As Director of the Finance Office at a mid-size church for many years, not once was I asked to produce a Profit & Loss statement. Isn’t that odd, considering that the business world lives and dies by these reports? What this church did live and die by was the Budget Report, which held all the power, internally and externally.
The thing is that all non-profits should look at P & L statements, as well as balance sheets and budget reports. Although they don’t technically make profit, they do have different income streams and associated cost of goods. Solid data on revenue and expenses can help shape decisions on spending along with growth and development strategies.
Accounting, when done well, tells the story of your organization, complete with all the elements of good storytelling. Just for fun, let’s think of some of the questions that good accounting processes can answer, within the story framework.
Setting
What is your organizational context? How was it originally funded and how is it currently funded? What is the company culture? What are the symbols that speak meaning into your brand?
Characters
Who are the players within the organization; both those who are part of the income side and those who are part of the expense side?
Plot
What does your organization actually do? Who do you serve and how? What are the various ways in which you are funded and spend that funding?
Conflict
Where are the conflicts in the story of your team or organization? Are there perceived inequities in salary or department budget or team size? Are there tensions with other community agencies, especially in regard to scarce resources?
Resolution
Are you close enough to the team pipeline to be aware of conflict early, when it can still be useful rather than destructive? Do you have a well-communicated process for conflict resolution?
Point of View
How do you view your organization? How does your team view the organization? What about the external shareholders, such as donors or community?
Theme
What is the reason your organization exists? The mission? Do the financial reports tell a story that aligns with mission?
You may be thinking that there’s no way that accounting answers all of these questions within your story, but you would be wrong. How and why an organization raises funds and where and why an organization spends those funds tells everything about them! And then some.
Here at Ginger Lee Solutions, we are experts at pulling all the story threads together and shaping those threads into a cohesive narrative that helps leaders make well-informed decisions for the future.
What story does your organizational finances tell?