Top Indicators of Nonprofit Financial Health | Nonprofit Finance Fund | March 2018

"Nonprofit leaders have a difficult mandate to constantly balance money and mission, while collecting and sharing data on social and financial performance. With limited finance staff and multiple sources of financial information, it’s no wonder these leaders and their supporters often struggle to tell a clear, compelling financial story that makes sense of all the data. (This post focuses on financial health basics, for information and ideas on what it takes to manage to programmatic results, check out NFF’s publication and campaign, Invest in Results, a partnership with the Federal Reserve Bank of San Francisco.) How can nonprofit executives, funders, and advisors identify what matters most when examining finances? What are some trends and indicators that can guide us through an abundance of data and help assess true financial health? Not all financial indicators are created equal. Below, you’ll find a short list of financial health metrics based on NFF’s years of experience lending to and advising nonprofits. You can find the data for these metrics on historical-looking documents such as audited financial statements and Forms 990, as well as on forward-looking internal budgets and projections. Strapped for time to do this number crunching yourself? Financial SCAN*, a data platform developed by NFF and GuideStar, can do this analysis for you, illustrating trends in an organization’s financial performance through user-friendly dashboards and graphs. You can also use the tool to see how one organization’s financial metrics and ratios stack up against its peers...."