NONPROFIT OPERATIONAL...

This report is designed toassist you in yourorganization's development.Below you will find your overallranking, organizationalsnapshot and narrativewrite-up.

Snapshot of: ABC Foundation - APSector: T31 - Community Foundations

Revenue: $1M - $10MPeriods: 12 months against the same 12 months from the previous

yearPrepared by: Smith & Company CPAs, PC

NONPROFIT OPERATIONALANALYSISA measure of how well the organization is managingmoney with regard to its sector and mission. Conditions in this area of the report are quite similar to last period, at least in the few major metrics that arebeing evaluated. The organization has average results in this area of the report. Note that program efficiencyis about average and is also about the same as last period. It might be good to increase this key ratio slightlyover time because it is the one metric that people tend to understand and watch carefully. Program efficiencymeasures the percentage of each expense dollar that is allocated toward programs. This number is importantto managers, board members, donors, contributors, and even employees/workers because ultimately theywant to know that funds are going to program expenses. Stakeholders perceive this as a meaningfulallocation of funds and as a reflection of the mission of the organization. One sign that donors might bebuying into the mission is that the organization has received a high level of contributions this period relativeto its investment in fundraising. As a final note, the organization does not produce a substantial percentage oftotal revenue through program revenue. Because of this, management may want to assess all of theorganization’s revenue streams for reliability and sustainability, because fluctuations in these outside sourcesof cash can at times be difficult for management to control. Expenses might be adjusted based on thisanalysis to minimize risk to the organization’s future program services.

ReGroup Advisors - Non-Profit Business Condition Report

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Shows the basic relationship between program expenses and total expenses. The best outcome would be aratio close to 1, where the majority paid by a nonprofit would go towards "programs". This ratio is typicallykeenly watched by employees, managers, Board members, donors, and contributors. It tends to be one of

the more important metrics that many nonprofits use in assessing performance.

This shows the breakdown of all expenses of the nonprofit. In most cases, the majority should go towardsProgram Service Expenses.


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This metric shows the composition of the organization's revenue stream. Specifically, it shows how manycents in program revenue there are for each dollar of revenue generated. Some people like to look at this to

see how dependent the entity is on outside funding.

This shows the breakdown of all incoming revenue of the nonprofit. In most cases, the majority should becoming from Program Service. This chart can be useful to show how dependent the entity is on outside

funding.


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Shows how able a nonprofit entity is to pay for total expenses from program revenues alone. Many times(although not always) program revenues are more predictable and consistent sources of money and,

therefore, it is a point of interest to see how able a nonprofit is to liquidate expenses from just programrevenue. The ideal score would be 1 or even above 1 in very rare cases.

Shows how much contribution revenue a nonprofit can generate from fundraising activities/expenses. Theideal relationship is a high number, which would mean that the nonprofit is able to generate a multiple of how

much it costs to do fundraising.


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This shows the average amount contributed by donors to the organization.

Shows the amount of organization expenses per member. If this number is high the organization should lookinto aggressively seeking new members.


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NONPROFIT FINANCIAL ANALYSISFinancial Score for ABC Foundation - AP

LIQUIDITY -A measure of the organization's ability to meet obligations asthey come due.

OPERATING YIELD TRENDS -A measure of whether the trends in profit are favorable for theorganization.

REVENUE -A measure of how revenue is growing and how it lends itself tothe organization's program services.

BORROWING -A measure of how responsibly the organization is borrowing andhow effectively it is managing debt.

ASSETS -A measure of how effectively the organization is utilizing theirgross fixed assets.

EMPLOYEES -A measure of how effectively the organization is hiring andmanaging its employees.

Financial Analysis for ABC Foundation - AP

LIQUIDITYA measure of the organization's ability to meetobligations as they come due. The organization has produced some positive results in the liquidity area. First, the organization's cash andnear-cash accounts have grown relative to its short-term obligations, which is good. These are the specificassets that the NPO uses to pay the bills. For example, notice in the graph area of the report that theorganization's quick ratio has risen from last period. Second, the organization has been able to improveearnings this period, which should help it to improve its "overall" liquidity position over time.

On the other hand, the NPO has produced some negative results as well. The organization's overallliquidity position is still poor, as it was last period. In fact, it may be necessary to find some ways toimprove these conditions -- it is possible that the rate of progress in this area is too slow. This means that theNPO's liquidity position has improved but the organization still does not appear to be in good shape. It is


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important to note that the organization's position seems poor according to the several ways liquidity ismeasured.

The organization's relatively weak overall liquidity position may be traced to turnover ratios - its receivabledays and payable days performance. Both of these benchmarks are higher than sector averages, indicatingthat the organization is not as efficient as other similar nonprofits in collecting receivables or payingbills/payables. Although a high payable days ratio can indicate that the organization may be trying to keepmoney in the nonprofit by using trade credit, this is a statistic that generally will not be pleasing to creditors.

LIMITS TO LIQUIDITY ANALYSIS: Keep in mind that liquidity conditions are volatile, and this is a generalanalysis looking at a snapshot in time. Review this section, but do not overly rely on it.

Generally, this metric measures the overall liquidity position of an organization. It is certainly not a perfectbarometer, but it is a good one. Watch for big decreases in this number over time. Make sure the accounts

listed in "current assets" (numerator) are collectible. The higher the ratio, the more liquid the organization is.


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This is another good indicator of liquidity, although by itself, it is not a perfect one. If there are receivableaccounts included in the numerator, they should be collectible. Look at the length of time the organization has

to pay the amount listed in the denominator (current liabilities). The higher the number, the stronger theorganization.

This number reflects the average length of time required to collect cash from receivable accounts such aspledged contributions and/or program services transactions completed using credit. It is crucial to

maintaining positive liquidity.


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This number reflects the average length of time required to collect cash from all receivable accounts exceptpledged contributions. It is crucial to maintaining positive liquidity.

This ratio shows the average number of days that lapse between the purchase of material and labor, andpayment for them. It is a rough measure of how timely an organization is in meeting payment obligations.


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Cash reserve is a rough measure of the amount of cash on hand to cover future expenses. The organizationshould target 182 or more days of cash reserve.

OPERATING YIELD TRENDS1A measure of whether the trends in profit are favorablefor the organization. It is interesting to see that the operating margins have substantially risen by 223.44% here, which drove anet gain in dollars into the organization. The NPO's operating yield has risen significantly since the priorperiod. The strong increase in operating yield is unusual and positive, since revenues have only stayed aboutthe same from last period. Efficiencies seem to have been made in managing the expense side of theorganization. Specifically, the NPO seems to have been able to drive considerable net gains this period bycutting costs from last period. As long as the organization does not cut operating expenses to thepoint of hurting the quality of its programs, it is excellent to have better operating yield on relatively thesame level of revenues. If the organization can now increase revenues and keep expenses in check, it shouldbe able to continue to strengthen its financial position, allowing for improvement and expansion of programservices in future periods.

1 Operating yield (net operating gain/loss) is the nonprofit equivalent of net profit.


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This number indicates the percentage of revenue that is left over after paying for program expenses. It is animportant statistic that can be used in business planning because it indicates how many cents of gross

program profit can be generated by future revenue and also what percentage of revenue the organizationcan use for other expenses such as administration and fundraising.

A very important number. In fact, over time, it is one of the more important barometers that we look at. Itmeasures how many surplus cents the organization is generating for every dollar it sells. This is a very

important number in preparing forecasts.


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Investment yield shows the investment rate of return.

REVENUEA measure of how revenue is growing and how it lendsitself to the organization's program services. This NPO has had some interesting revenue results this period. Even though revenues stayed about the sameas last period, the organization achieved a positive result because its employee base and fixed asset baseboth decreased. This means that, although the organization is only generating about the same level ofrevenue, it is actually earning higher revenues per employee and asset dollar. The organization ismoving approximately the same amount of revenue through fewer resources that cost money, like employeesand assets. Over the long run, the challenge will be to move revenues higher on the existing level of assetsand employees. This usually improves the operating yield.

The next three sections will examine how effectively the organization is using three of its most importantresources: borrowed funds, assets, and employees. Ultimately, effectiveness here is determined by comparingchanges in these resources to changes in the organization's revenue level. Resources are costs that should beused to leverage higher revenues, since higher revenues are necessary to improve and expand theorganization's program services and make progress toward its mission.


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BORROWINGA measure of how responsibly the organization isborrowing and how effectively it is managing debt. Not many changes are happening in this section. Borrowing (total debt level) and revenues stayed about thesame. It is difficult to assess borrowing leverage unless there are changes in debt and/or revenueperformance. The one positive point to mention (as discussed in the Operating Yield section) is that theoperating margin improved this period. It is typical to see margin improvements over time if debt levels areheld constant, and it is good to see the organization achieving this.

ASSETSA measure of how effectively the organization isutilizing their gross fixed assets. In this case, the organization may have removed assets that were not generating enough revenues. Theorganization is now generating approximately the same level of revenue as it generated last period whenmore fixed assets were owned, and there has been an improvement in the operating margin of 223.44%.Even though revenue did not increase since last period, these are good results in this area because theorganization has become more "asset efficient" and leaner. The most positive part of this is that it shouldcause operating yields and thus programming to improve over time, if the organization can continue toincrease the level of revenues on the existing asset base.

EMPLOYEESA measure of how effectively the organization is hiringand managing its employees. Even though the revenue base is approximately the same as last period, this organization has been able toearn that level of revenue with fewer people, which is positive. The NPO is now more "employee efficient" --managers are driving about the same revenue through fewer people. A nonprofit will generally be reluctantto hire more people under these circumstances, unless it can bring in people who will bring in additionalincome. Careful planning must always be done before new employees are hired.

This is an important limitation of financial analysis: financial analysis looks back at what has happened, ratherthan ahead at where the organization is going. Past analysis is useful as an element to create good futureprojections, but it should not be used alone to make operational decisions. Decisions about hiring in particularshould be planned carefully around where the organization will be in the future.

"One of the marks of true greatness is the ability to develop greatness in others." -- J.C. Macaulay


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RAW DATA 06/30/2010 06/30/2011 06/30/2012 06/30/2013Statement of ActivitiesProgram Service Revenue $247,496 $236,850 $231,318 $224,024Contributions $4,326,775 $6,722,222 $3,823,629 $3,947,739Government Grants $2,889,001 $2,925,747 $2,625,214 $3,038,086Investment Revenue $185,379 $130,576 $179,985 $193,442Membership Dues $0 $0 $0 $0Other Operating Revenue $827,747 $1,179,872 $1,298,102 $1,060,442Net Assets Released From Restrictions $441,071 $584,599 $348,455 $191,800Total Unrestricted Revenue $8,917,469 $11,779,866 $8,506,703 $8,655,533Program Service Expenses $6,618,050 $8,427,278 $6,815,050 $6,804,034 Depreciation and Amortization $140,964 $179,501 $145,161 $144,926 Interest Expense $85,968 $159,360 $108,823 $112,539Gross Yield $2,299,419 $3,352,588 $1,691,653 $1,851,499Gross Program Margin 25.79% 28.46% 19.89% 21.39%Fundraising Expenses $276,182 $401,822 $244,985 $291,286Administration Expenses $670,897 $588,568 $535,101 $577,509Other Operating Expenses $875,298 $1,757,271 $830,058 $714,459Total Operating Expenses $8,440,427 $11,174,939 $8,425,194 $8,387,288Operating Yield (Net Operating Gain/Loss) $477,042 $604,927 $81,509 $268,245Operating Margin 5.35% 5.14% 0.96% 3.10%Other Inflows $0 $0 $0 $0Other Outflows $0 $0 $0 $0Total Change In Net Assets $477,042 $604,927 $81,509 $268,245

06/30/2010 06/30/2011 06/30/2012 06/30/2013Statement of Financial PositionTotal Cash and Cash Equivalents $3,350,693 $2,828,421 $3,271,856 $4,820,079 Unrestricted Cash $3,049,131 $2,573,863 $2,977,389 $4,386,272 Restricted Cash $301,562 $254,558 $294,467 $433,807Total Receivables $1,097,865 $1,748,701 $2,376,456 $1,612,340Inventory $0 $0 $0 $0Current Investments $0 $0 $0 $0Other Current Assets $1,643,891 $1,528,783 $3,424,641 $2,537,020Total Current Assets $6,092,449 $6,105,905 $9,072,953 $8,969,439Gross Fixed Assets $519,642 $628,629 $496,871 $434,762Accumulated Depreciation $0 $0 $0 $0Net Fixed Assets $519,642 $628,629 $496,871 $434,762Long Term Investment Assets $2,677,939 $3,345,271 $3,492,649 $3,588,921Other Assets $269,462 $248,560 $246,577 $284,210Total Assets $9,559,492 $10,328,365 $13,309,050 $13,277,332Payables $3,535,481 $4,265,183 $4,690,204 $4,578,689Short Term Debt $0 $0 $0 $0Notes Payable / Current Portion of Long Term Debt $0 $0 $0 $0Other Current Liabilities $885,644 $1,029,229 $881,549 $954,463Total Current Liabilities $4,421,125 $5,294,412 $5,571,753 $5,533,152


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COMMON SIZE STATEMENTS

Total Long Term Liabilities $72,894 $107,049 $118,165 $136,705Total Liabilities $4,494,019 $5,401,461 $5,689,918 $5,669,857Total Net Assets $5,065,473 $4,926,904 $7,619,132 $7,607,475Number of Employees (FTE) 25.5 28.5 29.0 27.0Number of Members 16,000.0 16,900.0 18,800.0 20,000.0Number of Donors 2,324.0 2,380.0 2,440.0 2,500.0

06/30/2010 06/30/2011 06/30/2012 06/30/2013 Industry*(200)

Statement of ActivitiesProgram Service Revenue 3% 2% 3% 3% 9%Contributions 49% 57% 45% 46% 40%Government Grants 32% 25% 31% 35% 3%Investment Revenue 2% 1% 2% 2% 37%Membership Dues 0% 0% 0% 0% 0%Other Operating Revenue 9% 10% 15% 12% 4%Net Assets Released From Restrictions 5% 5% 4% 2% 7%Total Unrestricted Revenue 100% 100% 100% 100% 100%Program Service Expenses 74% 72% 80% 79% 50%

Depreciation and Amortization 2% 2% 2% 2% N/AInterest Expense 1% 1% 1% 1% N/A

Gross Yield 26% 28% 20% 21% 50%Fundraising Expenses 3% 3% 3% 3% 3%Administration Expenses 8% 5% 6% 7% 8%Other Operating Expenses 10% 15% 10% 8% 3%Total Operating Expenses 95% 95% 99% 97% 63%Operating Yield (Net Operating Gain/Loss) 5% 5% 1% 3% 37%Other Inflows 0% 0% 0% 0% 0%Other Outflows 0% 0% 0% 0% 0%Total Change In Net Assets 5% 5% 1% 3% 37%

06/30/2010 06/30/2011 06/30/2012 06/30/2013 Industry*(200)

Statement of Financial PositionTotal Cash and Cash Equivalents 35% 27% 25% 36% 10%

Unrestricted Cash 32% 25% 22% 33% N/ARestricted Cash 3% 2% 2% 3% N/A

Total Receivables 11% 17% 18% 12% 5%Inventory 0% 0% 0% 0% 0%Current Investments 0% 0% 0% 0% 1%Other Current Assets 17% 15% 26% 19% 1%Total Current Assets 64% 59% 68% 68% 44%Gross Fixed Assets 5% 6% 4% 3% 5%Accumulated Depreciation 0% 0% 0% 0% 1%Net Fixed Assets 5% 6% 4% 3% 4%Long Term Investment Assets 28% 32% 26% 27% 51%Other Assets 3% 2% 2% 2% 1%


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Total Assets 100% 100% 100% 100% 100%Payables 37% 41% 35% 34% 6%Short Term Debt 0% 0% 0% 0% 0%Notes Payable / Current Portion of Long Term Debt 0% 0% 0% 0% 0%Other Current Liabilities 9% 10% 7% 7% 3%Total Current Liabilities 46% 51% 42% 42% 11%Total Long Term Liabilities 1% 1% 1% 1% 3%Total Liabilities 47% 52% 43% 43% 14%Total Net Assets 53% 48% 57% 57% 86%

*The industry common size figures shown above were taken from all nonprofit organizations with NTEE code T31 for all years in allareas with yearly revenue $1 million to $10 million.


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SECTOR SCORECARD

Financial Indicator Current Period Sector RangeDistance from

Sector

Program Efficiency 0.81 0.74 to 0.88 0.00%= Program Service Expenses / Total Expenses

Explanation: Shows the basic relationship between program expenses and total expenses. The best outcomewould be a ratio close to 1, where the majority paid by a nonprofit would go towards "programs". This ratio istypically keenly watched by employees, managers, Board members, donors, and contributors. It tends to be one ofthe more important metrics that many nonprofits use in assessing performance.

Revenue Composition 0.03 0.05 to 0.20 -40.00%= Unrestricted Program Service Revenue / Total Unrestricted Revenue

Explanation: This metric shows the composition of the organization's revenue stream. Specifically, it shows howmany cents in program revenue there are for each dollar of revenue generated. Some people like to look at this tosee how dependent the entity is on outside funding.

Operating Reliance 0.03 0.05 to 0.20 -40.00%= Unrestricted Program Service Revenue / Total Expenses

Explanation: Shows how able a nonprofit entity is to pay for total expenses from program revenues alone. Manytimes (although not always) program revenues are more predictable and consistent sources of money and,therefore, it is a point of interest to see how able a nonprofit is to liquidate expenses from just program revenue.The ideal score would be 1 or even above 1 in very rare cases.

Fundraising Efficiency 13.55 5.00 to 9.00 +50.56%= Unrestricted Contributions / Unrestricted Fundraising Expenses

Explanation: Shows how much contribution revenue a nonprofit can generate from fundraisingactivities/expenses. The ideal relationship is a high number, which would mean that the nonprofit is able togenerate a multiple of how much it costs to do fundraising.

Average Donor Contribution $1,579 N/A N/A= Total Contributions / Number of Donors

Explanation: This shows the average amount contributed by donors to the organization.

Expenses Per Member $419 N/A N/A= Total Operating Expenses / Number of Members

Explanation: Shows the amount of organization expenses per member. If this number is high the organizationshould look into aggressively seeking new members.

Current Ratio 1.62 2.00 to 4.00 -19.00%= Total Current Assets / Total Current Liabilities

Explanation: Generally, this metric measures the overall liquidity position of an organization. It is certainly not aperfect barometer, but it is a good one. Watch for big decreases in this number over time. Make sure the accountslisted in "current assets" (numerator) are collectible. The higher the ratio, the more liquid the organization is.


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Quick Ratio 1.16 1.50 to 3.00 -22.67%= (Cash + Total Receivables) / Total Current Liabilities

Explanation: This is another good indicator of liquidity, although by itself, it is not a perfect one. If there arereceivable accounts included in the numerator, they should be collectible. Look at the length of time theorganization has to pay the amount listed in the denominator (current liabilities). The higher the number, thestronger the organization.

Receivable Days 67.99 Days 20.00 to 50.00 Days -35.98%= (Total Receivables / Total Unrestricted Revenue) * 365

Explanation: This number reflects the average length of time required to collect cash from receivable accountssuch as pledged contributions and/or program services transactions completed using credit. It is crucial tomaintaining positive liquidity.

Receivable Days Less Contributions 125.01 Days N/A N/A= ((Total Receivables - Contributions Receivable) / (Total Unrestricted Revenue - Contributions)) * 365

Explanation: This number reflects the average length of time required to collect cash from all receivable accountsexcept pledged contributions. It is crucial to maintaining positive liquidity.

Payable Days 245.62 Days 20.00 to 50.00 Days -391.24%= (Payables / Program Service Expenses) * 365

Explanation: This ratio shows the average number of days that lapse between the purchase of material and labor,and payment for them. It is a rough measure of how timely an organization is in meeting payment obligations.

Days Cash Reserve 194.24 Days 120.00 to 244.00 Days 0.00%= (Unrestricted Cash / (Total Expenses - Depreciation and Amortization)) * 365

Explanation: Cash reserve is a rough measure of the amount of cash on hand to cover future expenses. Theorganization should target 182 or more days of cash reserve.

Gross Program Margin 21.39% 10.00% to 30.00% 0.00%= Gross Yield / Total Unrestricted Revenue

Explanation: This number indicates the percentage of revenue that is left over after paying for programexpenses. It is an important statistic that can be used in business planning because it indicates how many cents ofgross program profit can be generated by future revenue and also what percentage of revenue the organization canuse for other expenses such as administration and fundraising.

Operating Margin 3.10% -3.00% to 0.00% +3.10%= Operating Yield / Total Unrestricted Revenue

Explanation: A very important number. In fact, over time, it is one of the more important barometers that welook at. It measures how many surplus cents the organization is generating for every dollar it sells. This is a veryimportant number in preparing forecasts.

Investment Yield 5.39% N/A N/A= Investment Revenue / Investment Balance

Explanation: Investment yield shows the investment rate of return.


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NOTE: Exceptions are sometimes applied when calculating the Financial Indicators. Generally, this occurs whenthe inputs used to calculate the ratios are zero and/or negative.

READER: Financial analysis is not a science; it is about interpretation and evaluation of financial events.Therefore, some judgment will always be part of our reports and analyses. Before making any financialdecision, always consult an experienced and knowledgeable professional (accountant, banker, financial planner,attorney, etc.).


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