The document provides an overview of finance basics for non-profits, focusing on financial statements and the roles of cash, credit, and investment. It discusses the three main financial statements - balance sheet, income statement, and statement of cash flows. It explains key elements of the balance sheet and income statement, including assets, liabilities, net assets, revenues, expenses, and changes in net assets. The presentation aims to help non-finance professionals understand and interpret their organization's financials and tell its financial story as it relates to its mission.

1. Finance – Cash, credit, and investment
Presented By: Janet Gibbs
President & CEO
Mission Accomplished
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2. Session Focus
• Finance basics for the non-MBA, non-CPA
professional.
• At the end of this session, participants will:
– Understand their organization’s financial statements,
and be comfortable interpreting them for external
audiences
– Understand the role of cash, credit, and investment in
maintaining stability and supporting growth
– Be able to tell their organization’s financial story as it
relates to their mission

3. Financial Statements 101
• There are 3 basic financial statements for all
non-profit organizations
– Statement of Financial Position (balance sheet)
– Statement of Activities (Income Statement)
– Statement of Cash Flows
• Due to time limitations, we will focus on the
first two

4. Statement of Financial Position
• 3-part statement
– Assets
• What is owned
– Liabilities
• What is owed
– Net Assets
• What is left
• Theoretically, if all assets
are sold to pay off all
liabilities, net assets
would remain
• Audit typically shows 2
years
NON-PROFITORGANIZATION
STATEMENTOFACTIVITIES
20xz 20xy
Assets
Cashandcashequivalents 131,414$ 144,032$
Contracts&GrantsReceivable 1,111,902 720,970
PrepaidExpenses 16,387 34,168
Property, Plant&Equipment(netof depreciation) 533,346 491,774
Total Assets 1,793,049$ 1,390,944$
LiabilitiesandNetAssets
AccountsPayable &AccruedExpenses 329,203$ 253,402$
DeferredRevenue 74,919 75,646
Line of Credit 145,000
Total Liabilities 549,122 329,048
NetAssets
Unrestricted
Undesignated 708,401 563,225
InvestedinProperty, Plant&Equipment 533,346 491,774
Total Unrestricted 1,241,747 1,054,999
TemporarilyRestricted 2,180 6,897
Total NetAssets 1,243,927 1,061,896
Total Liabilities& NetAssets 1,793,049$ 1,390,944$

5. •Cash and cash equivalents are assets that can be found in a bank, in CD’s or savings accounts.
•Contracts & Grants Receivable are assets, but NOT CASH.
•Receivables are created when the organization is owed funds by an outside entity, such as a donor, customer or
government agency.
•Receivables are expected to be collected and turned into cash at some known point in the future
•Prepaid Expenses include things like quarterly or annual rent payments or insurance premiums that are
paid in advance of being used.
•PP&E (Fixed Assets) is typically the depreciated or “book” value, not replacement or market value.
NON-PROFITORGANIZATION
STATEMENTOF ACTIVITIES
20xz
Assets
Cash and cash equivalents 131,414$
Contracts & Grants Receivable 1,111,902
Prepaid Expenses 16,387
Property, Plant & Equipment (net of depreciation) 533,346
Total Assets 1,793,049$

6. •Accounts Payable include the value of invoices due but not yet paid.
•Accrued Expenses include payroll that is owed at the end of the month/year but not yet paid.
•Deferred Revenue includes cash received but not yet earned, such as tuition or meeting fees.
•Line of Credit (LOC) reflects the amount borrowed from and owed to a bank. Lines of Credit are
used for short-term needs when cash is at a low point due to natural ebbs and flows of the
operating cycle. (Girl Scouts cookie sales).
LiabilitiesandNetAssets
AccountsPayable&AccruedExpenses 329,203$
DeferredRevenue 74,919
LineofCredit 145,000
TotalLiabilities 549,122

7. •Net Assets are divided into 3 categories
•Unrestricted Net Assets are available to support the general operations of the organization.
•“Fixed Assets” separated from spendable net assets
•Temporarily Restricted Net Assets are available to support specific activities or purposes, as
restricted by the donor or external party.
•Permanently Restricted Net Assets (not shown) include Endowment funds which must be
invested “in perpetuity”; investment income can be used for operations.
NetAssets
Unrestricted
Undesignated 708,401
InvestedinProperty,Plant&Equipment 533,346
TotalUnrestricted 1,241,747
TemporarilyRestricted 2,180
TotalNetAssets 1,243,927

8. Statement of Activities
• 4 parts to understand
– Revenue and Support
• What was earned during
the period; not all cash
– Expenses
• What was spent during
the period; not all cash
– Change in Net Assets
• Revenue minus Expenses
– Net Assets Balances
• Beginning and ending
NON-PROFITORGANIZATION
STATEMENTOFACTIVITIES
Unrestricted
Temporarily
Restricted Total 20xy
RevenueandSupport
Contributions 125,368$ 69,144$ 194,512$ 170,831$
Contractsandgrants 3,807,616 3,807,616$ 3,716,855
InterestandOtherIncome 65,586 65,586$ 21,111
NetAssetsReleasedfromRestrictions 73,861 (73,861) -$ -
TotalRevenueandSupport 4,072,431 (4,717) 4,067,714 3,908,797
Expenses
ProgramServices 3,367,516 3,367,516 3,283,874
Management&General 471,247 471,247 371,166
FundraisingandDevelopment 46,920 46,920 33,988
TotalExpenses 3,885,683 3,885,683 3,885,683
ChangeinNetAssets 186,748 (4,717) 182,031 219,769
NetAssets,BeginningofYear 1,054,999 6,897 1,061,896 842,127
NetAssets,EndofYear 1,241,747$ 2,180$ 1,243,927$ 1,061,896$
20xz

9. •Contributions are an unconditional transfer of cash or other assets, including unconditional promises
to give (pledges). If a donor imposes a restriction on the use of the contribution, it is recorded as
Temporarily or Permanently Restricted.
•Contracts and Grants are typically fixed price or cost reimbursement.
•Net Assets Released from Restrictions shows the amount of Temporarily Restricted funds that were
used in accordance to the donor’s restrictions. Now can be recognized as Unrestricted revenue.
NON-PROFITORGANIZATION
STATEMENTOF ACTIVITIES
Unrestricted
Temporarily
Restricted Total
Revenue andSupport
Contributions 125,368$ 69,144$ 194,512$
Contracts and grants 3,807,616 3,807,616$
Interestand OtherIncome 65,586 65,586$
NetAssets Released fromRestrictions 73,861 (73,861) -$
Total Revenue andSupport 4,072,431 (4,717) 4,067,714
20xz

10. Other Types of Revenue
• Program Services Revenue
– Exchanges between the non-profit and another
party in which the non-profit provides a service in
exchange for a fee.
• Product sales (net of cost of goods sold)
• Membership Dues
• Tuition
• Special Events Revenue

11. •Is this a Contract or a Grant?
•Contract typically requires a service directly to the funder., who directly benefits from the work.
•A Grant typically is in support of a project not owned by the funder/government and with little or no direct benefit.

12. •Program Services expenses are costs associated with the delivery of goods and services to beneficiaries,
customers or members that fulfill the organizational mission.
•Management & General (Administrative) expenses include general and managerial costs such as executive
leadership, finance, HR, technology, and related administrative activities.
•Fundraising and Development expenses include publicizing and conducting fundraising campaigns and events,
maintaining donor mailing lists, and other activities to solicit contributions and memberships.
NON-PROFITORGANIZATION
STATEMENTOFACTIVITIES
Unrestricted
Temporarily
Restricted Total
Expenses
ProgramServices 3,367,516 3,367,516
Management&General 471,247 471,247
FundraisingandDevelopment 46,920 46,920
TotalExpenses 3,885,683 3,885,683
20xz

13. Revenues minus Expenses = Change in Net Assets
Net Assets, Beginning of Year comes from Statement of Financial Position
Change in Net Assets + Net Assets, Beginning of Year = Net Assets, End of Year
NON-PROFITORGANIZATION
STATEMENTOF ACTIVITIES
Unrestricted
Temporarily
Restricted Total
Total Revenue andSupport 4,072,431 (4,717) 4,067,714
Total Expenses 3,885,683 3,885,683
Change inNetAssets 186,748 (4,717) 182,031
NetAssets, Beginningof Year 1,054,999 6,897 1,061,896
NetAssets, Endof Year 1,241,747$ 2,180$ 1,243,927$
20xz

14. Cash Flow
• “Cash is King” in a non profit organization
• Daily attention and management is critical
• Many banks have software to assist with cash
flow management
• Manage accounts payable
• May need Line of credit for temporary cash
needs
• Invest unused cash in low/no risk investments

15. Statement of Functional ExpensesNON-PROFIT ORGANIZATION
STATEMENT OF FUNCTIONAL EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 20XY
Program A Program B Total Program
Management
& General
Fundraising &
Development
Total
Expenses
Salaries 2,254,516$ 372,000$ -$
Employee Benefits 481,300 3,750 -
Payroll Taxes 150,000 18,800 -
Total Compensation -$ -$ 2,885,816$ 394,550$ -$ 3,280,366$
Professional Fees 112,500 22,000 30,000 164,500
Supplies 15,000 247 5,000 20,247
Telephone 7,200 650 7,850
Postage 8,500 250 2,000 10,750
Occupancy Costs 12,000 1,200 13,200
Equipment Rental and Maintanance 17,500 12,000 29,500
Printing and Publications 11,000 7,500 7,500 26,000
Travel 172,000 17,000 2,420 191,420
Conferences and Professional Development 72,500 8,500 81,000
Scholarships 25,000 - 25,000
Interest 4,500 1,350 5,850
Total Before Depreciation -$ -$ 3,343,516$ 465,247$ 46,920$ 3,855,683$
Depreciation 24,000 6,000 30,000
Total Expenses 3,367,516$ 471,247$ 46,920$ 3,885,683$
% of Total 87% 12% 1% 100%
Supporting ServicesProgram Services
•Ties back to Statement of Activities
•Should compare actual to budget, by program and in total.

16. How Do You Tell Your Story?
What are you
trying to
accomplish?
What are
your
strategies for
making this
happen?
What are
your
capabilities
for doing
this?
How will you
know if you
are making
progress?
What have
and haven’t
you
accomplished
so far?
Adapted from Charting Impact, led by the BBB Wise Giving Alliance, GuideStar USA, and Independent Sector.
Ask yourself these
5 simple yet
powerful
questions

17. How Will You Present Your Story?
Audience
• Internal – Staff, Board
• External – Donors, regulators, constituents
Message
• What they want to know
• What you want them to know
What?
• Highlight what’s important
• Tie it to your goals
• Make it visual – dashboards, charts and graphs

18. Performance Dashboard
NON-PROFIT ORGANIZATION
FOR THE SIX MONTHS ENDED JUNE 30, 20XY
Goal Outcome / Status
HIGHLIGHTS Grant salary Increases The full 8% increase was funded - our first in 3 years!
Increase Endowment Funds We have completed the campaign, ending $14,500 over goal
Obtain Line of Credit Secured a $200K line of credit with our bank
Increase Cost Recovery on
Grant to Cover Program
Costs
We have secured foundation grants to cover almost the full
cost of programs and we have commitments for next year.
MIXED RESULTS Upgrade technology
We have replaced all staff computers on schedule, but
delayed the new database until our cash position improves
Improve ROI on Fundraising
Activity
We had to spend more than expected on our fundraising
efforts, although we are still hitting revenue targets
LOW LIGHTS Improve Cash Reserves
Although we are showing a small surplus at this point in the
year, we are running behind in efforts to build our cash
reserve. This is not surprising given our focus on the
endowment campaign and renegotiating with our funders on
cost recovery. Unrestricted fundraising needs to be our next
priority.

19. Make it Visual

20. Historical Trends Give Perspective to
Current Position

21. Sources of Guidance
• Guidestar (www.guidestar.org)
• Better Business Bureau Wise Giving Alliance
(www.give.org)
• Charting Impact – a partnership between Guidestar, BBB-
WGA, and Independent Sector
(http://www.guidestar.org/rxg/update-nonprofit-report/charting-
impact.aspx?source=/chartingimpact)
• Give Well (givewell.org)
• Great Non Profits (http://greatnonprofits.org)
• Charity Navigator (www.charitynavigator.org)