Webinar for Grantmakers—Financial Analysis in Action: Getting the Most Out of 990 Data
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Transcript of Webinar for Grantmakers—Financial Analysis in Action: Getting the Most Out of 990 Data
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Peter Kramer Manager Nonprofit Finance Fund Scott Menzel Product & User Experience Manager GuideStar May 30, 2013
Financial Analysis in Action: Getting the most out of 990 data
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AGENDA
Re-orienting to the Form 990 Case analysis using Financial SCAN Brief online tour Q & A
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From Form 990 Instructions:
Momentum is growing to make 990 data even more readily available
A compliance document AND a public profile for many nonprofits
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How can funders put the Form 990 to better use? Use 990 data to conduct analysis of past
financial trends during the due diligence process Engage with grantees in conversation about
how these trends inform current plans and resource needs
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Key Considerations: What 990 data can and cannot do
990 data CAN help: Understand an organization’s financial trajectory and recent
revenue, expense, and balance sheet dynamics Show how an organization compares to its peers across
standardized fields
990 data CANNOT: Provide the authoritative and most up-to-date financial
picture of your organization Tie exactly to the information presented in an audit Show revenue restrictions Distinguish between operating dollars and capital dollars
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Today, our analysis guide will be Financial SCAN
What: Data platform for assessing nonprofit financial health and fostering dialogue among all stakeholders involved in making social impact
Who: Private and public grantmakers/donors, nonprofit organizations, philanthropic advisors, consultants and media
How: Private and public grantmakers/donors, nonprofit organizations, philanthropic advisors, consultants and media
WHAT
Data platform for assessing nonprofit financial health, decision making, and informing grantmaker-grantee dialogue
WHO
Nonprofit organizations, private and public grantmakers, individual donors, philanthropic advisors, and consultants
HOW
Draws data directly and automatically from IRS Forms 990,* presenting complex information in an easy-to-analyze and communicate format (313K orgs)
*Note: Financial SCAN v. 1.0 does not include data from Form 990 EZ
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What’s in a Financial SCAN?
Organizational Dashboard: Five years of key financial trends and ratios
Graphs & Explanatory Text: More detailed overview of an organization’s: Expenses Revenue Profitability Balance Sheet Liquidity
Peer Comparison Dashboard: Comparison with up to five peer nonprofits you select
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Meet today’s case organization: Help for Homeless Youth
MISSION: To provide homeless and at-risk youth with the resources, relationships, and skills to become self-sufficient.
PROGRAMS: Health Services Case Management Drop-in Center Basic Employment Skills
RECENT DYNAMICS: Increased demand for services Uncertain revenue sources Maintaining an aging facility
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Help for Homeless Youth
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Dashboard: Income Statement
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Dashboard: Balance Sheet
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Peer Comparison Dashboard
Standardized 990 fields allow for side by side comparison
Contrasts operating and balance sheet characteristics
Offers broader environmental context for consideration
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Topics explored in Financial SCAN graphs:
Expense detail & composition Revenue detail & composition Profitability Full cost of doing business Asset composition Depreciation of fixed assets Liability composition Liabilities as a % of assets Liquidity
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Estimated full costs have not been consistently covered, limiting HHY’s ability to satisfy longer-term organizational needs
Full costs include: operating expenses, covering depreciation, purchases of fixed assets, debt principal payments, and savings
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Asset composition has shifted over time, reflecting a decline in liquid assets and growth in fixed assets
Facility ownership is its own line of business, and can sometimes be at odds with other organizational needs.
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While HHY’s assets have grown over the period, its liquidity has contracted
Available liquidity represents a nonprofit’s ability to handle risks and seize new opportunities.
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Next steps and considerations for funders of HHY
Use 990 data as a starting point for additional diligence
Engage in a data-based conversation with HHY leadership about how recent growth has impacted the organization’s financial health
Use insights from data and conversation with HHY leadership to inform grantmaking
Consider providing for full costs of services in future grants and/or funding reserves
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Brief demonstration of online interface
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Q&A
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nonprofitfinancefund.org 19
Thank you! Peter Kramer
Manager, Consulting Services Nonprofit Finance Fund
617-204-9772 [email protected]
To learn more:
www.guidestar.org/financialSCAN