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Account invoice for non-profit organizations

hello and welcome to another 10 minute talk brought to you by the dekalb county nonprofit partnership my name is ben bengal and i'm the director of dcmp 10 minute talks are designed to summarize timely topics to share new ideas and to provide another way for dcmp members to access useful information all with a very small time commitment this video focuses on the abcs of non-profit financial statements presented by betsy hall who's the finance director at the dekalb county community foundation hello i'm betsy hall and i'm the finance director here at the dekalb county community foundation i've been working in the nonprofit sector for over 17 years and before that i worked in the for-profit sector as well i'm a proud alum of northern illinois university i earned my bachelor's in accountancy a long time ago and recently earned my masters of public administration i'm a cpa and i'm passionate about non-profit financials and helping those that aren't as comfortable with them today's 10-minute talk is on the abcs of non-profit financial statements i designed this talk to highlight three elements of nonprofit financials that i feel are at the top of the priority list whether you're a non-profit leader board member or just someone interested in financials i hope you enjoy today's talk and come away knowing the abcs of non-profit financial statements so let's start with a it's a good place to start right i added a little bling just to show how fun accountants can be a is for assets one of the most important numbers that you should know about nonprofits is their asset size and their makeup so where can you find your asset size assets are located on the statement of financial position or better known as the balance sheet in the community foundation world our asset size is what defines our size and measures us against the size of other community foundations in other nonprofit areas assets are an important indicator of cash and liquidity investments how much your customers or constituents owe you and your fixed or depreciable assets take a look at the do good nonprofit statement of financial position here their assets which are just over two million dollars seems healthy enough look at its components nearly three-quarters of their assets are tied up in a building and its contents accounts receivable is a small part and prepaid expenses even smaller and finally its cash and investments represent over a quarter of its total assets if i were a non-profit leader for the do good non-profit or a board member i'd want to remember that important number our asset size is 2 million dollars next let's talk about b any guesses b is for budget in our abcs of nonprofit financial statements why do you budget when do you budget do you know the answers to those questions in your organization i like the saying about budgets here that says budgets tell where your money is going instead of where it went where is your budget located it's in the statement of activities or sometimes known as the income statement once you've determined whether your budget is balanced where revenue equals expenses or a surplus where revenue exceeds expenses or a deficit even where expenses exceed revenue there's some other key elements to understand about your budget and how you're performing against it or in other words budget versus actual or maybe at a certain point in the year you're looking at a percentage of your actual results versus your budget no matter what the measurement a non-profit that can budget effectively will be successful in telling its donors granters or other audiences where their money is going instead of simply where it went so finally our c in our abc's this one may not be as familiar c is for the change in net assets what does that mean change in net assets is the non-profit way of saying net profit although we don't make a profit it's simply revenues less expenses and measures how much you're adding or subtracting from your reserves some nonprofits will share their change in net assets before depreciation which would be the equivalent of your cash increase or decrease since depreciation is a non-cash item other key elements of the change of net and net assets is how well you're doing versus the budget or versus prior year these common questions are questions that leadership and board members may have in understanding the financial health of your organization change in net assets is the one element that actually appears on both the statement of financial position and the statement of activities it's what ties both statements together which in my opinion is the coolest thing about financial statements so to recap our talk today the abcs for non-profit financial statements are a for assets b for budget and c for change in net assets if you know these three important components you're well on your way to understanding your organization's financial condition i hope you've enjoyed the abc's talk today and with that i'll leave you with this a college friend of mine gave me this greeting card early in our careers and as you can see from the looks on their faces accountants really do just want to have fun thank you you