3 Tips for Telling Your Nonprofit’s Financial Story

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Many fundraisers focus on telling client stories, impact stories, stories about how our programs are changing the world for the better. These stories tug at the heart strings. We are comfortable communicating this sort of information.

But consider: For some individual donors, particularly major donors, and for most foundation partners, your organization’s financial story matters as much or more than your programmatic one. In fact, I’ve heard foundation program officers say more than once that, when reviewing grant proposals, they often turn to the budget page first.

Major individual donors and foundation donors are investors in your organization. They evaluate potential returns and they evaluate risk. They want to understand the financial scenario to which their funds are being added.

To tell your financial story, start by developing short talking points on these 3 key areas and be ready to share them as needed.

Salary Expense

Often the largest expense line item in a nonprofit’s budget, salaries reflect our most valuable asset – our people. In communicating with donors, be ready to:

  • Provide a list of the positions that are included in your salaries line item and whether they are full or half time.
  • Describe what benefits (health insurance, PTO, matched 401k) are provided to these roles.
  • Share an org chart to show key responsibilities and how positions relate to each other.

Contributed and Earned Revenue

Tell the story of how your organization wrangles the funds needed to make its impact. In conversation with donors, be ready to:

  • Share a list of recent major contributions.
  • Name the donors/funders with whom you have major asks pending.
  • Describe the pieces of your contributed revenue pie – what % of revenues comes from the main categories of donors: individuals, foundations, corporations, government?
  • If you have earned revenue, talk about it! Program fees, rental income, social enterprise income. Donors love to hear that you are not reliant on contributions alone.

Off-the-Page Factors

One organization I know was founded by a philanthropic family. Twenty-five years since the founding, the family still covers the organization’s annual “administrative overhead.”

This is a significant contribution and impacts the long term sustainability of the organization. But donors could not glean this fact by simply looking at this nonprofit’s operating budgets or financial statements.

The organization started communicating this fact in all of their asks and discovered donors loved hearing that, because administrative overhead was already covered, most of THEIR contribution would go straight to programs.

Maintaining financial transparency is important for nonprofits, but that’s not the driving force here. Proactively sharing details about your financial scenario is about shaping your story, being proactive instead of reactive, and putting your organization’s best foot forward from the start.

Pro tip: Your financial story talking points can be compiled in a 1-2 paragraph written budget narrative that accompanies your operating budget every time you send it out.

What are your thoughts on sharing financial information with donors or prospects? Please share your thoughts or experience in the Comments box below!

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