[vc_row][vc_column][vc_single_image image=”2687″ img_size=”full”][vc_column_text css=”.vc_custom_1665679644237{margin-bottom: 0px !important;}”]Does your board have a quick and easy way to assess your not-for-profit’s financial performance? It does if it has a dashboard with carefully chosen and up-to-date key performance indicators (KPIs). Dashboards can also be set up to provide critical information to multiple audiences regarding specific goals and fundraising campaigns.[/vc_column_text][mk_fancy_title size=”16″ margin_bottom=”0″ font_family=”none”]Here’s how you can get started[/mk_fancy_title][vc_column_text css=”.vc_custom_1665679621035{margin-bottom: 0px !important;}”]Your nonprofit’s “business” drivers to facilitate informed, timely decisions, you must first select the right KPIs. For a financial dashboard, these will depend largely on factors such as your organization’s revenue streams, key expense factors, budget and strategic goals. To include the most useful metrics, identify your nonprofit’s “business” drivers. Additionally, determine which factors affect the reliability of your revenue streams — and which influence expense levels. Then create KPIs that monitor those factors. Think, too, about the level at which you want to track your KPIs. You could monitor them by individual program or function, or at the organizational level.[/vc_column_text][mk_fancy_title size=”16″ margin_bottom=”0″ font_family=”none”]Staging financial stability [/mk_fancy_title][vc_column_text css=”.vc_custom_1665682621966{margin-bottom: 0px !important;}”]Say that a nonprofit theater company’s board is concerned about financial stability and liquidity. The theater’s primary business drivers are proper pricing and maximum attendance. Its dashboard might include such KPIs as: Operating results, the level of liquid unrestricted net assets, Current debt ratio (total liabilities / total assets), Progress toward a desired number of months’ cash on hand (cash on hand + current unrestricted investments / average monthly expenses), Number of tickets sold, and Average revenue per performance. Over time, this nonprofit likely would need to adjust its KPIs as its strategies, priorities or programs change. What was “key” last year isn’t necessarily key in today’s challenging environment. Other important metrics Certain KPIs are popular among a variety of nonprofits, including:[/vc_column_text][mk_fancy_title tag_name=”h3″ size=”16″ margin_bottom=”0″ font_family=”none”]Current Ratio[/mk_fancy_title][vc_column_text css=”.vc_custom_1665682631138{margin-bottom: 0px !important;}”]This reflects your organization’s ability to satisfy debts coming due within the year. Divide current assets by current liabilities. A ratio of “1” or more generally means you can meet those obligations.[/vc_column_text][mk_fancy_title tag_name=”h3″ size=”16″ margin_bottom=”0″ font_family=”none”]Projected year-end cash[/mk_fancy_title][vc_column_text css=”.vc_custom_1665682577705{margin-bottom: 0px !important;}”]Based on the current cash position plus budgeted cash flows through the end of the fiscal year, this projects liquidity and ability to satisfy upcoming commitments.[/vc_column_text][mk_fancy_title tag_name=”h3″ size=”16″ margin_bottom=”0″ font_family=”none”]Year-to-date revenue and expense[/mk_fancy_title][vc_column_text css=”.vc_custom_1665682572839{margin-bottom: 0px !important;}”]This measures actual results against a budget and reveals whether revenues and expenses are in line with expectations or within a reasonable range.[/vc_column_text][mk_fancy_title tag_name=”h3″ size=”16″ margin_bottom=”0″ font_family=”none”]Program efficiency ratio[/mk_fancy_title][vc_column_text css=”.vc_custom_1665682514668{margin-bottom: 0px !important;}”]The ratio assesses mission efficiency by showing how much funding goes to programs vs. administrative or other expenses. Calculate it by dividing program expenses by overall expenses.[/vc_column_text][mk_fancy_title size=”16″ margin_bottom=”0″ font_family=”none”]Multiple uses[/mk_fancy_title][vc_column_text css=”.vc_custom_1665682503889{margin-bottom: 0px !important;}”]Once you successfully establish a financial dashboard, you may want to use the tool for other purposes. Some nonprofits create dashboards to monitor hiring stats, board “accountability,” risk management and social media use. Contact us for more information.
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