Scott Menzel Product & User Experience Manager GuideStar Peter Kramer Manager Nonprofit Finance Fund December 10, 2013
Weaving Financial Data Into Your Grantmaking Process: Interpretation and communication with Financial SCAN
AGENDA
Introduction to Financial SCAN
New Feature Overview
Brief Online Tour
Case Analysis
Q & A
Knowing which metrics to focus on for assessing financial health
Having the time and skills to collect, parse and apply financial data to inform grantmaking decisions
Fostering a candid dialogue with grantees about financial health and resource needs
When it Comes to Nonprofit Finance, Funders Face Common Challenges
Effective Solutions
Financial SCAN demystifies nonprofit data and illuminates nonprofit financial health, providing the field with knowledge and tools for building and sustaining healthy, effective organizations.
Sound Financial Health
Strong Organizations
Quality Programs
Financial SCAN: A New Analysis Filter on 990 Data
Financial SCAN at a Glance
What: Data platform for assessing nonprofit financial health and fostering dialogue among all stakeholders involved in making social impact
Who: Private and public grantmakers/donors, nonprofit organizations, philanthropic advisors, consultants and media
How: Private and public grantmakers/donors, nonprofit organizations, philanthropic advisors, consultants and media
WHAT
Data platform for assessing nonprofit financial health, making data driven decisions, and strengthening grantmaker-grantee dialogue
WHO
Nonprofit organizations, private and public grantmakers, individual donors, philanthropic advisors, and consultants
HOW
Draws data directly and automatically from IRS Forms 990,* presenting complex information in an easy-to-analyze and communicate format (313K orgs)
*Note: Financial SCAN does not include data from Forms 990 EZ
What’s in a Financial SCAN?
Organizational Dashboard: Five years of key financial trends and ratios
Graphs & Explanatory Text: More detailed overview of an organization’s: Expenses Revenue Profitability Balance Sheet Liquidity
Peer Comparison Dashboard: Select peer organizations for financial benchmarking
How are Funders Using Financial SCAN?
Adds, strengthens and/or focuses financial component of due diligence
Helps identify financial strengths and red flags
Informs conversations among grantmakers and their grantees about financial health and needs
Saves time and resources
“This innovative new tool builds the financial management capacity of nonprofits and helps grantmakers engage with their grantees about financial health and funding needs.”
Kathy Reich, David & Lucile Packard Foundation
Financial SCAN 2.0: New Features!
Excel Download Peer Group Comparison Customized Enterprise Access 7 Day Nonprofit Access
Brief Online Demonstration
Key Considerations: What 990 data can and cannot do
990 data CAN help: Understand an organization’s financial trajectory and recent
revenue, expense, and balance sheet dynamics Show how an organization compares to its peers across
standardized fields
990 data CANNOT: Provide the authoritative and most up-to-date financial picture
of your organization Tie exactly to the information presented in an audit Show revenue restrictions Distinguish between operating dollars and capital dollars
Meet Today’s Case Organization: REAL WORLD SKILLS
MISSION: To prepare underserved youth for lasting careers and self-sufficiency
PROGRAMS: Personal & professional skill-building Summer internship placement Trade programs and certifications
RECENT DYNAMICS: Steady yet modest growth New location and dated equipment Beginning strategic planning process
REAL WORLD SKILLS
Dashboard: Income Statement
Dashboard: Balance Sheet
Peer Comparison Dashboard:
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Topics Explored in Financial SCAN Graphs:
Expense detail & composition Revenue detail & composition Profitability Full cost of doing business Asset composition Depreciation of fixed assets Liability composition Liabilities as a % of assets Liquidity
With the exception of 2008, surpluses and deficits have been close to breakeven
RWS has effectively managed this growth by consistently covering its operating costs to achieve marginal surpluses
But are surpluses adequate to build financial resilience?
RWS’s liquidity has fluctuated somewhat over the period, but has been consistently tight
Available liquidity represents a nonprofit’s ability to handle risks and seize new opportunities.
Observations & Recommendations for REAL WORLD SKILLS
Observations from Financial SCAN: Modest growth over last several years Reliable mix of revenue sources Relative to peers, few fixed assets Tight liquidity constrains ability to innovate
Recommendations for Funders: Acknowledge strengths (e.g., reliable revenue, surpluses
in most years, etc.) and encourage business planning in strategy process
Discuss with RWS leadership the amounts and types of capital needed to help the organization build working capital and reserves and adapt to the changing job market
Q&A
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Thank you! Peter Kramer
Manager, Advisory Services Nonprofit Finance Fund
617-204-9772 [email protected]
To learn more:
www.guidestar.org/financialSCAN