Incorporating Financial and Nonfinancial Metrics in Organizational Oversight

In this blog series, we previously discussed how to interpret nonprofit financial statements, how to calculate ratios, and how to leverage financial and nonfinancial information in your nonprofit organization. Now, let’s conclude this series with considerations for management related to incorporation of financial and nonfinancial information at your organization.

What is most important to your organization?

Selecting the most relevant and easily measurable metrics is key to implementing new processes without disrupting your organization. Management should identify the most relevant metrics for your organization. Remember, this should be specific to your organization – your needs are likely different from other organizations. You may choose to include basic financial statements, certain financial ratios, and/or program impact results. Whichever you select, find a way to track your selected metrics without it becoming a time-consuming task. Financial data and ratios can be easily set up in a simple Excel workbook and updated with each periodic close, or better yet, your accounting system may have reports to calculate these for you!

Once you have identified the most relevant metrics to monitoring your organization’s success, develop ways to track and integrate these into your reporting package. This can help leadership monitor the full picture of financial health and program success of the organization. 

Incorporating benchmarks

Whether you benchmark against prior years or other peer organizations, having comparative information can help monitor progress against your goals. Taking the time to set up a benchmarking template that can be efficiently updated will allow for monitoring of progress. Consider using common financial statement line items, ratios, or other easily tracked information in your benchmarks. Then, incorporate this into your internal reporting package. 

Key takeaways

• Take an inventory of your current policies and procedures related to internal reporting and monitoring
• Interview key personnel during this process for their feedback on what is most important to them
• Integrate those unique perspectives as you develop key metrics in your internal reporting procedures
• Identify opportunities for technological efficiencies, such as through financial dashboards or models
• Incorporate your selected financial and nonfinancial data and metrics into procedures for internal reporting and monitoring

Mission forward

Every organization seeks to remain sustainable as they carry out their mission. Incorporating relevant metrics and data efficiently into management oversight is important to this journey. We hope that this blog series has provided you the opportunity to take a step back and rethink how to best use relevant financial and nonfinancial data to succeed in your mission.

Links to prior blogs in this series:

Setting the Foundation to Interpret Nonprofit Financial Statements | CLA (CliftonLarsonAllen) (claconnect.com)

Using Financial and Nonfinancial Data to Calculate Key Ratios | CLA (CliftonLarsonAllen) (claconnect.com)

Leveraging Financial and Nonfinancial Information to Improve Program Success | CLA (CliftonLarsonAllen) (claconnect.com)

Leveraging Ratios to Better Understand Community Impact and Organizational Success | CLA (CliftonLarsonAllen) (claconnect.com)