A few weeks ago a Board Member contacted us looking for ideas on reports for the Board that would clearly communicate their financial situation. He had a 14 page package of monthly financial information that most Board Members could not easily understand. The Board knew the donations were down from the prior year and they were concerned that they might be using savings from prior years to cover current years expenses.
We worked with the Organization’s bookkeeper and came up with a set of Key Performance Indicators that the Board could monitor each month. Targets were set for each indicator and the Organization determined three monitoring levels: green-on target or better; yellow-headed in the wrong direction and the Board needed to consider making changes; or red-the Board needed to take action which could include cutting back on expenses.
The two indicators that the Board found most helpful was one that looked at revenues compared to the last two years and one that showed if the Board was using savings for current year expenses and if so, how quickly were savings used.
A one page report summarized the indicators. The Board still receives the detailed financial information. The details provide an explanation for the performance and help the Board determine courses of action. However the summary report, typically called a dashboard, helps the Board see where to focus their attentions.
The nonprofit blog Blue Avocado has a terrific post on dashboards with a variety of illustrations that expand on the discussion above. You can link to the article here.