 Jeff Walker, MBA, Chief Financial Officer, Lyric Opera of Kansas City Megan Campbell, MPA, GPC, Director of Development, Head Start of Shawnee Mission

Do the financials and the narrative tell the same story?

 Audited Financial Statements and Management Letter  Form 990 Tax Return  Internal Interim Financial Statements

 Barometer of Organizational Health  Inaccurate or Incomplete Numerical Data  Diversification of Funding  Auditor’s Management Letter  Footnotes

 Audited does not mean it’s right o Funders typically “run a tape” on the audited financial statements to make sure they add up o Don’t let the funders tell you your statements don’t add up, “run a tape”  Double check your interim internal statements for errors o This is especially true for statements that are spreadsheet based instead of system generated o Make sure that all financial statements “FOOT”

 In addition to the auditor’s required communication, organizations typically receive an auditor’s management letter  The letter is the auditor’s recommendations for how to improve your organization’s financial processes  Funders typically look for: o Short management letters o No significant deficiencies o A statement that previous year’s auditor suggestions were fully implemented o Management’s response to the auditor’s management letter

 The format of audited financial statements are dictated by GAAP  The audit footnotes are the organizations opportunity to tell the story the financial statements don’t. Use them to your advantage!  Include: o Organizational history o Demographics served o Program accomplishments o Other information about what makes your organization unique

FUNDERS LOOK AT THE FORM 990 to determine:  If salaries for top paid staff are reasonable  If an organization is “top heavy”  The relationship between key staff and contractors  Peer support in organization  Diversification of organizational funding

 Funders want to see a good mix of: o Government o Grants o Fundraisers o Individual Contributions o Earned income o In-kind  If one or more spokes is missing…why?  Does 100% of your board contribute?  Do board contributions represent a significant percentage of total individual contributions?

 Funders look at Interim Internal Financial Statements o Balance Sheet o Income Statement o Budget Report  Funders look for significant year-to-year changes (over and under) and want to know…why?  Funders look for significant budget to final comparison differences and want to know…why?  What do significant variances tell funders about your organization?

 What could cause fluctuation on an current financial report between YTD Budgeted Revenue and YTD Actual Revenue?  What could cause fluctuation between YTD Budgeted Expenses and YTD Actual Expenses?

 Funders use Cost Per Unit Analysis to determine the cost effectiveness of an organization’s outcomes  Funders look for a consistent Cost Per Unit within your industry  For example, if there are 3 agencies that provide similar services to a particular demographic, funders will typically expect to see similar Costs Per Unit for all 3 agencies  If your Cost Per Unit is higher or lower than your peers, prepare to explain the difference

Working with your Finance Department/Staff Relationship Building Timing Understanding the Subject Matter/Program/Need Communicating Funder Priorities Office Organization and Communication

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 Contact Information: Jeff WalkerMegan Campbell Chief Financial OfficerDevelopment Director Lyric Opera of Kansas City Head Start of Shawnee Mission 1725 Holmes St Santa Fe Drive Kansas City, MO 64108Overland Park, KS Phone: