Financial Planning for

Sustainable Nonprofits

Developed by

Nonprofits Assistance Fund

Presented by

Curtis Klotz, CPA

Who We Are

Nonprofits Assistance Fund’s mission is to build

financially healthy nonprofits that foster community vitality.

Our financial experts help nonprofits strengthen their capacity to

address unexpected events, finance new opportunities, and realize

strategic goals. We fulfill our mission by helping you thrive.

Find out more at www.nonprofitsassistancefund.org.

Goals for Today’s Workshop

1. Gain analytical tools to assist in understanding an

organization’s current financial position and current

business model

2. Learn different techniques and approaches to having

practical conversations critical to organizational

decision-making

3. Explore factors to consider when scenario planning and

multi-year budgeting through case examples

3

Assessing Your Current Financial Position

The Balance Sheet

Financial assets and

obligations as of a

specific date

Assets

• What is owned

Liabilities

• What is owed

Net Assets

• Net Worth, Equity, or

Retained Earnings

4, 5, 6

The Income Statement

Amounts of income and

expenses for a certain

period of time

Resulting Change in Net

Assets

• Surplus (profit) or deficit

(loss)

• Also known as net income

7

Assessing Your Current Financial Position

6, 7

Assessing Your Current Financial Position

8

Assessing Your Current Financial Position

9, 10

Understanding Your Business Model

The Income Statement

Amounts of income and

expenses for a certain

period of time

Resulting Change in Net

Assets

• Surplus (profit) or deficit

(loss)

• Also known as net income

11, 12

Understanding Your Business Model

13

Understanding Your Business Model

14

Trend Analysis

Income Statement Trends

15

Balance Sheet Trends

16

Income Trends 2008-2011

17

Program Financial Results

Gauging Risks to Your Income Budget

18

Program-Based Reports

19

How Flexible Are Your Expenses?

20

Strategic Decision-Making

Review of analysis

• Liquidity analysis

• Balance sheet strength

• Income risk and reliance

• Trend analysis

• Program financial results

(Re)iteration of organizational goals and priorities

Board and staff leadership revisit goals that have been laid

out in strategic plans, work plans, budget

• What is most important to the organization?

• How nimble is the organization?

21

Mission Impact and Financial Impact

Utilize Idea Screens

23

Cost-Benefit Analysis

24

Understand Your Financial Management Culture

What types of languages and attitudes are prevalent when

discussing organizational finance?

How dynamic is your budget?

25

Understand Your Financial Management Culture

Professionalization

Roles and responsibilities

Transparency and communication

Risk tolerance

26

Scenario Planning

Scenario Planning Considerations

How will scenarios differ?

• Consider the entire realistic realm of possibilities,

particularly in the income budget

Are income sources variable by percentage or all -or-

nothing?

What events would trigger a change in course?

How flexible are your expenses? How could they become

more flexible?

27

Income Scenario 1

28

Expense Scenario 1

29

Impact Scenario 1

30

Income Scenario 2

31

Expense Scenario 2

32

Impact Scenario 2

33

Income Scenario 3

34

Expense Scenario 3

35

Expense Scenarios Summary

36

Planning Summary

37

Financial Forecasting

Financial Forecasting

Purpose of financial forecasting

• Provide an action plan to achieve strategic goals

• Translate strategic plans into financial plans

• Confirm priorities

• Identify capacity needs

• Prepare for organizational changes to support goals

• Create SMART goals to implement financial plan

38

Financial Forecasting

Financial forecasting steps

• Use strategic plan to identify financial requirements

• Prepare simple budget plan for core ongoing activities

• Estimate costs to achieve strategic goals

• Identify need for resources to support new costs

• Ask and consider: What is our optimal income mix?

• Honestly assess feasibility of financial needs

• Prioritize and balance

• Implement and monitor 39

Financial Forecasting

40

Financial Forecasting

41

Financial Forecasting

42

2013

How To Use Today’s Workshop

1. Ensure that key organizational decision-makers have a

shared understanding of the organization’s financial health,

business model, and financial risks.

2. Revisit important organizational documents such as

strategic plans and work plans. If necessary, revisit

conversations to be certain that there is agreement on key

organizational goals and priorities.

3. Consider what will be necessary to become a more

financially dynamic and flexible organization by reviewing

cost structures. Look forward; think about how to

properly balance an emphasis on annual budgeting with

scenario planning and multi-year financial forecasting.

43