Our recent webinar “Tides of Transparency: Communicating the Financial Information That Matters Most to Your Board” focused on how to create reports designed to help board members make good decisions and understand the financial picture.
We’re diving deeper to help you identify the key information to include in your reports and how to maximize their effectiveness:
Q: What are the key pieces of information that should be included in the board packets, considering the best balance of graphs, etc. vs. numbers?
A: It is the responsibility of your organization’s financial leadership to direct the board to the information that they want to convey. A great place to start is educating them, however, at a minimum, the financial reports listed below should be included in your board packet.
- Statement of Financial Position (Balance Sheet) – Shows what the nonprofit owns (assets), owes (liabilities), and its net worth at a specific time.
- Statement of Activities (Income Statement) – Summarizes revenue and expenses, showing how the organization’s finances changed over time.
- Statement of Cash Flows or Rolling Forecast – Tracks cash coming in and going out, showing how the nonprofit manages its money.
- A Monthly Memo – Summarizes key metrics and high-level insights, and serves as an opportunity to guide the board toward focusing on a broader financial strategy without getting lost in granular details.
Also, at YPTC we add a one-page memo in the reporting package to help guide the board’s attention to key areas of focus. Include static graphics in your memo to help your board receive and understand information quickly, especially quantitative information and comparisons. These graphics help your board focus on the big picture; they can raise an alarm, trumpet a success, or recommend an action.
Q: How is color best used when presenting financial information?
A: In a world of distractions, be intentional when presenting information. Color is used sparingly to emphasize a part of a graphic representing financial information, either as a standalone or included as a part of a financial report package. This same color can be used in the interpretation to visually link a specific portion of text with the graphic. Balancing color with readability and consistency is helpful to make information easy to compare and avoid unnecessary distractions. When used effectively, a limited color palette highlights key points, aligns with brand guidelines, and ensures accessibility for all audiences. For more on effective graphics, see [YPTC’s Art of Charts].
Q: Does a template for a nonprofit policy procedure manual exist somewhere?
A: Helping your nonprofit board focus on governance, oversight, and setting strategic direction starts with a good set of policies. It’s the guardrails of your organization. To create or update policies for your nonprofit consider looking at the policies of similar organizations, tap into the resources of your supporting association, or schedule a consultation with an industry expert. For more on templates, please refer to the Resource list provided at the end of the pdf version of the webinar’s slide deck. There are also many helpful examples on Google, and using AI can be a great starting point!
Q: What would be a material versus immaterial variance?
A: Like deciding to replace a lightbulb in your home versus remodeling your kitchen—the importance of specific items in financial statements depends on the scale and impact. The immateriality of items in financial statements varies based on the organization’s size, complexity, and the context of the financial information. Additionally, audit guidance, legal requirements, grant compliance, and your nonprofit’s policies often set materiality thresholds, guiding what is considered significant enough to report.
Want more? Check out the full Tides of Transparency webinar for all our recommendations on creating effective reports for your board.
Want to learn more about YPTC can support your nonprofit through critical board decisions? Contact Us!
