Let’s be honest—most nonprofit board members didn’t join a board to dive into financial statements. They’re here because they care deeply about the mission, the programs, and the impact. They bring expertise in fundraising, advocacy, governance, or leadership—not necessarily in accounting or finance.

And yet, financial literacy at the board level is essential for strong oversight and strategic decision-making. It’s understandable—many boards have deep expertise in mission, programs, and governance, but interpreting financial statements often falls outside their comfort zone.

So, what can nonprofit leaders do to bridge the gap?

A Better Question:

How can we help board members read, understand, and use financial statements as a tool for strategic conversations?

Here’s my top three checklist for making financial reports easier to understand and interpret:

1. Provide the Right Kind of Information

• One of my mottos is – when there are numbers, use words. Include a brief narrative analysis that synthesize the analysis of the financial statements - in plain language.
• Highlight key finance ratios and key performance indicators and use graphics like charts. Make it easy for board members to quickly gather the information they need to know by providing these snapshots that can quickly convey whether the organization is on track with its budget and financial goals in simple yet very meaningful ways.
• Don’t skip the Statement of Financial Position! Too often this is omitted from board packages, yet it contains essential insights not found in the Statement of Operations. Provide a consolidated Statement of Financial Position and explain the lines that board members need clarity on.
• Prioritize accurate variance reporting. Ensure that any variance explanations are rooted in reliable data. For example, if annual revenue or expense lines are divided equally by 12 months, the variances are less likely to accurately represent the true variance, and it is confusing to explain that the issues are about timing. Include the actual revenue and expense projected for each month, don’t divide the total by 12 months. 

Get inspired by Zia Wang, RPA, PLP who boosted her confidence and skills in writing financial narratives here.

2. Use the Right Format 

• Consolidate where it counts. Avoid overwhelming board members with a 12- to 25-page Statement of Financial Position. A clean, consolidated one-page Statement of Financial Position (Balance Sheet) format builds confidence and clarity.
• Show both dollar and percentage variances in the Statement of Operations. This dual view helps contextualize financial fluctuations and enables better analysis. Let’s face it, you don’t want to spend time talking about a $200 variance on a special event when there are more pressing variances to discuss.
• Include multiple time periods. Statements that show only Year-to-Date (YTD) figures limit financial oversight and simply do not provide enough information for financial oversight and control Ideally, include current month, Quarter-to-Date (QTD), and YTD for a fuller picture, at the very least include two time periods either month or quarter-to-date and the YTD.
• Prioritize this year’s budget. Rather than comparing actuals to last year, align the Statement of Operations to this year’s budget with dollar and percent variances for good financial oversight and control, and use the available space in the statement to forecast the year end position.

Get inspired by Caitlin Smith, Chief Operating Officer at Strong Start Charitable Organization on how learning to confidently read and interpret financial statements and understand the crucial role of the finance committee has improved the financial oversight and governance and has allowed her to make informed decisions that benefit the organization. 

3. Share Reports at the Right Time

• Produce statements monthly. Whether or not the board reviews them every month, they should exist and be accessible, and the CEO and leadership team should receive and review them to have greater financial oversight and control.
• Engage the finance committee regularly. Aim to ensure the finance committee receives the full financial statements a minimum of 8 months out of the year.
• Quarterly Board Statements but beware of the summer gap. Organizations that skip meetings in July and August often don’t send the quarterly report in the summer months either, which means that the board may only receive financial reports two times before they approve the next year’s budget. That has proven to be insufficient for organizations that have limited reserves, declining or status quo funding, decreasing donations, and/or are facing uncertainty. Don't skip sending the financial report in the summer months and consider semi-monthly or quarterly statements a minimum for the board.
• Always include current data + projections. Whether monthly or quarterly, reports should show the latest actuals, YTD or QTD totals, and a year-end forecast.

Get inspired by Kelly Hoey, Executive Director of HIEC-ApprenticeSearch.com and how she has equipped her team with finance skills to be able to fulfill upon the recommendations in this article.

The Bottom Line

Financial statements don’t need to be intimidating! By ensuring the right information, presented in the right format, and shared at the right time, boards can confidently engage in financial conversations and more readily integrate finance with discussions on strategy and impact.

Want to deepen your organization’s financial fluency? Explore the Finance Masterclass for Nonprofit Leaders - and other practical training and tools from Goodcasting Academy www.goodcasting.academy

👉 Let’s turn financial data into strategic insight—because when boards understand the numbers, they can integrate finance with strategy for greater impact and resilience.

#nonprofitfinance #NonprofitFinancialLeadership #GoodcastingAcademy