“Having clear, readable financial information means that board members, even those who are allergic to budgets and numbers, can assume their rightful responsibilities as trustees,” claim Cash Flow Strategies coauthors Richard and Anna Linzer.
I smiled when I read this quotation in the Linzer’s new book, Cash Flow Strategies. When I was a board chair in my past life and we would review the financials, the reports were always quickly approved no matter how much my executive committee tried to engage the board in the finer details. The Linzers’ depiction of board members’ allergic reaction to financial reports is all too familiar.
We’re currently featuring this essential read at CausePlanet with a Page to Practice™ summary and live interview on June 27. Financial certainty in uncertain times is an ongoing challenge for administrators and board members especially when reporting has lost its utility and readability.
One of the strategies discussed in Cash Flow Strategies focuses on making financial reports more useful for the board and staff through the application of footnotes. “Cash flow budgets that are accompanied by footnotes can make a remarkable difference in the degree to which everyone understands your budget. The cash flow budgets by themselves are a boon to comprehension, but the addition of detailed footnotes can assist even the most fiscally challenged board member,” assert the authors.
In our recently featured book, Storytelling for Grantseekers, author Cheryl Clarke also promotes budget footnotes as an important strategy for helping funders understand your financial reports. “Budget notes can and often should be used, for they help explain and clarity the information contained in the numbers story,” Clarke adds.
Clarke says financial footnotes are especially useful whenever:
a program expense represents five percent or more of the total estimated costs for the program. For example, if the program budget is $100,000 and one line item exceeds $5,000, include a note to explain or justify that expense item.
a particular line item might be unclear to the reader or might require additional narrative detail. For example, “a line item labeled ‘miscellaneous’ practically begs for a note to explain what is included under this category.”
Join us for an author interview with Richard Linzer about cash flow and working capital for nonprofit organizations when we’ll take the discussion far beyond the footnote: Thursday, June 27 at 11 a.m. CST.