1. Analyzing Grantee Financial Statements “But they looked so good on paper….” Delaware Valley Grantmakers October 15, 2009

2. LTM Consulting Group, LLC LTM Consulting Group is dedicated to providing objective, high quality, experienced based, investment, finance, accounting, tax and operating consulting services to private family and independent foundations, independent schools and other not-for-profit organizations on a regional and national level. LTM views its services as an extension of staff for Boards, Executive Directors, CFOs and CIOs and is available for consultative guidance or project work on a variety of complex financial management issues. Lawrence T. Mangan, President, has over 20 years of experience as the chief financial officer for private foundations and independent schools. During that time, he has overseen a large, sophisticated investment portfolio, with substantial allocations to alternative assets and grant, administrative, operating and capital budgets in the hundreds of millions of dollars. He has also had responsibility for managing complex issues relating to human resources, global offices, information technology, facilities, construction projects, food service, communications and taxes at institutions with hundreds of employees and students. He has also worked with numerous not-for-profit organizations as a Board and Committee member, a grant maker and a presenter at workshops and conferences. Larry has earned an MBA from LaSalle University and a Bachelor of Science degree in Finance from The Pennsylvania State University. He is a Past President of the Foundation Financial Officers Group (FFOG), an international association of senior level investment and financial professionals of private foundations. Larry is currently a Board member and Chair of the Audit Committee of Delaware Valley Grantmakers, a member of the Board and Chair of the Finance & Investment Committee of the First Hospital Foundation and a member of the Finance Committee of the Dorothea vanDyke McLane Association.

3. Agenda Welcome Measuring & Evaluating Fiscal Health Audits, Limited Reviews, Compilations Financial Review Checklist “The Not-so Good, The Bad, The Ugly” Q & A

4. Measuring and Evaluating a Non-Profit Organization’s Overall Health Can the organization live within its financial means? What is their organizational philosophy for managing the bottom line? What is the historical pattern of their prior year operating results and what is the projected future pattern? If there is a cumulative net asset deficiency, what is the plan of action for converting it to positive?

5. Measuring and Evaluating a Non-Profit Organization’s Overall Health Does the organization have sufficient working capital? Does the organization have healthy financial ratios (e.g. current ratio, debt- to-net asset ratio, etc.)? Is there a healthy mix of earned income & contributed income? Remember that the financial statements & related footnotes tell an important story about the organization! What do you want the story to say about your organization?

6. Types of Financial Reports Prepared by CPA Firms Audit: Represents the highest form of reliability; involves detailed analysis and transaction testing (on a sample basis). Provides assurance that the statements fairly present the financial position. Review: The work is limited to an analytical review with no detailed transaction testing. Variation analyses are performed to compare current year numbers with prior year numbers for overall reasonableness. This work provides only limited assurance about the financial position. Compilation: Involves converting raw financial information into a readable format. No opinion is expressed; all information has been provided by management and simply compiled by the auditors.

15. Institution: Happy Elderly Living Place (HELP)

18. Institution: We Need Care, Protection & Reassurance (CPR)

22. Final Thoughts The review process generates questions to which the CEO & CFO (and others) need to respond. It helps to determine how financially “fit” the organization really is. Financial "distress" is not grounds for an automatic declination. Affirm and support financially "successful" organizations. It can be used as a technical assistance tool.