Financial Risk Assessment for Nonprofits
Learn Where Your Nonprofit Stands.
Through a Financial Risk Assessment, you gain a clear, holistic, and definitive picture of your nonprofit’s financial performance and position. You learn how your operations are supporting your mission and where they may not be.
Our Financial Risk Assessment service has three components:
Onsite Financial Discovery
Over two to three days at your location, we analyze your financial accounts, controls, processes, tools, and reports. We also interview your leadership and operational teams to get a clear picture of your financial operations.
Financial Evaluation
About 30 days after discovery, we deliver a written financial assessment that does the following:
- Quantifies your nonprofit’s key operational metrics.
- Tells the story they reveal.
- Identifies your immediate and longer-term risks and opportunities.
- Prioritizes risks relative to your mission.
Financial Recommendations
In the assessment, we also provide best-practice recommendations for mitigating your risks and addressing your opportunities. We include requirements and next steps for implementing these recommendations.
Benefits of our Financial Risk Assessment
A complete financial evaluation gives your nonprofit all of the following:
Financial Awareness
You’ll learn the financial health of your nonprofit according to precise metrics, which we help you interpret for use in decision-making.
Financial Understanding
You’ll learn how and why your nonprofit arrived at its current financial state, and be able to communicate this information to stakeholders.
Financial Visibility
You’ll gain foresight into where your nonprofit is headed, and a timeline for taking appropriate action.
Financial Preparedness
With recommendations and next steps included in the assessment, you’ll have a working plan for shaping your nonprofit’s future.
Is a Financial Risk Assessment Right for You?
You know red flags when you see them. Here are several that indicate it is probably time for financial evaluation.
Financial Discrepancies
Your in-house financial records do not align with your bank statements, and you can’t explain why.
Empty Seats
An executive in charge of finance, accounting, or operations left your nonprofit, and you don’t have a transition plan.
Missing or Illegible Reports
Key reports surface only sporadically or not at all, and other reports make no sense. You struggle to find and understand critical financial metrics.
Board Pressure
Your board of directors is asking for financial reports or projections that you and your team can’t produce.
Loose Accountability
You’re unclear on the allocation or performance of various funds and contributions and can’t report on them with precision.
Incomplete Audit Prep
Your nonprofit struggles to gather and organize the reports and documentation required for a financial audit.
Adverse Audit Findings
Your auditor discovers that your nonprofit lacks controls around reporting, compliance, or governance.
Permanent Reactive Mode
The lack of financial transparency prevents you from anticipating or mitigating risk, so you’re constantly putting out fires.
Stagnant Strategic Projects
You’re merely keeping the doors open from month to month, rather than implementing a bold vision from year to year.
Our Financial Risk Assessment Approach
When we assess your nonprofit’s risk, we’re also advocating for your success. Our recommendations are designed to help you achieve your goals with sustainable resources and healthy operations.
Ultimately, we want you to grow, to set ever more ambitious goals, and to keep surpassing them.
Note that our risk assessment is not a people assessment. We evaluate financial controls, not people. And our only focus on people is to support them with good controls.
With all that in mind, below is what we analyze during a Financial Risk Assessment:
FINANCIAL PERFORMANCE CRITERIA WE EVALUATE
Revenues
How are they growing? What are the number and quality of revenue streams? What does it take for you to generate revenue?
Profits
While they’re not for private distribution, they’re essential for building your mission. Do you have the profit margins to withstand surprises or downturns? Or conversely, to dream bigger?
Operational Efficiency
How do you manage costs, vendors, and inventory? What are your workflows? How do you fill financial roles?
Solvency
Can you pay your debts as they come due? Particularly your long-term commitments on things like capital and real estate?
Liquidity
Do you have the cash – and not just the revenues or profits – to cover ongoing and unplanned expenses?
FINANCIAL REPORTS AND DOCUMENTS WE REVIEW
Balance Sheet or Statement of Position (SOP) ● Income Statement or Statement of Activities ● Statement of Functional Expenses ● Cash Flow Statements ● Annual Reports ● Financial Ratio Analyses ● Chart of Accounts ● Purchase Orders, Invoices, and Expense Reports
Figure Out Your Finances so You Can Focus on Your Mission.
Complete the form below for a free 20-minute consult.