September Edition 2004 - New York Nonprofit Press

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16 New York Nonprofit Press www.nynp.biz September 2004 FINANCE A Ten Point Checklist to Evaluate Your Financial Management Unfortunately, it is not uncommon to read about financial failings at even well known and well established nonprofits. At these times, a question often arises: how do board members and executive directors, many of whom do not have financial backgrounds, determine if their finances are managed well. Finances are, after all, the life-blood of nonprofits. I believe that boards and CEOs can quickly assess the strength of their agency’s financial management by rating the efficiency of their accounting or finance department. While this simple checklist may not reveal deep seated financial flaws i.e. structural deficits or revenue risks, it is based on the truism that how an accounting or finance department functions determines how well their finances are managed. Sanjay Shah HOW DOES YOUR AGENCY STACK UP? ❑ 1. Does your accounting department give you timely and accurate “bird’s eye view” reports every month? These should be 3 or 4 pages long, with the first page comparing monthly and year-to-date operations with budget targets, followed by “drilleddown” reports of either groups of programs or funds and a page of notes explaining the “variances.” ❑ 2. Are these reports automated, coming right out of the accounting system? In many instances, accounting/finance personnel spend inordinate amounts of time preparing reports because their accounting systems don’t or can’t produce them in the format they or their board want. Besides the time savings, reports coming right from accounting systems help to assure the integrity of the numbers. ❑ 3. Does your accounting department prepare monthly reports within 10 days after a month ends? Unless there is a specific and compelling reason for delays, your accounting/finance department should be able to give “timely” reports. Regular delays of more than 10 days may be due to problems with basic “processing” functions i.e. payroll, accounts payable, etc. ❑ 4. Do the reports prepared by your accounting department give a clear sense of what’s going on and where the problems lie? Clarity & brevity, as opposed to volumes of tiny details, are more important, especially when it comes to reports for the board of directors. The reports should show overall results (surplus or deficit), where the problems lie – i.e. Program A caused 71% of deficit because of higher salaries (39%), rent (11%) & lower revenue (21%) - and what management intends to do about it. More often, the reports and discussions get bogged down in questions like “Why is our telephone bill $200 higher than last month?” and miss the big picture. ❑ 5. Does your accounting department provide quick answers to your questions? Ideally, they should anticipate the questions and provide explanations. However, if they take 2 hours to answer a question like “how did we do in Program A for July compared with last year?”, then you have a problem ❑ 6. Does the accounting department provide a Statement of Activities (Revenue & Expense Report) and a Statement of Position (Balance Sheet) at the same time? A well-run accounting/finance department is up-to-date with all processing functions, monthly closings, adjustments, bank reconciliations, etc., essential to producing Statement of Activities & Statement of Position reports simultaneously. A department that is on top of their financial statements is also likely to be on top of financial matters concerning their organization. ❑ 7. Does your accounting department provide you cash flow projections and analyses of accounts payable and receivable? Many nonprofits struggle with cash flow and one way of managing it is to have regularly updated cash flow projections so you can appropriately manage accounts receivable, accounts payable and working capital needs. Cash flow projections should be based on historical data and adjusted for the knowledge about current events. ❑ 8. Can your accounting department complete an external CPA audit in 3 months after a fiscal year ends and do your final audited numbers differ substantially from the unaudited numbers? An independent CPA audit is the ultimate test of your financial reports. How quickly is your accounting department ready to meet with outside auditors? Not many nonprofits of any size actually complete a CPA audit within three months, but a well-functioning department should be prepared for one at that point. Also, while there is always some variation between internal financial reports and final audited results, substantial differences are a sign of trouble. ❑ 9. Does your accounting department provide you with financial projections – for the current year as well as next year? An ability to create financial projections, depending on the complexity of the operations, may require financial modeling and/or advanced spreadsheet skills. The payoff is an ability to manage your finance “proactively.” ❑ 10. Does your accounting department follow FASB 116 requirements regarding unrestricted, temporarily restricted and permanently restricted funds in recording all receipts? It is extremely important to delineate unrestricted funds from temporarily and permanently restricted funds at the transaction level, for the simple reason that nonprofits have discretion over where, when & how they can spend these funds and they should correctly record and track these receipts. CHECK YOUR RESULTS: Yes to 5 or less – Needs significant improvements Yes to 6 or 7 – Needs some improvements Yes to 8 or more – Needs marginal improvements What can you expect if you meet all or 8 or more tests? Four major benefits: a) Good financial management and planning b) Well-educated decisions to meet your short-term and long-term goals c) Proactive management to avert impending problems d) Efficient use of all of your resources – time, people, and money What do you need to pass these tests? Three things as follows: • Clearly defined and automated processes with checks and balances •Well implemented systems to meet your organization’s needs & goals •Trained staff – both in the processes and the systems, and knowledgeable in financial/accounting matters Sanjay Shah is the President of Paragon Management Group. He has worked as CFO and consultant for many large and small nonprofits. He can be reached at sshah@paragon.mgt.com
September 2004 New York Nonprofit Press www.nynp.biz 17 PEOPLE SERVING PEOPLE Mattingly New Commissioner at Administration for Children’s Services Abbott House Names Meyers New Executive Director/CEO John B. Mattingly has been appointed Commissioner of New York City’s Administration for Children's Services. Mattingly was previously Director of Human Service Reforms at the Annie E. Casey Foundation. Over the past five years, he has worked closely with ACS, serving as a member of the New York City Special Child Welfare Advisory Panel which has helped to resolve the Marisol and Wilder federal class action lawsuits. "John Mattingly is well-known to the New York City children's services community of practitioners and advocates, and we are incredibly fortunate that he has decided to join our team," said Mayor Bloomberg. "Knowing from personal experience the business of child welfare both in New York and other cities around the country, I have no illusions that this will be an easy task,” said Mattingly. “On the other hand, I also have seen the progress made by Commissioner Scoppetta and Commissioner Bell in the past eight years, and I hope to build on that work in the coming years." “We have worked with him in the past and look forward to working with him again,” said Jim Purcell, Executive Director of the Council of Family and Child Caring Agencies (COFCCA). “We are very impressed with his vision and his knowledge of the child welfare system.” "John Mattingly is clearly the right person for the job, coming to New York City with a demonstrated record of accomplishments John Mattingly and expertise in the field and a long history of success in national child welfare reform efforts," said Gail B. Nayowith, Executive Director, Citizens' Committee for Children of New York. At the Annie E. Casey Foundation, Mattingly designed and managed the "Family to Family" foster care initiative, and was also the Foundation's team leader for child welfare policy. "Family to Family" focuses on strengthening the network of families available to care for abused and neglected children in their own communities; and tracking outcomes for children and families. He also mediated a class action case against the State of Tennessee in 2001. Claude B. Meyers Claude B. Meyers has been selected to be the new Executive Director and CEO of Abbott House, located in Irvington, New York. She will succeed Denis Barry who had announced his intention to retire earlier this year. Meyers brings over 35 years of experience in New York social services to her new position. She has been both a top administrator with the Child Welfare Administration (now ACS) and a senior executive at two direct service nonprofit agencies. “I am most grateful to have been selected by the Board of Directors to succeed Denis, to continue his splendid and valuable work and, hopefully, to bring Abbott House to an even higher level of excellence,” said Meyers. “It gives me enormous pleasure to be associated with this caring community.” “Claude is a wonderful person with character, experience and leadership skills,” said Barry. For the past seven years, Meyers has served as Associate Executive Director of Episcopal Social Services of New York where she oversaw the agency’s operations and led its expansion into preventive services, special needs foster boarding homes, early intervention and federal Early Head Start. During a 30-year career with New York City government, Meyers rose to lead the Child Welfare Administration as Executive Deputy Commissioner in 1994. Prior to that, she served as Assistant Deputy Commissioner for Policy and Planning, Director of Foster Care Development, Director of Contract Management and in a variety of program management and direct service positions. After leaving CWA in 1995, she spent approximately two years with HeartShare Human Services. Meyers will join Abbott House on October 18th. Barry will retire at the end of October. Abbott House provides care for over 1,000 abused, neglected and developmentally-disabled children and young adults at its 16-acre campus, a foster boarding home program and 26 community-based group homes. Gutheil Next Executive Director at Episcopal Social Services Women’s Foundation Welcomes Cohen as Executive Director Robert Gutheil has been selected to become the next Executive Director of Episcopal Social Services. Gutheil will begin work at ESS on September 7 and take full title on January 1, 2005, when current Executive Director Stephen J. Chinlund retires after 16 years of service. Gutheil has over 30 years of experience in New York social services, most recently as Executive Director of The Salvation Army Social Services for Children. During his tenure Gutheil oversaw the expansion of high-quality programs into group homes for adolescents, residences for the developmentally disabled, foster boarding home care and adoption, day care centers, family preservation programs, and support services for people with HIV/AIDS. “I look forward with enormous enthusiasm to joining the outstanding Board and staff leadership team at ESS,” said Gutheil. “It’s an agency I already know well and consider one of the best in the field. We’ll move forward together to even higher levels of service to the children, families and individuals of our great city.” The Salvation Army has honored Gutheil with its prestigious National Award for Excellence in Social Work. He has also been presented with the Leadership Award by Life Services for the Handicapped and the Unsung Heroes Award by the Day Care Council of New York. Gutheil serves on the Boards of Day Care Council of New York, United Neighbors of East Midtown, Life Services for the Robert Gutheil Handicapped, The Open Congregation, and Episcopal Charities. Previously he has been a member of the National Advisory Council of Executives for the Child Welfare League of America and served on both the Board and Downstate Steering Committee of the New York State Council of Family and Child Care Agencies. ESS, which traces its history back to 1831, operates 16 separate programs including foster boarding homes, adoption services, group homes and foster care prevention; community residences for the developmentally disabled, early head start; early intervention; the Murray Hill Senior Center and a prison services network. The New York Women’s Foundation has welcomed Hollis Cohen as its new Executive Director. Cohen comes to the Foundation with 20 years of experience working for nationally-recognized organizations helping underserved populations. “The Foundation’s work in the communities of New York City and its in-depth knowledge of the issues facing low-income women and girls contribute to its profound effect upon poverty in this city,” said Cohen. “I am looking forward to being part of the Foundation as its position in New York City grows even stronger.” Before joining The New York Women's Foundation (NYWF), Cohen was Lighthouse International’s Vice President for Development and later served as their Vice President for Technology Enterprises and Special Assistant to the President for Program Development. At the Lighthouse, she developed and funded cutting-edge initiatives to ensure access to new technologies for those who are blind or visually impaired. Through innovative partnerships in the public and private sectors, she developed new resources for efforts aimed at ensuring equality for disabled individuals of all ages. Cohen developed some of the first “cause-marketing” campaigns, bridging corporate marketing interests with not-forprofit goals. She consulted to American Express on its “Charge Against Hunger” campaign. For the Association for a Better New Hollis Cohen visit our website at www.nynp.biz York, she developed the first co-op marketing program to support the City’s cultural institutions. She began her nonprofit career at Citymeals-on-Wheels, where she ultimately served as Executive Director, developing model programs in order to provide annual funding to over 100 community organizations across the city delivering meals and emergency food supplies to the frail and homebound elderly. During her tenure, she oversaw the organization’s move from a program of the New York City Department of the Aging to an independent non-profit in “public/private” partnership with the City.
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September Edition 2004 - New York Nonprofit Press

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