“I love financial statements.”
And, so began Dennis Morrone’s AICPA Not-for-Profit Conference session earlier this week.
After a deft comedic pause for laughter and applause (who knew CPAs were so funny), Grant Thornton’s Morrone went on to say, “But, it’s clear to me after many conversations with nonprofit stakeholders that they fall short of the users’ expectations.”
So, in his session with peer John Mattie from PwC titled, “How to Tell My Organization’s Story Through the Financial Statements,” the two discussed the importance of expanding disclosure to be more informative and better aligned with your organization’s strategic goals.
Here are some highlights:
Why is transparency important?
- Proactive transparency and communication are essential to organizational success. Stakeholder understanding and support only come from transparency and open communications.
- A practice of continuous, transparent communication enables an organization to better respond to crises – such as physical disaster, fraud, or the sudden loss of a leader – and execute more robust crises communication strategies.
- Establishing a culture of transparency is critical for effective governance, constituent engagement, and change management.
- Opening communications channels can help to establish meaningful and productive relationships with constituents. These relationships can have a significant impact on long-term financial and non-financial performance.
First, know your stakeholders
Know both internal stakeholders (board, committees, senior management, management team, staff, volunteer workers) and external (customers, donors, funders, grantors, creditors, partners, government, general public). And, understand their needs and expectations. Needs for information, communication methods, and information consumption patterns vary substantially from segment to segment. Meeting and exceeding the information needs for each of these groups is critical to delivering satisfaction.
If that’s too overwhelming, start by identifying your top two to three stakeholders. What do they need/want? Go from there.
How do we convey the broader, strategic message with financial statements?
Make the data you have today more understandable and relatable; enhance the story and improve disclosure. When we think about financial statements we think revenue inputs and expense outputs. We need to be thinking more about outcomes.