Executive Directors – It’s What You Don’t Know That Can Sink You
I’m an English major. I don’t want to deal with accounting. I would rather not power up Excel.
But I do understand how important it is to get accounting right.
Accountability. Good Stewardship. You can’t claim either if your financial accounting house is not in order. You need professionals managing your financial accounting. Attorney Jeffrey Unalp, CPA has written a new eBook ‘What Executive Directors Need to Know About Finance‘ which is a wonderful, free resource for nonprofit executive directors.
Here’s a snippet from Budgets and Forecasting:
It is said in the finance world that a budget is obsolete the day after it is made. That is true to some degree. That is why it is important for a management staff not to stay too focused on budget variance analysis. Too many management staff are too concerned about “hitting the budget” when there is good reason why you may not hit the budget.
So at least quarterly, the management staff should be putting together a forecast of what the remainder of the year looks like and a rolling twelve month projection. This means evaluating what is happening with current revenue/contribution streams, shifts in programming and strategic opportunities. This should include columns on the income statement that compare actual/forecast to budget and call out the variances.
This may seem like a daunting task, but once a projection model is set up, it should take a couple days to update a forecast each quarter.
Here’s what’s covered:
- What’s the role of the board of directors and executive director of a nonprofit corporation?
- What does an executive director have to know to succeed?
- Annual plan and annual budget – what is the difference?
- Budgets and forecasting
- Seek to diversify funding – don’t put all you eggs in one basket
- Cash projection – cash is king
- Plan for reserves
- Think broadly about restricted funding
- Properly staff the finance function
- Accurate, meaningful, understandable board reports
- Insurance is boring – until you have a problem
- Tax Form 990
Be sure to take advantage of this wonderful resource. Unalp CPA Group serves nonprofits in California.