
By discussing the impact of state budget changes, identifying best practices,
and providing credit at crucial moments, we're working to help charter schools
strengthen their finances and become sustainable for the long-term.
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