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Does anyone have best practice ideas on financial narratives?

Susan Wayland's Profile

We are a non profit higher education organization and I am looking for ideas to make the monthly board of trustees financial report narrative more readible and accessible to our trustees. Many are not financially savvy. If anyone has ideas or a website with some examples to send, it would be appreciated! Thanks

Answers

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Susan,

Next time I'm in the city, maybe we can grab coffee and chat about it. I've got a couple not for profits I support, and a partner of mine (Taylor at Franklin & Tapner) has additional experience in the space.

Largely I use cheat-sheets, and then leave the finances at the level of "we have $x" or "you can spend $y" on the event. Add detail to that and even my senior folks get wrapped around the rail, so I try to keep it *very* high level. Details go into the cheat sheets, and they are general operating principles, not financial details.

The only time true detail goes out, it is five lines of email that say:
-We budgeted A
-We spent B
-We were over in C
-We were under in D
-Net impact to cash we can spend is E.

This format is similar for the board; it takes the form of page 1 of a brief powerpoint. It calls out "things you should care about" ref the five things above. The only addition is the planning bullets, such as "we are planning on spending Y next quarter on the website" or "we have new initiative that is of Z scale", or "Obamacare will cost X because our employees in this area....", etc.

Summary: reduce it to...
-Very basic "where we are"
-One liners for "here is a datapoint that is actionable by the board"
-Detail that doesn't have actionable implications don't get included...they can ask if they want to know.

KP
(you can ping me at keith [dot] perryatgmail [dot] com)

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Keith
I like your outline and I can see it working well for board execs who know how to act as board execs. How do you work with your CEO/Executive Director to "train" board members to be able to receive and digest your approach?
Regards
Len

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Len,

In my experience, people *like* to be told what they should be concerned about. Yes, have backup if they have particular concerns (and golly, can they get deep into the weeds). However, structuring the conversation as "we have 15 min to get you this information that you need", take distractions off-line, and have a structured approach, and you get treated like the expert in the room from whom they can learn.

Effective meetings (agenda, time, prework, defined outcomes) is a great step in this direction, which people sincerely appreciate.

In one recent instance, "rat-hole" discussions (minutiae, off topic, not goal oriented) became crippling. So, the next discussion I carved out 15 min for effective meetings training, and pre-loaded the team with what that was all about. One of the core differentiations I called out was "executive vs. operational". Is it operational? Then the board has no business discussing it (basically). My mom (CFO for many years), would call people out in meetings for "chasing nickles instead of dollars". You only have so much time, so make sure it is impactful, was the message.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

A side comment....

Although I generally agree with the steps mentioned, I think this speaks volumes on the competency of Boards (profit or non-profit). We financial types are more or less condoning the incompetency of our Boards (or member/s). How far are we willing to spoon feed/"tutor" said members? Although I recognize that each member has their own backgrounds, they should be able to translate/correlate their backgrounds with what is happening with the company or organization. Board qualification is a complex issue and I do NOT mean to belittle those without financial backgrounds.

That being said, I usually make myself available to Board Members (and they are encouraged) 3 days before a meeting if there are concepts or numbers they don't understand or need clarified. This saves valuable time during the meetings. A good Chair will encourage this practice and has complete control of the meeting. The reverse is also true. A good chair (or even the CFO) will explain and obtain buy in from members before the meeting for initiatives/proposals.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

My first answer is......why not ask your Trustees for inputs on how you can improve the reports that will serve them better? Your best resource are the users themselves. (Wait...that sounded condescending but I assure you, there is no malice in my statement.)

A reminder that your board docs are a living/ever evolving document, Make sure that you periodically ask Board Members/Trustees on how to improve them.

Keith's outline looks good.

Susan Wayland
Title: Chief Financial Officer and Director of ..
Company: San Francisco Day School
(Chief Financial Officer and Director of Operations, San Francisco Day School) |

Thanks for the input, I agree that it would be a good idea to get input from the board and will encourage our CFO to do so...

Thomas Sherrouse
Title: Business Intelligence Manager
Company: TaxSlayer
LinkedIn Profile
(Business Intelligence Manager, TaxSlayer) |

I've found a book that is pretty good at addressing this subject.

"Painting with Numbers: Presenting Financials and Other Numbers So People Will Understand You" By. Randall Bolton

http://www.amazon.com/Painting-Numbers-Presenting-Financials-Understand/dp/1118172574/ref=sr_1_1?s=books&ie=UTF8&qid=1424094166&sr=1-1&keywords=Paint+with+Numbers

Susan Wayland
Title: Chief Financial Officer and Director of ..
Company: San Francisco Day School
(Chief Financial Officer and Director of Operations, San Francisco Day School) |

Thanks for the advice, I will see about getting that book!

Kristin Tesch
Title: Controller
Company: ESP International
(Controller, ESP International) |

I don't work for a non-profit, but we use waterfall graphs for some of our less technical managers. It starts with our budget and works over to actuals. Anything that didn't hit budget is a short bar graph in red and then anything better than budget is green. It allows for a pretty quick visual of areas to focus on versus reading through a bunch of numbers.

Susan Wayland
Title: Chief Financial Officer and Director of ..
Company: San Francisco Day School
(Chief Financial Officer and Director of Operations, San Francisco Day School) |

Excellent suggestion Kristin - I am also in favor of more graphical represenation of the information....

James Scott
Title: Consulting CFO
Company: Early Growth Financial Services
LinkedIn Profile
(Consulting CFO, Early Growth Financial Services) |

Boardvantage software is great for sharing info with a board. Be sure to focus on exceptional issues with the Board, time and attention are limited. http://www.boardvantage.com/en/

Susan Wayland
Title: Chief Financial Officer and Director of ..
Company: San Francisco Day School
(Chief Financial Officer and Director of Operations, San Francisco Day School) |

Hi James, agreed. We actually use a great cloud based board portal called Board Effect to share all data. I will be using it for the summaries that go to our committees to the board.

Randall Bolten
Title: CEO
Company: Lucidity
LinkedIn Profile
(CEO, Lucidity) |

Susan--
I’m the author of “Painting with Numbers” ("PwN"), and I’m flattered the book is mentioned among the excellent responses you got. My main message is that it’s important to use the same thought process when presenting numbers that you would use for writing an important memo or giving an oral presentation. There is a grammar to presenting numbers, just as there is for speaking and writing, and “PwN” describes it. You also need to have a sense of narrative flow – remember that you are telling a story – and you must demonstrate respect for your audience. “PwN” addresses those perspectives as well.

It’s especially important to keep all that in mind with audiences like a not-for-profit board, whose members are often not financial experts, often not knowledgeable in the not-for-profit arena, and sometimes neither. But they are probably all intelligent people, and there is more to getting your message across than just dumbing it down and using pretty graphs that don’t always tell a coherent, specific story.

Lastly, while it is always useful to ask the board members what information they’re looking for and how they want it presented, always remember that YOU’RE the expert on what information a not-for-profit needs to run itself. It’s your job to show THEM what information they need in order to be effective board members. If you can achieve this, they will see you as their peer.

If you do get the book, I’d be very interested in your thoughts on whether it helped you, and how. I may want to write about that experience. And I do get to the Bay Area occasionally, if you'd like to chat briefly.

Phyllis Proffer
Title: Owner
Company: The Heights Company, LLC
LinkedIn Profile
(Owner, The Heights Company, LLC) |

Your book is terrific and I have given it as gifts to many CFOs and other financial professionals, including people new to investor relations.

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