What Story do your Financials Tell?

What story do your financials tell?

A good, compelling story is a favorite tool of most fundraisers I know. Salespeople use it too. The electrical engineering college graduate who grew up in a refugee village in Rwanda without electricity? The formerly unsheltered family walking into a home of their very own? Sign me up.

But with audits underway and 990s in process, my mind turns to a different kind of story – a financial story. All of these documents – the things you attach to grant proposals or print in your annual reports – are doing the telling.

Like any story, it’s important that your financial story is compelling – it must develop a shared understanding of your organization’s numbers and how they connect to the execution of your mission. But I’ll be honest – not many organizations are telling their financial story well.

What do your financials tell your donors, customers, or potential investors?

Too often, financial stories are a collection of one-acts, with no discernible thread.  Sometimes they even present conflicting information and muddle the importance of your organization’s bigger story. So … how can you craft a compelling financial story?

Actively Manage your Finances – Throughout the Year

Here’s a hard truth – if you’re not actively managing expenses, cash flow, and allocations, it will show.  Crafting a compelling financial story means managing with intentionality. It’s budgeting well (and living within your means). It’s monthly cash-flow reports. It’s reassessing resource allocations quarterly. And, it’s working a defined development and/or sales pipeline.

Own your Narrative

Has your organization grown steadily and incrementally for a decade?  Or are you an innovator who makes big bets that haven’t always paid off?  Or, maybe you’re an emerging organization that is ready to scale?  All of these are legitimate models and compelling stories in their own right.  You want to make sure your numbers and vision are telling the same story.

Don’t Hide your Mistakes

I know you don’t want to draw attention to an issue in your financials, but it is far worse for funders to spot an issue first. I asked a colleague the other day what he was looking for when reviewing financial statements. “Surprises,” he said.  He wanted to know, does the story hang together, or are there things that don’t fit? If you had a bad year after a poorly executed leadership transition, say that.  If you lost a big funder, explain how you’re replacing them.  Being up front about an issue builds trust.

This month, RevJen is partnering with Philanthropy Southwest on a series of webinars designed to help funders use financial statements to make better funding decisions.  They’re learning how to uncover the story.

My advice? Make it easy on them.  Few organizations are doing this well, so it’s a ripe opportunity to stand out.  Actively craft your financial story – where you’ve been and where you’re going.  If you do, your donors and funders are much more likely to go with you.