There is no doubt that communicating essential financial information while maintaining a positive relationship with your nonprofit board is critical to the success of your organization. Enabling the board with timely and accurate information not only allows them to monitor progress toward program goals, but also make informed financial decisions that will directly impact the organization’s future.
However, it’s not without its challenges. Your board likely includes members with varying levels of experience, an array of personality types, and a variety of connections (which is great!), but they may not have specific experience with nonprofit accounting. As a result, it can be difficult to determine what type of information board members will find valuable and how should that information be presented.
Over time, we’ve learned the best approach centers on these three areas:
- Build trust
- Present data visually
The first step to building a successful relationship with your board is gaining their trust. You want everyone to know each other well enough to be confident in each other’s personalities and competencies. This will help you understand what types of reports will be the most helpful and have the most impact.
A mutual commitment to open and honest communication (even when the communication might be uncomfortable) is a cornerstone in building a strong relationship. When information is shared sporadically or in an overly formal way, it’s difficult to get the needed results. In addition, keep in mind that the information shared with the board should not be the same information you’d share for an audit. Provide a narrative, be concise, and think about the end goal – enabling your board to make decisions to further your mission.
Present Data Visually
Board members need a comprehensive understanding of the organization’s finances and financial goals but don’t limit yourself to financial statements. Visuals, such as dashboards, will help your board focus on the information that’s most important and draw faster conclusions.
For more insight on how to communicate financial information with your board, check out our webinar “Securing Board Approval for New Technology.”