The Third Turn

Dr. Mark L. Vincent's Blog

Nonprofit financial management: 4 confusions infecting executives

Posted by Mark L. Vincent on Dec 22, 2011 1:49:00 PM

My remaining blog posts in 2011 are going to touch on 4 confusions that infect nonprofit leaders when it comes to nonprofit financial management. We find them everywhere we turn in our consulting practice--especially among gifted executive directors, faithful board members and departmental managers. Yes, even CFO's who are good at what they do can share in the confusion.

Here are the 4 errors:

  1. Confusing income for size of budget.
  2. Confusing fiscal year with length of effect of a transaction.
  3. Confusing a monthly report with a real-time management tool.
  4. Confusing reduced expense with an improved cash flow.

In my next four posts I'm going to explain each one and provide a suggestion or two to avoid confusion.

For now, ask yourself the following questions:

  • When I am asked about my organization's income, what figure do I give? Why?
  • Does my organization do cash or accrual accounting? If we are doing cash, are we violating our responsibilities to do proper accounting?
  • Do we look at monthly reports at board or department meetings? What numbers do we look at the most? Why?
  • Do we focus on cost reduction, income expansion or the difference between them as the bottom line of organizational performance?
Those questions relate to the four confusions that will be addressed. If you think these articles will be helpful for your organization and your organization's leaders, read them, print them out and take time to discuss them. Or, consider our 20 minute seminar. Click on the button below to learn more:
p.s.  I have a hunch some will think of additional financial confusions that operate in the nonprofit world. I'd love to hear about them.
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Topics: nonprofit leadership, financial confusion, stewardship education, Mark L. Vincent, Design Group International, steward leadership


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