Nonprofit Financial Statements And The Story They Tell.

Tim Barnes:
Welcome to episode 89 of the practice of nonprofit leadership. I'm Tim Barnes.

Nathan:
and I'm Nathan Ruby.

Tim Barnes:
Well, Nathan, here at the practice of nonprofit leadership, we work hard to try to address practical issues, processes, and ideas that executive directors of small to medium nonprofits might be working through.

Nathan:
That's right.

Tim Barnes:
Does that sound like a commercial?

Nathan:
Yeah, kind of. We should get like a professional actor, voiceover guy for that, Tim. But you know, and our topics often come out of conversations that we have with executive directors, or sometimes it comes out of how badly Tim and I screwed something up and we talk about it and we kind of dissect it and it's like, hey, we can make a podcast episode out of that.

Tim Barnes:
Well, yeah, we both have some really good war stories that we share occasionally. Some will remain in th in the vault. 



Nathan: I was just going to say sometimes, you know, we just barely have our, our head above the water line. And, and, but we, we persevere, Tim. We make it through.

Tim Barnes:
That's right. The good news is that we both have survived to fight another day. We keep pushing along, which is really, which is really good. 


Tim Barnes:
Well, today we're going to talk about numbers. Now, I know you like numbers when it goes to fundraising, but we're going to talk about numbers in a little bit of a different focus. And these are the numbers that show up on an organization's financial statements. I got to be honest, Nate, the numbers weren't really my thing growing up. I was much more into the humanities and, you know, literature, some of those kinds of things. And as I was thinking about this, I can't count all the time. My high school math teacher walked away from me after conversation, just shaking his head. And I know you had a little bit of the same experience at times as well. Oh, but I tell you, as I got into nonprofit work and I stepped into leadership, I had an epiphany when it came to numbers. The numbers on a financial statement actually tell a story and they tell the story of the priorities and focus of an organization, like where they are giving their energy, the story of what is going well and what needs attention. And they can provide a clue to the direction an organization should take. And they can be a significant part of the compass that we are using to guide us in the way to go.

Nathan:
You know, Tim a Compass is a good descriptor and, you know, yes, the financial statements and all of the numbers that we as executive directors have to look through and pay attention to and yeah, it is a spreadsheet full of numbers. And Tim, I was a solid C-minus student in math and, you know, looking at a spreadsheet gives me a headache. But as executive directors, our job is to take that information, the data that's on that sheet and make decisions. And ultimately that's what a compass is. It tells you where to go. And so it, you know, this is really important stuff and Tim, I'm glad you're covering this because I am not qualified to have this conversation today. So Tim, take us away.

Tim Barnes:
Well, we want to dive into this topic and we realize maybe we know some of you have told us that you listen to this while you're driving. So please keep your eyes on the road. And I know you won't be able to take notes, but we will do a couple of things. One is, I don't know if you've noticed or not, but we've begun to add transcriptions into the show notes. And so if you want to download that transcription and read it and highlight it later, you can or you can listen to this again some other time. And we're also going to, in the show notes, put some links that I found helpful in explaining nonprofit statements. And oh yeah, Nathan, I guess for the lawyers, we better make our disclaimers that we are not certified financial experts and we're not claiming to be those in this podcast. We're sharing some things that we found helpful in our experience as nonprofit leaders, but We recommend that you consult with a CPA or a financial expert that has experience in nonprofit finances. And before you launch out to do anything, you make sure you check with them. Okay, Nathan, are we good?

Nathan:
Yeah, basically don't sue us.

Tim Barnes:
Yeah. There's, there's not much to get. So we do feel like this is an important topic that we, that we've grown in and we just want to share from our, from our experience that might be, might be helpful for you as well. So we want to dive into four financial statements that you should have as a nonprofit and that you need to be paying attention to. And we're not necessarily saying that you have to do all this. Hopefully you have a bookkeeper or you have a CPA or you have somebody who is qualified to put these statements together, but you need to know what they are and what they tell you and how that might impact your leadership of this organization. So let's dive into these statements and then I wanna give you some tips on what to do with those. So the first statement that you should have is a balance sheet. And in the non-profit world, that's often called a statement of financial position. And basically what this is, is it's a snapshot of your financial position at a specific point in time. So on this day, so if we did a balance sheet on this day, we're recording this on May 24th. printed out a balance sheet, it would be a snapshot of where we are as an organization on May 24, 2023. Oftentimes these are printed at the end of the month and we look at it that way. And what that snapshot gives you is several things. One, the balance sheet tells you, lays out your assets. So it's what your organization owns. And so, for example, cash. So how much cash do you have? What are your assets? How much cash that come from donations or grants, investments? So how much cash do you have on hand? And then other assets like furniture, if you have an office, you have furniture and equipment that you have to use. You have supplies maybe that you use for your programs. You have a building. possibly or a vehicle or equipment, all kinds of things. Whatever is an asset to you that has value, you wanna make sure that's on your balance sheet. So you have assets and then you have liabilities. And liabilities is what the organization owes. So accounts payable. So what do you owe? Maybe you have contracts. Maybe you've contracted someone to do some work on your building or you have a contract with someone who Mows your yard every, you know, mows the yard around the building. Whatever contracts you might have are your bills that you have to pay. You may have some debt. So if you have loans, what do you, what do you owe on that? That's a liability. Maybe you are, are giving grants to other organizations. So how much are you going to give out? So it's all, all your commitments that's going to take money from the organization. And so your assets minus your liabilities, and then you have your net assets. And these are the assets that are after the liabilities are taken out. Then you, you, you know what you have, you know, where you stand. So your assets need to equal your liabilities minus your liabilities. plus your net assets. So you need to remember that that's how that works. So basically, after all that, you're basically a balance sheet is telling you where the organization is today. What are your assets? What are your liabilities? And where you stand? And what you have to run the organization.

Nathan:
So Tim as nonprofits that Those net assets that number Should be in is it important for us to be increasing that over time or is that more of a? Of an even we don't necessarily want it to go down But is it important for it to go up? I guess is the question

Tim Barnes:
You know, that's, that's a good question. Um, and I would say, and I've said this on this podcast before, or one of the bosses I work for used to say, you know, we're not in it for the money, but if we don't have money, we're not in it. So our goal is not to amass great amounts of assets and cash only to the point that you're going to use that to carry out your mission. to do what the organization is put together for. So you wanna make sure you don't wanna go down in value that you lose your ability to carry out your mission. But we try to spend whatever we receive to carry out our mission within reason. We also talk about we want a certain amount of money in the bank that if everything, if everybody stops. giving, if we had no more income, we'd be able to carry on for a while. So you need to think about that. Think about that as well. But it's, and here's the other thing to remember. Non-profit doesn't mean that you as an organization don't make money. So it's just what happens to the money that, that you make

Nathan:
That's leftover.

Tim: In, in a for-profit, that money is, you know, it would be our, the owners. The owner's portion, you know, the profit that you would get from making that money. In a nonprofit, that money stays within the organization. It doesn't benefit any one owner or person. It stays to continue to carry out the mission as an organization.

Nathan:
Yeah, and I think, you know, a lot of this, uh, of the balance sheet, you know, so for instance, you could have somebody donate a building to the organization and if they donated, let's say they donated a building that was valued at $500,000. Well, your net assets just went up by $500,000, but that's not cash to pay the bills with. So when you're, when you're talking to me, cash, cash is king. It is. what I'm looking at primarily most of the time. And that's a conversation for your board to say, okay, what is our goal for net assets, especially cash? Do we want two months of operating capital? Do we want three months? Do we want six months? Do we want a year? I worked for a while for an organization and they had one year's worth of all expenses for their program, the whole shoot match, one year of expenses in cash in a side account and talk about how peaceful that was going into the into the new year knowing that we have a whole year's cushion. Now that may or may not be right for your organization and and that may be impossible for your organization but it's a conversation to have with your board but you know the the net assets is definitely a a number you need to be paying attention to and watching those trends. Is it trending up? Is it trending down? And then breaking into pieces what piece of that net asset is trending up or trending down.

Tim Barnes:
Well, I think it's a good comment and good question too, Nathan, because I think it's important to remember in a nonprofit, you are receiving resources, whether that's cash or stock gifts or other grants from governments or other organizations to do your work. And so you need to be a good steward, a wise steward. of what you have so you can continue to perform your mission. There may be opportunities. So we took an opportunity. We had some resources. And because of the interest rates, we were able to put some of that money into a money market fund, for example, that we're getting some interest out of that. We're not playing the market with the donations. But we are being good stewards to say, Hey, we can get a little bit of interest on that money while we're not using it, which will help us continue to do, uh, to do our mission. And so you may look at that and say, okay, we'd like to see that asset go up because we're able to invest in that way. But it has to be out of stewardship that you are able to continue to, to, to do your mission. So that's something you consider as well. Well, let's go to our second statement. And I have to say, this is the one that I spend the most time with, and it's income statement or in nonprofit world, the statement of activities. And basically this shows all the financial activity of your nonprofit and the financial result of your work. Now, the thing is different about a statement of activities from the balance sheet is that rather than being a snapshot in time, it shows what happens over a period of time. That may be over a period of a month or that may be over your fiscal year, but it's more like a video rather than a snapshot. It doesn't take just one picture. It continues to show the picture of your organization. And so it looks at It looks at the revenue minus expenses, which will equal the change in your net assets or the funds coming in minus the cost of operating. And so cost of operating nonprofit will then show you what funds are available to continue the operation. So let's go back. The statement should show, first of all, where is the revenue coming from? So how do you get resources to operate your nonprofit? So you may get donations, people support you, you have donors, maybe you have some big donors, maybe you have people to give every month or whatever. You have grants, maybe you get from government or from foundations or other organizations. We talked in our last podcast about events. Maybe you have a golf tournament. And so, That's one of the things you notice that you had $30,000 come in from that golf tournament. So it shows, it shows what comes in for revenue and where it comes from. Then you also on the sheet, you have, where is the money being spent? What are your expenses? What are the, what are the categories of your expenses? So your programs, compensation, rent, you know, office equipment, you're able to see where you're spending the money. You also on this, you also on this statement of activities might see, particularly as it relates to revenue, it would be good to know what money is restricted and what money is non-restricted. And Nathan, you want to talk about the difference between restricted and non-restricted when it comes to donations.

Nathan:
sure. Um, restricted gifts are restricted for a specific activity or for a specific period of time. So if you have a program, let's say, uh, you're a animal shelter and you have a budget line item for dog food. So you could get a gift that comes in that is restricted for dog food. So if it is restricted for dog food, then you can only spend that money on dog food as opposed to an unrestricted gift. Let's say it's a hundred dollar gift. So I, I send in a hundred dollar restricted gift for dog food. I have to spend that hundred dollars on dog food. If I send in a hundred dollars, it's unrestricted, then I could spend it on, on dog food or cat food or bird food or whatever. Feed I guess bird feed Tim, but either way you could spend it on whatever you want now Restricted gifts you could get yourself in trouble on restricted gifts So let's say that you had it you have your budget for dog food is a hundred dollars That's your that's your budget for dog food, but your donor sends in a five hundred dollar restricted gift for dog food Well, okay. Now you've got your first hundred dollars but now you have $400 that is restricted for dog food. You can't spend that on salaries or cat food or anything else. You have to spend that on dog food. So now you have to go back to your donor and say, listen, uh, Mr. Mrs. Donor, thank you so much for your gift, but you know, we don't, we don't spend that much money on dog food. What do you want me to do with the difference? So. Restricted gifts are okay as long as they are already in your budget. So Tim, here's another way you get upside down on restricted gifts. Let's say that a gift comes in, you've got $100 in your budget for dog food, but the gift comes in for something outside of your budget. I don't know what it is. X. Whatever X is. But you don't have X in your budget. So now you have $500 coming in, but if you're gonna accept the gift and keep the gift, you have to spend that $500 on X, which is outside of your budget. So now your budget just increased 500, and the revenue came in to offset that, but it's not supporting your budget. So you have to be really careful when it comes to restricted gifts. Unrestricted is... almost all the time a better option than restricted.

Tim Barnes:
And I think that's a really important point. I know for new executive directors coming in who may not be used to that, it's really easy to go, wow, we had $100,000 revenue come in. That's awesome. But it's important to know what was that revenue giving to? And if 90,000 of that is for one of your programs, but you need 50,000 to run the organization, you're in a world of hurt at that point. So Again, we're not saying, I mean, we go out and we say, hey, we want to raise money for one of our programs and we do that. That's great. But you need to understand what do you need to operate? What do you need to do your mission and be very clear about the revenue that's coming in, what it's for. So something to keep in mind. And this statement of activities is really important. You can pick up different things that happen. Uh, so I look at, I look at this report in two ways. I it's, and I will say if you're more used to like a P and L statement, profit law statement, this is similar to that. And I start by saying, okay, what did this month look like? And then I also look at it from a year to date perspective. So if I'm in April, I look at what did it, what did we spend in April? What came in in April? And I look for trends, I look for what is the story that's coming out of this? Like what did we do in April? And then I also look at what have we, what have come in and what have we spent through the first four months of the year so that I can get a more of a picture that way. And things pop up. So Nathan, you and I were talking about, I know your organization has a large uh, expense at the beginning of every year, that's going to pop up on your, on your statement of activities. If I was a new executive director and I saw that, you know, a 40, $50,000 expense or whatever it is, I'd be going, what the heck, you know, I gotta, I gotta go find this, but maybe

Nathan:
Yeah,

Tim Barnes:
you

Nathan:
we,

Tim Barnes:
can, you can.

Nathan:
we have a bill that comes due in January. Sometimes it bleeds over into February, but typically January and it's, it's 20% of our entire revenue, uh, is an expense due in January. And it is, yeah, that first year, uh, I started in May of the year. So I had, I'd heard about it. Um, and so I had to go back and I had to look at the income statements for the last two or three years to, to get. my arms around what that expense was. And, you know, thankfully it was in January. So we got the benefit of the, of the year end fundraising push to make sure we had cash on hand to make that payment. Uh, but what it does, what it does too is, uh, we are, we show a net, a net revenue, uh, until like, you know, January 15th or whatever. And then And then of course that expense hits. So by the end of the January income statement, we're negative. And we stay negative for the entire year until December, uh, when we go positive again, and it's just, you know, it, it, it, I try to not be demoralized by it, but gosh darn it, I have to go the entire year with a negative number, uh, and, but you know, that's the, that's the way it is. So.

Tim Barnes:
And, and it is important to understand this is a major part of what you do as an organization. So it's not, it's not regretting that spending that money per se, right?

Nathan:
Right.

Tim Barnes:
Cause it's what you do.

Nathan:
It's the basis of our program. So, you know, it's medicine. It's our pharmacy budget. And the majority of it comes at one shot. And, you know, that's why we fundraise. That's why we do. That's why we exist. So it's not a bad thing. But when you sit there and you look at the reports, and it's like, oh, man, we're still negative. But...

Tim Barnes:
So the key is this statement, statement of activities, brings questions up that you can go and look. So if you see an extra expense or if you see a big gift that's given or whatever, you can ask questions and say, hey, I've gotta go find out what that is. And oh yeah, oh yeah. You know, as you research, you go, okay, now I remember and whatever, so.

Nathan:
And I think the key word there, Tim, that you used is story. This, this information is telling you a story. And the way I always approach it is I take a step back and say, okay, what am I seeing? I'm looking at the forest, you know, what story is, is this telling me? And then as I see trends or I see something that's, that's not quite right or is out of whack or is. you know, maybe it's 20% higher than in the past or something that stands out to me. Then I could dig into the details and look at, okay, what specifically is going on? But I always start at the 40,000 foot level and then work my way down to the 5,000 foot level. And it helps me to understand what's happening at this given time.

Tim Barnes:
So this is, and again for me, this is like one of the most important statements that I spend time with. You know, this may not be true for you, but I find it so helpful when I'm kind of just making sure that I know where we are, what we're working on, what the challenges are, and it does tell a great story. So the third statement is unique to nonprofits, and it's called a statement of functional expenses. And this statement has information that often is requested when you fill out your annual 990. 990, if you're not familiar, is basically your non-profit tax return, I call it, for the IRS. And it basically lays out money that came in, how you spent it, what you did, a whole lot of other questions. But this statement shows... how your expenses are distributed among the functional areas of your organization. What percentage that you spent of the revenue that came in, or sorry, this shows the distribution of your expenses by the functional areas of your organization. So oftentimes it's programs, how much went to programs, how much went to fundraising. how much went to management are three that often show up. So I'll let you know in our organization, we have four areas that we track under functional expenses. We are organization that works with people who have displaced refugees. And so we have a functional area called refugee services. So it's everything we do to do our work with those who've been displaced, around the world, locally, whatever. So it's the services, the work that we do with refugees. We also, as an organization, train and consult with other groups who wanna know more about refugee work and what goes on. So some of our expenses go to help training and consulting. And then we also do research and advocacy where we need to know what's going on in the world of refugees. And we need to be able to communicate to others to advocate for the work that we're doing. So those are three of our functional expenses, our functional, yeah, where our expenses go. And then the fourth one is admin. So what do we spend to keep the organization running? Now this is somewhat of a, not controversy, but there's a lot of a lot of ideas and thoughts about what goes into these functions. And the reason that this is so important, the statement is so important is one donors like to see how you use the money, how, how are the expenses distributed? So, you know, if you're spending 90% of your expenses on managing your organization and only 10% doing what the work that you say you to do. that could be a problem. And so they want to know, how are you spending your money? When you, you know, certifications from, from websites like Charity Navigator or GuideStar, they use that information to rate your organization, how well you do it. And it's good to know as a leader, what, how does it break down? What are the, what are the places? What are the functions that we are? that we are doing to carry out our mission and how much of that money is going. And I will say for us, this is us, I'm not saying any other organization, for us, we work really hard to keep our admin category at 15% of our expenses. And that may be unrealistic. And I. It's not a magic number, but that's what we look at. So we try to make sure that 85% of our expenses are going to some of the other work and only 15% to, uh, you know, do our management admin area. So Nathan, I don't know if you have a thought on that as well.

Nathan:
Um, yeah, Tim, my blood pressure's already going up. Um, yeah, I'm going to have some global rating agency who doesn't know my organization has never heard of us. Doesn't understand how we operate or what it is that we actually do. Give me a rating on how effective we are based on, on the money that we spend.

Tim Barnes:
Hey, Nathan,

Nathan:
Um, yeah.

Tim Barnes:
you just you blanked out for a little bit.

Nathan:
Oh, okay.

Tim Barnes:
I don't know whether it's going to actually how it's going to come out, but maybe we can just start

Nathan:
Okay,

Tim Barnes:
again where you can say.

Nathan:
I will do that. As long as we're going to edit this anyway, I need to grab my power cord from my iPad because I'm running

Tim Barnes:
Yep.

Nathan:
out of battery here.

Tim Barnes:
Yep.

Nathan:
My iPad is getting, it's kind of like phones. It's getting to where it's not holding a charge anymore.

Tim Barnes:
Bummer.

Nathan:
Okay, here we go, three, two, one. Tim, you're getting my blood pressure up here. These rating agencies, GuideStar and Charity Navigator, they are, they do a great thing, and I'm not saying that they don't have a place. But... You know, they, they give these, these ratings to organizations. They don't know my organization. They don't know your organization. They don't know how we function or what it is that we're actually doing. And so you really got to take these percentages with a grain of salt and you, you and your board have to determine what is right for us. And you know, if, if donors want, I'm going to be, uh, I'm going to be a little snippy here, Tim. but I could give you a really good ratio of admin expense to revenue generated. So what if we just had one employee, one staff person, and that's it, that's all we did. Well, gosh, our ratio would be really, really good. Would we do any good in the world? Would we actually get anything done? Well, maybe not as much. So, Okay, I'm done being snippy, Tim. I will say that the larger your organization becomes, the easier it is to keep that admin ratio low. Let's say that you have an executive director and three staff people that are on the admin side that are not program-based. Okay. If you have a million dollar budget and you have those four or five positions, then that's a certain ratio. Well, if you have only 700,000 of revenue, then that percentage is higher. Or if you only have 200,000 or 150,000. So what I'm saying is the bigger your organization becomes, the easier it is to have that lower percentage rate. If you're a $150,000 budget and you've got two and a half staff people, I wouldn't worry about your ratio as much because you're really boxed in a corner. You've got to have a baseline number of staff positions to get anything done. So I live it at that. The bigger your organization becomes, the easier it is to have that ratio get lower.

Tim Barnes:
I think this is a podcast we can do

Nathan:
Yeah, I think it is.

Tim Barnes:
down the line.

Nathan:
I

Tim Barnes:
So

Nathan:
think

Tim Barnes:
anyway.

Nathan:
it is because you also, some of these organizations will, there is no exact criteria on how your auditors will do the 990s. So what some auditors count as admin expense, other auditors count as program expense, and those, those, it's a moving target, Tim. And so it's, it there. Yeah, we got to do a whole podcast on that because there's lots to talk about with that.

Tim Barnes:
And there is ways to think about where you put different expenses. But anyway, this is helpful. It's something that I look at on a regular basis just to see what our percentages are, where our money is going in these functional expenses. So let's jump into the last statement. And this is probably the one that we use the least or that I refer to the least. And it's probably as you become a bigger organization, it's maybe more applicable, but it's called Statement of Cash Flows. And basically it shows how cash moves in and out of the organization broken into three sections. And the first section is operating. Operating section is basically the revenue and expenses that are the revenues coming in expenses going out. So and again, not. broken down in so many categories like the Statement of Activities, but basically overall, what is the revenue that's coming in in operations and what are the expenses going out? The second category is investing. So it's the idea of interest that you make on investments. That would be some of the revenue. So if you have some money in a money market, somebody gives you some Interests that you make on some of those investments go in there. And also for expenses is payments made on long-term investment purchases or payments on a building or land. So it's basically the, the, uh, the revenue that comes from investments and the money that's going out to, to purchase or, or make payments on investments. And then the last category is financing, which is the revenue from earnings or interest on financial activities and savings in your savings account. And then financial expenses like interest paid on a loan. So if you have a, maybe you have a, um, uh, a line of credit at a bank and you pay interest on some of that or whatever. So that goes

Nathan:
Thank you.

Tim Barnes:
into that. So it basically just shows how your cashflow works when it comes to operations, investing, and finances. So it's helpful to see some of that as a small nonprofit executive director that may not be as important to you at this stage. But it's something that you should have. Your bookkeeper should be putting that together, but it's maybe less to have to look at. So those are four statements that you need to have as a nonprofit and ones that you should be paying attention to. So with that said, Nathan, I have four tips that I'd like to just share about, okay, great, and now I know I have those statements, I kinda know what they do, what do I do with that? Well, let me give you these four statements. The first one is, or four tips, sorry, let me give you these four practical tips. The first tip is this, if this is an area of struggle, ask your bookkeeper to go over the statements with you and help you get a better understanding of the statements and what to look for. And this could be, maybe it's not your bookkeeper, maybe it's somebody else who's a financial expert. Maybe, Nathan, I think you talked about, there are people in your community, maybe a local community college or something who

Nathan:
Yeah,

Tim Barnes:
might

Nathan:
can we

Tim Barnes:
be able to help as well.

Nathan:
Tim, can you just get, can you go to like just a big company in town and, and ask them at a volunteer and to help with, uh, with that.

Tim Barnes:
Yeah, you might, you might do that. I think one thing to always keep in mind is there are some nuances and some differences between for-profit accounting and nonprofit accounting. There's different ways to look at it. So as you get input, it's important that you also talk to someone who has a background in nonprofit accounting and how to look at things. But yeah, you know, CPAs. there are oftentimes there are people who specialize in nonprofit accounting and trying to find someone like that. The key is you don't have to be an expert. But if this is a struggle you're having, you need to spend some time educating yourself so that you have the ability to be able to look at these and understand what's going on. The second tip is this, block out time each month to go over the financial statements. Ask yourself what story are being told here in these statements. Look for patterns. What things are standing out to you? What things are you not sure of that you need to do some more research? But I would say so every, every month after we get our statements, I sit down and I go through each one of those. I look at them. I write out questions and, uh, and, and look for things that I need to follow up with. So don't just. push aside, I know you've got lots of other things going on in your life, many other things that you're trying to do, but you need to, maybe it's just 20 minutes at the end of every month to look at your statements, but it's important to make time in your schedule to do that. The third thing is, third tip is to schedule time to meet with your board treasurer and or if you have a, some organizations have a finance committee, and make sure that And once a month, you're having those kinds of conversations. So I, when I get those statements and after I've had time to look at it, I schedule a meeting with our board treasurer and we go over it together. He has a different set of eyes to look at it and a different set of experiences. So we work on it together that then we're able to come to the board and talk about it together and help them understand what we see. So make sure you, you make time with your board treasurer or your finance committee. And here's the fourth one. When you're making big decisions, when you're working on future plans, be sure to include the financial picture in the mix. Look at how you've been doing the last two or three years. Look at how you're doing this year. Look at what trends are there. What can you what stands out to you? And how will that impact the plans for the future? The decisions you have to make. Should you start this? Should you start this new? program, this great opportunity. Well, let's also look at the finances. Let's look at the statements. What stories are telling us that may impact the launching of that of that new program. So it's important to give some time around that as well.

Nathan:
Well, you know, Tim, I, I always, uh, I, I approach finances and, and these documents always with a little bit of humor because it is, it is a struggle for me, it is not, uh, it's not something that comes naturally to me. So of course I deal with it with humor. Uh, but this stuff is, it is so important. And as executive directors, Tim and I have said this on this podcast several times before, and we think in our expert opinion. that being a executive director of a small to medium sized nonprofit is one of the, one of the most difficult things to do ever anywhere. Uh, because you have to be experts in areas that you have no idea what you're doing. You have to be an expert in program. You have to be an expert in finance. You have to be an expert in fundraising. You have to be expert in fish fixing the toilet. When it overflows, you have all of these things that you have to do, even though you have no real. understanding of them. And so, you know, today and the information that Tim shared, you know, this is just kind of the tip of the iceberg of some of the things that you need to be paying attention to on these financial statements that your organization creates on a monthly, quarterly, and annual basis. So this is all important stuff that you need to be paying attention to. So, Tim, what, you got any closing thoughts for us?

Tim Barnes:
Well, I think the bottom line is, is that understanding financial information about your organization is an important part of leading a nonprofit. Like you just said, Nathan, take time to develop in this area. Again, I know you're supposed to be the expert in every area, but just have enough, enough expertise to be dangerous. It's the way I look at it. Know enough to know what questions to ask and how to dive into it. Take the time to develop in this area. Don't be afraid to ask for help or input from those who have expertise or experience when it comes not to nonprofit finances.

Nathan:
Thank you for listening today. If you are benefiting from what is being shared on this podcast, we would like to ask you to share a review on the platform that you're listening to. Let us know how the podcast is benefiting you. If you would like to get in touch with us, our contact information can be found in the show notes. That's all for today. Until next time.