How to Increase Your Board’s Financial Literacy

Photo of Mekea

Mekea Roseman, Senior Accountant

By: Mekea Roseman, Senior Accountant
Cordell, Neher & Company, PLLC

Board decisions can sometimes affect an organization’s finances, so nonprofit board members should understand basic accounting principles and how these numbers impact their work in a meaningful way.

Nonprofit Boards review several different types of financial statements, and it is essential that Board members can read and interpret the financial information presented to them. Understanding the financial information presented to them allows Board members to adequately evaluate the financial health of the organization.

Not only should Board members understand the accounting terms that surround financial statements, but they should also understand the purpose and content of the financial statements themselves. The standard financial statements most nonprofit Board members will see are:

  1. The Statement of Financial Position (balance sheet) – This statement shows the assets and liabilities of the organization at any given point in time
  2. The Statement of Activities (profit and loss statement) – This statement shows revenue and expenses for the organization
  3. The Statement of Cash Flows – This statement shows where cash comes from and how it is spent

To help Board members become well-equipped to understand organization finances, Board meetings should have time allotted to educate about nonprofit accounting and encourage questions and conversation about what the information presented means and the accounting principles behind it. If there is still some uncertainty, or members would like more information, they should feel free to discuss this with the organization’s accounting professional, management, or the internal accounting staff. These resources can help Board members see the story behind the entity’s financial statements and the accounting methods surrounding them.

Once Board members understand the basics of the financial statements and can interpret them, they can then focus on what these statements mean to the organization. When reviewing financial statements in Board meetings, Board members should be encouraged to look at the overall picture instead of viewing the statement line by line. When reviewing financial statements, here are some questions for the Board to consider:

  1. How does this year’s gross revenue compare to last year’s?
  2. Are expenses within expectations of our budget?
  3. Do we have enough cash flow to cover upcoming expenses?
  4. How do our investment gains (or losses) compare with our benchmarks?
  5. Where do the trends point?

Asking these questions will help gauge the health of the organization. These questions likely lead to more in-depth discussion about the factors causing unexpected or unusual variances in both revenue and expenses. It also allows the Board to dig deeper on unusual and unexplained financial expansions and contractions.

Aside from understanding financial statements and accounting lingo, Board members should also stay up to date of the changes in nonprofit accounting. It may be helpful to have the organization’s CFO or an outside accountant make regular presentations to the Board. These presentations can focus on several topics, from explanations of basic accounting definitions and principles to issues related more specifically to each organization, including expected investment returns, benchmarks, compliance with regulations and granting authorities and future expectations.

Board decisions often impact an organization’s finances, even if the matter may not appear financial in nature. Please call Cordell, Neher & Company, PLLC at (509) 663-1661 if you have questions or would like a review of your organization’s financial statements.  Our professionals are well-versed in nonprofit accounting and are eager to help determine your organization’s financial well-being and assist in ensuring your nonprofit is set up for success.

Events & Deadlines

Latest Past Events

Shred Event

Cordell Neher & Company, PLLC 175 E Penny Rd #1, Wenatchee

Join us at the annual FREE document shredding event at Cordell, Neher & Company, PLLC

3rd Quarter Due

Cordell Neher & Company, PLLC 175 E Penny Rd #1, Wenatchee

CNC Newsletter

Subscribe and stay informed on policy changes that could have an impact on you.
Something went wrong. Please check your entries and try again.

Leave a Comment

TaxCaddy Login

Avantax Login


CPA/Tax Documents Only

Bill Pay Login

Footer Contact

  • This field is for validation purposes and should be left unchanged.

(509) 663-1661  - Wenatchee
(800) 767-7725  - Toll Free

(509) 662-5678
Fax Number

P.O. Box 3068
Wenatchee, WA 98807-3068

Privacy & Usage: The information on the Cordell, Neher & Company, PLLC website is provided with the understanding that it should not be substituted, in any way, for consultation with a professional Certified Public Accountant, accountant, tax, legal or other competent advisor. Cordell, Neher & Company, PLLC makes every attempt to ensure that the information contained on their websites are obtained from reliable sources, but is not responsible for any errors and/or omissions or from the results obtained from the use of any information. This site contains links to servers maintained by other organizations. Cordell, Neher & Company, PLLC cannot provide any warranty regarding the accuracy or source of information found on any of these servers, the content of any file the user might use to download from a third-party site, and is not responsibility for the content found on any of these servers or for any links these servers maintain with other servers.

Avantax financial professionals may only conduct business with residents of the states for which they are properly registered. Please note that not all of the investments and services mentioned are available in every state. Securities offered through Avantax Investment Services SM, Member FINRA, SIPC. Investment Advisory Services offered through Avantax Advisory Services SM. Insurance services offered through an Avantax affiliated insurance agency. Method 10® is property of Avantax Wealth ManagementSM All rights reserved 2020. The Avantax family of companies exclusively provide investment products and services through its representatives. Although Avantax Wealth ManagementSM does not provide tax or legal advice, or supervise tax, accounting or legal services, Avantax representatives may offer these services through their independent outside business. This information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.


© 2020 Cordell, Neher & Company PLLC • Designed by Pixel to Press