Communicating about Money and Finances
Money may talk, but most of us aren't very comfortable talking about it. Finance can be an emotionally charged issue. And, 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.
why it matters
Organizations that facilitate positive communication and understanding of financial matters reap many benefits. They are able to strengthen and empower their staff and board members. They are able to tell their story more effectively to the community. Talking productively about money builds trust and an understanding of reality internally, and results in greater accountability externally.
How to talk about your organization's finances
Communicating financial information can become a powerful tool for the organization if you follow some fundamental principles.
Confront and Remove the Taboos
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. Open communication about money and finances can help remove the mystery. The result is that everyone involved with the organization is informed and empowered.
Train and Explain
If money has been "off limits" in the past, the leaders of the organization have to start the conversation and change the culture.
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. Key reports to review:
- Compare income and expenses to the budget
- Annual balance sheet
- IRS 990 document
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 external users, summarize financial information and connect it to the work of the organization. This resource article, Reporting Financial Information to the Board, can help you share information with your board.
Maintain an Open Book
Once the staff and board understand the financial picture, keep the door open for questions and suggestions.