The Final Seminar: Financial Management for Nonprofit OrganizationsApril 25, 2014
On April 17, 2014 the Center for the Study of Sport in Society hosted the final seminar in their Nonprofit Management seminar series. The topic was “Financial Management for Nonprofit Organizations” and was presented by Professor Rick Arrowood, J.D. Professor Arrowood discussed the similarities and differences in managing finances for nonprofits and businesses. He has extensive experience sitting on boards for various organizations, so he offered insight on both smaller and larger scale nonprofit finances with real life examples.
Professor Arrowood walked the seminar’s attendees through the different financial statements nonprofits may use. These statements are typically based on the fiscal year and may mirror the state’s fiscal year. The financial statements include the statement of financial position (sometimes called the balance sheet), the statement of activities (the profit and loss sheet), and the cash flow statement. The statement of financial position details the organization’s assets, liabilities, and net assets and lists which assets are unrestricted, temporarily restricted, and permanently restricted. The main purpose is to show the status of cash and the overall health of the organization, as it includes information on the amount of real estate owned, and also status of funds that may be restricted by a donor to cover certain expenses. The statement of activities, as explained by Professor Arrowood, is constantly changing and is a snapshot of a moment in time. It usually covers 30 days and accounts for the expenses of programs and events. It can be helpful to plan for drastic variances, and it is usually consistent year to year. The cash flow statement is used to evaluate the amount of cash needed on hand at all times to operate. It is also used to create the budget.
Professor Arrowood also discussed annual reports, fundraising, and audits. Although not legally required, annual reports can be a nice way of capturing the organization’s accomplishments and financial information from the previous year. When fundraising, it is important to make potential donors aware of the organization’s 501c3 status, as well as informing what they can list as a tax deduction. Legally it is the donor’s responsibility to obtain a letter from the organization about what is tax deductible, but it is best practice to provide this information to the donor. Audits are important to conduct when receiving a grant because a total evaluation of the organizations finances can show whether the organization can support the grant. Grant money could run out mid-program or be disbursed by reimbursement so it is important for the organization to have the money to support it up front.
Attendees took advantage of Professor Arrowwod’s experience and expertise during the question and answer portion at the end of the seminar. Participants were able to address specific issues within their nonprofits, and get valuable feedback and advice. For those unable to attend the seminar, it was recorded and will be posted on the Sport in Society website here! Thank you to everyone who attended our seminar series this year, we’re already looking forward to continuing our professional development events next September!