Introduction to Nonprofit Finance

Puzzled by financial reports? Feeling like everyone else knows what these numbers mean, except for you? This course will introduce you to the three most commonly used financial statements in nonprofits: the budget, income statement, and balance sheet. You will also become familiar with a few core principles that will help you as a leader. The content is geared for managers, advocates, and board members who want to increase confidence and basic knowledge of financial management at domestic violence organizations. If possible, we encourage you to take this course with a colleague, so that you can help each other learn.

Completing this course constitutes 11 self-study hours.

Part I: Core concepts

This section provides basic information about finance.

Survivors of domestic violence increase their self- determination and paths to freedom when they gain/regain control over their economic resources. As nonprofit leaders and activists, we must do the same. After all, if we do not understand and manage our financial resources, who will?

• Money In, Money Out – Gain an understanding of revenues and expenses.
• What You Own and What You Owe – Learn about assets and liabilities.
• Accrual vs. Cash Accounting – Explore the differences and learn why one is generally preferred for nonprofits. 
• Fiscal Year – Options for setting your fiscal year.
• The Balancing Act – Context for making financial decisions.

Part II: Budgets, income statements, and balance sheets

Three financial statements to know and love. Even if you are not the romantic type, understanding financial statements can increase your confidence, spark insight, and help your team turn visions and dreams into reality. The budget, income statement, and balance sheet say a lot about how an organization carries out its mission and puts its values into action.

• The Budget – Learn how to create and read a budget.
• Income Statements – Understand how your organization is getting and spending money.
• The Balance Sheet – Arguably the most-complex of the three financial statements, the balance sheet includes these five elements:
  • A snapshot in time
  • Assets
  • Liabilities
  • Net assets
  • Balance sheet summary

Part III: Practical applications

Financial statements can help your organization make good decisions and decrease money worries related to organizational health, saving and spending, cash flow, and rainy days. Learn more about reading financial statements and practice what you’ve learned with this experiential exercise!

Consult these webinars and online resources to further your learning:

• Financial Leadership & Management Webinar – geared to the realities of domestic violence and sexual assault programs, this webinar covers: nonprofit financial fundamentals and budget basics; cost allocation; board financial oversight; and fraud prevention.
• Nonprofit Finance Webinar: Cost Allocation – learn about allocating costs with multiple funding sources at your nonprofit organization. 
• Board Cafe – free online resource for board members that includes helpful articles on finance.
• Guide to Nonprofit Financial Management – overview of bookkeeping, financial controls, and the annual accounting cycle.