Narrative 1 – I was recently asked by a close colleague/friend/mentor to vet an organization based on their financial reports and see if there were any red flags I should help identify as well as provide a ‘story behind the numbers’.
Narrative 2 – Backtracking a bit on this, let me call this colleague of mine R. So R and I have known each other for ten years now and worked on multiple programs, resolved various financial issues as well as seen through organizational and financial transitions. Aside from being a close colleague, R has also been a great mentor to me on professional as well as personal fronts. We both became parents around the same time and hence we have a certain camaraderie developed there too. While our work styles as well as career tracks have been quite different, we have a certain level of respect and acknowledgement of each others’ opinions and guidance. So when I was asked to help out on reviewing this organization’s financial reports for any red flags, it was not only for old-times sake but also a connection that we had developed over the years with each other that I knew my inputs might be valuable!
Back to the present – In the above two narratives, I provided different perspectives to the reader. Both have the relevant facts and yet are they both telling the same story? Probably yes except that in narrative 2, my objective was to provide a more detailed narrative for the reader to connect to while offering that same factful story-line.
What motivated me to write this post is when R asked me to provide a story behind the organization’s financial reports. Now you will find that nonprofits around the world have a particularly strong power of storytelling about the work they do – be it to raise awareness, for raising funds through award-winning proposals, to inspire around the impact they create and so on. It goes without saying that their financial numbers too – especially the way they are presented – are equally core to their STORYLINE. By financial numbers, I refer to three key elements – financial statements, financial status section of their Annual Reports and a well-written (award winning?) budget proposal.
While their narratives are fundamental to the work they do, highlighting the financial story offers its own unique spark. Here are some pointers on how financial numbers can be a great storyline on the work that the nonprofits continually do:
1. Numbers have a unique way of presenting a story. They are facts by all means, reflect transparency and so less surprises there to begin with. There is a huge merit to transparency in your numbers per this study from Guidestar .
2. They have the ability to be presented in a manner when they happened – a timeline that serves to set the scene of progress and impact over a period of time.
3. Numbers have a less tendency to be fudged – and do not even attempt to; for one, there are readers out there who have ‘audit’ in their blood! And of course, you wouldn’t want to lose your trustworthiness and reputation with your supporters.
4. With numbers come a huge sense of credibility – they tend to be less exaggerating, less deceiving – and they help present the work in a manner that can be proved either ways quite easily.
5. Numbers are the decision-drivers of your work – whether it is for potential donors or the external auditor or the internal leadership seeking a renewed direction.
6. Numbers provide a strong sense of ownership of your work. In my experience of managing finances, I have learnt that when program teams have been empowered with owning their own budgets, they will drive the program to a completely different level than teams who may not have direct access to their budgets.
What are some of your favorite financial number-driven stories?
How do you make the most of your organization’s numbers?