Telling the financial story

People usually read what interests or excites them. For some people, a ledger sheet is as riveting as it gets. For others, maybe an adventure, a love story, a thriller/chiller.

During the 2014 Association for Healthcare Philanthropy (AHP) International Conference, Kelli Smith said that elements can be combined in a financial story that makes a real page-turner.

With that in mind, Smith took a look at the Table of Contents:

  • Readers. For a nonprofit, they are lenders/lessors, grantors, prospective employees, regulators/watchdog organizations, donors.
  • Language. There is some that is unique to nonprofits, such as temporarily restricted funds, permanently restricted funds, donated property and donated services, and some that is not unique, such as non-cash balance sheet items.
  • Plot. Lenders/lessors are looking for liquidity, stability, profitability – nonfiction narrative. Grantors want sustainability, predictability, reliability, need – drama. Prospective employees want stability, liquidity – biography. Regulators/watchdogs want compliance, benchmark comparisons – poetry. Donors want stability, financial need, financial health, reliability – romance.
  • Editing. Can the story be improved? If it’s a real horror story, work to fix it. Is there additional information that might help? Presentation clarity: timeframes for assets and liabilities.
  • Footnotes. Financial statements are part of Form 990, and organizations have less control over presentation there.
  • Epilogue. Financials are part of the story. Readers make assumptions. Nonprofits can help them understand.