Managing events and programs, making effective use of donations, holding fundraisers, and providing services all rely on a complete and accurate understanding of where funds are going and how operations are being conducted.

Fundamentally, this is a matter of putting the right reporting systems in place. However, smart, useful reporting is not a matter of simply gathering and presenting more data. Reporting can be a force for dramatic improvement or for staff demoralization depending on how and what information is distributed.

Too many distinct reports, for example, can overwhelm recipients with information. Distributing financial information to individuals who may not have the tools to understand it can leave them with the wrong impressions or even feelings of incompetence. Complete transparency often sounds like a good idea, but poor implementation can lead to a drop in morale. Instead, it is better to provide the right reports to teams that need them so that everyone from leadership on down can better advance the goals of the organization.

Understanding Who Needs What Reports

The “jack of all trades” employee who “wears many hats” is common across small organizations, not just in the nonprofit sector. Though this can be effective when the entire team isn’t very large and is still growing, a lack of distributed responsibility can be a drag on the mission.

Board – Serving in an advisory role and providing financial oversight, the board’s responsibility is to prevent fraud, ensure regulatory compliance, drive fundraising efforts, and guide the organization towards achieving its mission.

Management – A manager’s role is to oversee the execution of specific processes conducted by themselves and teams of employees. Carrying out strategic plans and implementing decisions made by the board is the primary responsibility of management.

The Role of Reporting

Achieving an effective level of collaboration between the board, managers, and an organization’s members as a whole depends on everyone having the information they need to carry out their goals.

In fundraising, for example, being able to communicate to potential donors the specific outcomes that will come of their donation could mean the difference between a five-figure dollar amount and six-figures (or more, of course). “$50,000 will provide 50,000 shoes” is a much more compelling message than, “Your donation will go towards giving children shoes they need.”

Reporting helps guide efforts, determine where a team is excelling, and find areas for improvement. Different teams need different reports.

Governance

The right reports help the board detect fraud, ensure compliance, and carry out the goals of the organization. These reports should include:

  • Budgets versus actual spending
  • Tax Returns
  • Audit Reports
  • Payroll costs versus spending

Strategy

Strategic reporting allows the board and managers to best allocate resources and meet goals. Determining key performance indicators and then building reporting structures around them help to identify strengths and weaknesses in an organization. Cash flow and financial sustainability reporting provide the necessary information for organizations to know the short and long-term viability of an organizatio

Asking the Right Questions

Building the right reports and distributing them to the right people depends on first asking some basic questions. What is the purpose of this report? Who needs to see it? Should this report be generated monthly, quarterly, semi-annually, or at some other interval?

Then, outline the specific actions a report will result in so that there is a clear understanding of how to nimbly respond in any situation.

The right reporting can foster collaboration among and between teams and levels of an organization and is a key element of an organization’s overall strategy. Hoping to optimize your accounting strategy as it relates to reports or anything else? Rubino is here to help. Don’t hesitate to reach out.

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