Philanthropic Best Practices Recaps


Nonprofit Financial Statements: How to Identify the Red Flags

Financial statements tell an important story about how a current or potential grantee is operating and show a funder where its money came from, where it is now, and where it’s going. Returning to the Annual Meeting in this particularly tumultuous year for nonprofit organizations, Tom Blaney alerted attendees to potential red flags in financial statements. 

Blaney opened the session by introducing the various types of financial reports and what to look for in a useful audit. He offered tips on how to best assess a nonprofit’s financial capacity and stability. During the presentation, notable red flags in financial statements included: if the audit firm does not have a dedicated nonprofit division, consistent decreases in the nonprofit’s revenue year over year, little or no funding diversity, regular cash flow problems, and a higher percentage of restricted assets versus unrestricted. For a copy of Blaney’s presentation and more information on these financial statement red flags, click here.


Philanthropic Best Practices: Developing a Grant Agreement: What to Leave In, What to Leave Out  

No matter the nature or size of your grants, it’s essential to have a thorough grant agreement in place. Some agreements may need to be more complex than others, but all such documents must provide both donor and grantee a clear understanding of expectations, restrictions, payment schedules, and reporting requirements.

Karen Gries, John Jackson, and Andras Kosaras discussed the changing rules of nonprofits and detailed the best formats for philanthropy. Kosaras encouraged donors to develop grant templates to stabilize the giving processes. He explained, “You don’t have to reinvent the wheel for every grantee. You can have two, three, or four different templates that you develop and then you can use those.”

Gries implored grantors to be more flexible in their grant agreements, offering COVID-19 as a reason to provide flexibility. “As the programatic activities of our grantees have changed, the foundation community has stepped up amid COVID-19 and allows grantors needed flexibility,” she said.


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