Name: Build It Now: A Financial Resilience Framework for Nonprofit Leaders
Uploaded: 2026-09-22T18:34:33.822Z
Duration: 51 min 48 s
Description: Build It Now: A Financial Resilience Framework for Nonprofit Leaders

Transcript for "Build It Now: A Financial Resilience Framework for Nonprofit Leaders": walk into a board meeting and don't have very good news, and the board is hearing about this financial vulnerability for the first time. It's a scramble and it's happening under significant pressure. For other organizations, it's, you know, they get the same email, but this executive director pulls up the cash flow forecast and sees exactly how many months the organization can operate. She calls an emergency meeting with a board that already knows the financial position because they see it every month, and she walks into that meeting with three scenarios and a recommendation. So we have the same crisis, but it's a completely different outcome and a different feeling. And this scenario that I just talked about, maybe you're like, that doesn't feel hypothetical to me because that literally happens. Right? This isn't hypothetical for a lot of organizations. Government funding is frozen or delayed for many of us. Reimbursements that used to take thirty days are taking ninety. In fact, I talked to an organization yesterday who has a government funder that is a year behind on payments. Foundations are shifting priorities, and maybe that foundation funder who's been with you for years suddenly has a new strategic plan that doesn't really include funding your organization. And at the same time, demand for our services keeps growing, but our budgets are staying flat. If you've been feeling this pressure, first of all, I want you to know it's not just you. The Center for Effective Philanthropy found that two thirds of nonprofit leaders are concerned about their organization's financial stability right now. If if you're anxious about money and your financial health, you're definitely in the majority, and I'm so glad you're here because that's what we're talking about today is really building a framework to support you through this time. Here's the thing about those two organizations that I mentioned a couple of minutes ago. The difference between them was not the size of their team or their budget. It wasn't about how long the executive director had been there, or even just like luck, being in the right place at the right time. The difference between that chaotic feeling and scrambling and being very reactive versus the organization that felt calm and proactive is that they built the systems when everything was stable. And so that's exactly what we are talking about today. So here's our road map for the next forty five minutes or so, and this is the Financial Resilience Framework. We're going to talk about four different areas. First, visibility. Can you see what's coming? Second, liquidity. How much time do you have? Third, flexibility. What are the moves that you can make? Fourth, narrative. Are you able to tell the story? I'm hoping my goal is that you all leave with one action item that you are able to take this week to start building this framework inside your organization. Let's start with visibility. Like I said, I just want to reiterate, by the end of our time today, we're going to be talking about building a cash flow forecast, that's the visibility piece. Calculating your months of cash on hand, that is the liquidity piece. Identifying the revenue and expense levers you can pull, that's flexibility. And finally, narrative, being able to compose a three-five sentence narrative for your board, your funders, and your staff. Now let's dive in to visibility. The first thing I have for you is a question. Make sure you can see the poll question on your screen. I want you to answer, do you have a rough idea of what your bank balance will look like six months from now. Is it A, yes, we have a forecast and we update it regularly? Is it B, sort of? I have a general sense, but nothing's really written down or formalized? Is it C, no, we only look at the bank balance when we need to. Or is it D, I'm not sure who at our organization would know. Take a moment, answer that poll. I have a suspicion of where our results are going to end up based on lots of conversations with many, many nonprofit leaders. So let's go ahead and close the poll. I am not able to see the poll on my screen, so I'm just going to keep going. Hopefully, you all can see that. In my experience, most rooms where I ask this question look something like this with the biggest group in the middle. Do you know what your bank balance is going to look like six months from now? Sort of. That is usually the biggest answer that I get is sort of. And so my goal for today is that after this hour and after you go back into a little bit of work, you would be able to answer this question with a resounding yes. I am confident that I know roughly what my organization's bank balance will look like six months from now. And that is really at the heart of visibility like we're gonna talk about right now. Now, most nonprofit leaders, when they think about their finances, they're thinking about the financial statements. Right? These reports that you look at every single month, the income statement, the balance sheet, and these reports are very important. We need to understand some because there's important information in there, but there's a bit of a limit to what they're telling us. Right? They only tell us what has already happened. It's history. At this point, we don't have any ability to change what is in those financial statements. So if you're running your organization by only looking at your financial statements, it's like driving down the highway while staring in the rearview mirror. Right? Not a safe situation because your income statement is not going to warn you about a cash crunch coming three months from now. So what does it actually take to see out the windshield to look ahead of you into the future? So visibility is really three things. It's books that are closed and current every single month. It's a regular rhythm for actually reviewing them. Finally, maybe the most important part is a cash flow forecast that looks forward instead of just your financial statements that look backwards. First, current books closed monthly. And by closed, I mean that by the middle of the following month, last month's numbers are final. Right? We've categorized our transactions. We've reconciled all of our accounts. We're done. Because if it is, you know, September and we are still unsure about what happened in July, right, everything else that we're gonna talk about today is not really gonna help you be resilient. Right? If we don't have accurate historical information, we can't use that to build our forecast. Okay? So this is really sort of an unglamorous foundation, But if your books are chronically behind, if today is September and you haven't looked at July numbers or August numbers yet, or maybe even before that, that's going to be your starting point is to get those books caught up and get into a regular monthly routine. Which brings me to the next part of visibility, which is having a rhythm. Right? So if our books are closed and we're generating reports, but nobody's actually looking at them, that's not visibility, that's just busy work. We want a standing time on our calendar every single month to look at what has happened in those financial statements and then what's ahead in the forecast. Maybe it's you as a finance person, maybe you're sitting with your executive director, the treasurer of your board, your finance committee. It could be a number of these people, but what really matters is this consistent routine where we have eyes on our financials every single month, recurring, non negotiable without fail. And third, the most important piece I think of visibility, part of this resilience framework, is a twelve month cash flow forecast updated monthly. Okay? Not updated quarterly, not updated two times a year or when things change, but updated monthly. This is really a simple spreadsheet that maps out the cash that you expect to come in and go out over the next twelve months. Like when's that grant actually going to hit the bank account? When is your three payroll month? We all know that one. And this forecast is really the tool that moves you from just reacting to your finances to actually anticipating them. What this looks like is pretty simple. It looks like your income statement month by month. We have our actuals that we're going to fill in each month as they happen, and then our projections for the next months that have not yet happened. Very, very simple. You can start with your income statement, start with your budget. We don't have to start from scratch. So then we tie this to a cash flow forecast. Right? So we have our opening cash balance, what's coming in, what's going out, our ending balance, and our months of cash on hand. So I can literally see into the future of my bank balance. Right? I can look six months into the future and see what my bank balance is going to be at the end of November. Right? Even though maybe it's only April right now, I can see that. So the forecast really shows you, I I think the most important thing here is that we are looking ahead and we can see our lowest bank balance into the future. Right? So we can ask ourselves now, what actions can we take to ensure maybe that that doesn't happen at all or that that balance does not go any lower? So that we're gonna talk about flexibility in a moment and those levers that we can pull to make sure this doesn't happen. But this is the power of visibility and a forecast is that we see things before they happen. Before it's two days before payroll, we realized we don't have enough cash in our account to handle it. Then a forecast can also see because we're updating it every single month, let's say this budgeted $400,000 grant that we thought was coming in August is now not coming until October. A budget or your financial statements are not going to show you the impact of that change, Right? But a forecast will because now I can move that 400,000 out of August, pop it into November, and I can see, oh my gosh, we are gonna run out of cash. Right? So we need to do something now to make sure that doesn't happen instead of being surprised and being reactive. And so what I have seen in nonprofits is that when this visibility piece and specifically a solid forecast is missing, every single surprise, every unexpected thing, a grant payment delayed, an unexpected expense comes at full speed or right in your face, and we have to be very reactive. Right? Without a forecast, the first sign of any trouble is the trouble itself. Right? You find out about this July scenario in July, a week before payroll is due. Right? So we just wanna make sure that we have that strong visibility to be able to see around the corner. Now, I am anticipating what some of you might be thinking based on other times I've talked about forecast with nonprofit leaders. You might be thinking, I can't predict every single number, like how am I supposed to know how much money we're gonna raise in January? Right? My revenue is too unpredictable to forecast. I understand and I agree with you. Right? We cannot predict the future, but here's what I want you to take away from this section more than anything, is that forecast don't have to be perfect to be powerful. Right? Take a little snapshot of that and just remind yourself when you are putting together your forecast. It does not have to be perfect because a rough forecast that you look at, that you update every single month will beat a perfect forecast every single time if it doesn't ever get built. Your best guesses written down, revisited monthly is a strong system that is part of this framework. Perfectionism may have kept you from building it in the past, but I want you to, as much as possible, let that go. Forecast do not have to be perfect to be powerful. Okay. Let's go on to the next part of our framework. The second part is liquidity. So we're on to our second poll question, poll number two. How many months of cash on hand does your organization have? Less than three months, answer A, you have less than three months of cash on hand. B, you have three-six months of cash on hand. C, you have more than six months of cash on hand. Or D, you don't know. Take a moment, answer the poll. How many months of cash on hand does your organization have? Now, as you're thinking about this, I want to talk to anybody who answered that, Dee, they don't know. Because in every training I do, that is like not a small number. Right? I just want to say that there is no shame in that answer. If you don't know how many months of cash on hand your organization has, that's your action item for today, is to calculate that number and find out, and I'm going to show you in just a minute how to do that. We can go ahead and close that poll if we haven't already, and we will keep going. We talked with visibility about seeing what's coming. Now, liquidity is the second part of this resilience framework, and it answers the question, when something changes, when things go awry, how much time do you have to respond? Right? That's really what liquidity is in sort of practical terms for today. It's not necessary I mean, it is an accounting concept, but for our purposes today, it's about time. It's the runway between the moment that that email that we talked about this morning, lands lands in your inbox and the moment that you run out of options. Because the more runway you have, the more options you have, and the better decisions you make. So, the thing I want us to just think about here, related to liquidity, is that we really first need to understand the difference, between accrual accounting and cash accounting because we might be looking at our financial statements, our income statement, and thinking to ourselves, wow, our revenue looks great, so we must be good. Right? And if you are doing accrual accounting, which I imagine many of you are, that is not the same as how much runway you have. Right? So I just wanna make sure for those that you're like, well, wait a second, are we doing accrual? Are we doing cash? I want us to know that what is on the income statement in revenue or what's on the bottom line of the income statement, our net income is not necessarily cash on hand. So maybe that is the question that you want to answer today. Right? Are we using accrual or cash accounting? Are our financial statements on accrual or cash? So accrual accounting means that your revenue and expenses are recognized on your financial statements when they're incurred, not necessarily when cash comes in the door. Okay? So we wanna make sure that first of all, we've got this baseline understanding of what we're looking at here so that we know when we're thinking about our liquidity, what we're looking at. Let's talk about months of cash on hands. This is the number of the hour. Again, if you don't know this number, that's your action item to calculate this. Months of cash on hand answers the question, if not another dollar came in the door starting today, how long could your organization keep operating? Paying your staff, you know, keeping the lights on, continuing your programs. And knowing this number is really, you know, the difference between a delayed payment from a funder being a sort of minor inconvenience versus a crisis. Okay. So the math is very simple. We're just gonna take our available cash and divide that by our average monthly expenses. Okay? Very simple. So if you have 1,200,000 available and you spend about $160,000 a month, you have, at this point in time, seven and a half months of cash on hand. So I want you to think about your own numbers. If you know them off the top of your head, great. If you are looking up your bank balance as we speak, maybe pause that and come back to it at the end, but bank balance or available cash divided by your average monthly expenses. Now, I always get this question, well, what counts as available cash? Because maybe you have an endowment, maybe you have a board restricted reserve, maybe you have some other reserve. So when I'm thinking about available cash, I'm thinking about, like, could I use this money to make payroll next week? Right? Is it unrestricted? There's no strings attached. It's already in the bank account. Right? Let's not count receivables, and we can use it for expenses today. Right? That's what I'm considering available cash. And on the flip side, what is not available cash? Well, anything that's restricted. Right? There's specific rules around how I can spend this money, so that's not really fully available for payroll. Right? Maybe you have untouchable reserves, receivables. That's money you've earned but is not in your bank account. Right? So that's not gonna help you make payroll next week. So I want you to think about this as you're calculating, that number for yourself, making sure that we're thinking about what is available cash to our organization. So of course, the question that everyone's thinking, how much is enough? Like, what's a good number? What should we be aiming for? Right? I'm sure you've probably heard three to six months as sort of a common target, and honestly, that's a great place to start. But the other thing to consider is that it really depends on your revenue. Right? If your organization lives on, you know, government reimbursable contracts that pay really slowly and definitely unpredictably, you probably need more runway than an organization that has, like, steady monthly donors. Right? So it doesn't really matter what other people around you are doing or hitting someone else's benchmark. The idea is to think about your own target on purpose based on your organization and how your organization actually runs. Alright. So if you you know, as you do the math, as you calculate this every single month, because I want you to make sure you're calculating months of cash on hand every single month, and you're like, oh my gosh, we have less than one month and I never realized it. Well, no organization goes from, you know, three weeks of cash on hand to six months overnight. Right? Reserves are built slowly and consistently. Ideally, we're budgeting for, you know, a modest surplus intentionally every single year, and we're consistently slowly putting aside money into this reserve. Right? So, I just want to encourage you if you're like, oh my gosh, we have less than a month, getting to six months is going to take some time, but it's the intentionality that really is important here. Another question I get a lot is like, What about a line of credit? I just want to throw this out there as one more tool for your liquidity toolbox, a line of credit from your bank. A line of credit can be very useful for bridging timing gaps like covering payroll while you're waiting on a slow reimbursement from a funder. So a couple things I wanna say right here, a line of credit is a bridge. It is not a solution. Right? If we are drawing on this every single month to fund ongoing deficits, that is a bigger issue. That is not what a line of credit should be used for. And the second thing is that banks like to lend to organizations that look stable. So the best time to apply for a line of credit is not when you are scrambling to cobble together some funds to make payroll next week. Right? It's when you are stable. So this might be a conversation that you wanna have with your board now. Things look okay, but we don't know what the future holds, and so this might be another tool in your toolbox of liquidity. When we don't have runway, here's what it actually costs your organization. When we're not paying attention as much as we should to our liquidity, every decision that you make is reactive. It's out of desperation. Right? Maybe you take a grant that is not necessarily a great fit mission wise because you just need the cash. Maybe you're cutting the wrong expense because you don't have any time to think things through. You just need to find money. Right? You accept terms that maybe you you wouldn't accept if you had more cash in the bank. So liquidity is not just safety and security. It's really something that's moving you from reactive decision making to strategic decision making. Now, we're going to move on to the third part of the resilience framework and talk about what moves can you make. Flexibility. This is the third part of the framework. We talked about visibility, being able to see into the future. We talked about liquidity, understanding how much runway you have, and now we're talking about flexibility. These are understanding the levers you can pull and what moves can you make. My question for you with another poll is what percentage of revenue comes from your top two funding sources? I'm going to explain in just a minute why we're asking this question, but I want to know what percentage of your revenue comes from your top two funding sources. Is it A, less than 25%? Is it b, 25 to 50% of your revenue comes from your top two sources? Is it c, more than 50%, so over half of your revenue comes from your top two funding sources? Or d, you don't know? Alright. So let's keep that open for another few seconds. And I just wanna share as we are answering and wrapping up the poll, If you answered more than 50% of your revenue is coming from your top two funding sources this year, you're you're not alone. Right? Concentration high revenue concentration is not a failure. A lot of times, it means that one organization or one funder believes in your work enough to fund you generously. Right? That's not necessarily a bad thing, and this changes year over year, of course, but it's something that we need to plan around, and that is what this whole section is about. Flexibility is about knowing what moves you can make before you actually need to make them. What levers could you pull if something needed to change quickly? We're going to talk about moves on both sides of the income statement today. On the revenue side, understanding your revenue mix, that's why I asked that question a moment ago, and on the expense side of things, understanding what could shift if needed. Right? What levers could I pull if we needed to save some money right now? So my goal for this section is that you walk away able to know what levers to pull if you absolutely had to. Right? Because we want to be making these decisions when we have a clear head, when we don't have an emergency waiting inside our inbox, and we want to do this, proactively. On the revenue side of things, there are four metrics that are important to know about your revenue. And all of these, you'll be able to figure out with your most recent financials, which I'm sure you all have. So we're gonna go into each one individually. So we have concentration, diversity, restriction, and predictability. Let's go one by one through each. Concentration, this is measuring what percent of your revenue comes from your top sources, and this is a poll question that you just answered. So many of you know the number. Right? Looking at, this year's year to date financials or last year's numbers. And, if more than half of our revenue is coming from two sources or even a single funder, this might be a red flag. Right? Maybe a conversation that you wanna have with your board, that you wanna have with leadership, with your development team. Right? So how can we think about diversifying our revenue? And so we this doesn't necessarily mean that you need to pull back from those funders. Right? It might mean that you actually want to lean in. Right? Deepen the relationships, communicate more with those funders, really solidify what you already have going. And at the same time, share the concentration risk with your board and get them to participate in the conversation of how are we going to diversify our revenue. Like, the conversation can be, we have a risk here. We are not necessarily worried for the immediate future, but how can we work together to diversify our revenue? Okay. The second metric when we're thinking about revenue and levers to pull is our diversity. So how many meaningful streams of revenue do we have? Right? So I'm talking meaningful ones. Right? If you have a particular source of revenue that brings in like one percent of your annual budget, that's not exactly what I'm talking about right here. Right? That is not going to catch you if another funder pulls out. A red flag here might be fewer than three meaningful streams. If you only have one or two meaningful streams of revenue, we might need to think about some more diversification. The other thing that I always recommend is to resist the urge to launch something shiny and new. I know a lot of us, we're paying attention to what other organizations are doing, to what is working for everybody else, and I have done this myself in my business. It's like I I see that person being really successful doing that thing, so I do that thing too and it doesn't work the same. Right? So resist the urge to launch something new and instead, you know, the fastest path to real diversity is almost always growing a stream that you already have this working. Right? If individual giving right now is, say, maybe 10% of your revenue portfolio, maybe getting it fifth to 15% of your revenue portfolio is gonna be easier than building a whole earned revenue program from scratch. Right? So really digging in, understanding what's working, and doubling down there. Alright. The third metric related to our revenue levers is restriction. So we need to know how much of our revenue is restricted versus unrestricted. Right? We should be tracking this. We should know this number without, like, hours of sifting through GL detail. We should know how how much of our revenue is restricted versus unrestricted. So a potential red flag, right, might be if your unrestricted funds are less than 20% of your total revenue, meaning that there's really not a whole lot of room to absorb any surprises. Maybe this is where those relationships you have built with your funders really come in handy and you have the conversation asking, hey, what would it look like for you to provide general operating support instead of restricted funding? Here's what our financials look like. Here's our needs. Can can you support us in that way? Right? And making unrestricted giving really the centerpiece of your individual fundraising. Right? I I think we all know that, you know, the unrestricted dollars are the most valuable to our organization and really knowing what this number is and being able to, put some intentionality behind that is really important. Finally, the last metric when we're talking about revenue levers is predictability. Which of our revenue sources are reliable, which renew, and which are one time or maybe uncertain. Let's take every revenue source that we have and sort it into three buckets. Reliable, it renews like clockwork, and we know that it's coming. Maybe you have a monthly giving program. Likely is the second bucket. So there's a good history. Like, we feel okay about it, but it's not promised. There's nothing in writing. We are still a bit unsure. And then finally, uncertain. Maybe these are one time gifts. This is stuff that's in your pipeline. This is, you know, that dream funder. Right? So the red flag here is building next year's budget as if that pipeline revenue or that uncertain revenue is guaranteed. That is how so many organizations end up surprised by a shortfall that they actually really should have seen coming. When we are budgeting for revenue sources that are uncertain, we're almost always going to be caught by surprise. We want to make sure that we are aiming to cover our fixed costs, so our rent, our core payroll with reliable revenue. And then those uncertain dollars, maybe even those likely dollars, they fund things that we could pause or delay or scale up or scale down if they don't come through. We just want to make sure that we're matching the predictability of our revenue with our expenses. What is the actual move on the revenue side? What are we going to do? What levers can we pull if we find ourselves in this situation? Well, it's not walking away. We don't want to walk away from our major funder. If your revenue is really concentrated, your move is probably just building one additional meaningful revenue stream. This is like a board level strategy conversation, not something that you're scrambling on alone. I want you to be able to look at these metrics, understand them, bring them to your board for a bigger conversation on how can we work through this together. On the expense side of things, a lot of times expenses I mean, maybe not a lot of times, maybe all the time. Expenses are where we have more control. We can't control what's coming in on the revenue side, but we do have more control over our expenses. So we're gonna look at our expenses through three different lenses, fixed versus variable, grant tied versus flexible, and then now versus later. So let's go into each one here. So fixed versus variable. Fixed costs, as you may know, are those that are locked in. Right? Our rent, our core salaries, insurance. Whereas variable costs could change next month and maybe change every month, contractors, travel, conferences, printing, supplies. And here's what I have seen that when we go through our budget, when we look at our income statement, there's always a lot of more expenses that are variable than we initially thought. Right? So I'm not asking you to, like, go through and slash all of your variable expenses by any means. You just need to know now before you're in crisis mode which lines could move if necessary. The second lens through which we're looking at our expenses are what is tied to a grant. What expenses are written into a grant budget because those expenses are promised to a funder. We can't move them. We can't just say, Okay. We budgeted for a thousand dollars on this line item, but I actually need money for this other thing. You can't do that without a conversation and sometimes explicit written approval. We need to make sure that we're marking up our budget. And like fixed versus variable, we understand which of these expenses are tied to a funder or a particular grant and which are hours to make decisions on. So we wanna know, this is basically looking at what we have control over to move. And then the third lens, the third thing we're looking at related to our expenses and the levers that we can pull is timing. Right? What could be delayed, now this is the key, without harming programs or staff? Right? We do not wanna start slashing expenses or delaying things that are going to cause a significant impact to the communities and the people that we serve, to the people that work for our organization. Right? But maybe there's a new hire that could wait till next quarter. Right? Maybe there's an equipment purchase that we could push out a few months. Maybe the website refresh that, yes, is important, but, like, does it have to happen this year? Maybe not. Right? I just wanna sort of reframe. Delaying expenses is not necessarily cutting them. Right? We don't want to make anyone lose their job or shrink a program. But in a cash crunch, timing shifts are almost always the first lever that you can pull. And if you've thought about them ahead of time and had conversations about them ahead of time, pulling this lever to move the timing of different expenses is not really that painful. So what I would love for you to do after today is put together your expense lever list. So go through your budget and make a list of everything that could shift if needed. Maybe start with timing moves, then maybe variable costs, and making decisions when things are calm, when you have a clear head, when you've had a chance to talk to your board means that when disruption does come, you're not making these hard decisions at like 11PM in a panic. Right? All you're doing is executing a plan that you already made, and that makes a huge difference to really like your own mental health and well-being, as well as everyone in your organization. So when flexibility is missing, organizations that don't know their revenue and expense levers jump straight to the biggest, most painful moves, the layoffs, the program cuts, because those are the only levers that they can see. Those are the biggest thing that they see, and so we start hacking. Right? Those other options were there the whole time, but you can't see them when you're under pressure. So now we can see what's coming with visibility. We know our runway with liquidity. We know our moves with flexibility, and the last piece that we're going to talk about today is, can you tell the story? We're going to talk about narrative and I have one more poll for you here. Who sees a written summary of your financial position on a regular basis? Who understands your financial story at your organization? Is it A, your board only? B, your board and staff, c, your board staff and funders, or, d, no one gets a regular written summary? Maybe there's some combination here. Maybe it's, like, inconsistent, but I wanna know who sees, sort of summary of your financials on a regular basis. Alright. So this is a part of the resilience framework that many organizations don't have, but you could very easily. This might be the fastest one to build, especially if you are the finance person. You have all this information, you just need to compile it together to be able to talk about it. Let's wrap up the poll and let's keep going. Talking about your finances, might not feel like a financial system, but how you're communicating your financial position, it really shapes what everyone around you is gonna do next. Right? Whether you're bored, starts panicking, or whether they're leaning in to support you, whether your funder gives you flexibility, or whether they pull back, whether your staff, like, all pitches in, we're all engaged, we're all in this together, or whether they're looking for a new job. Right? So the story is really important here. So here's the bad story. We're fine. Right? The organization that tells the board, we're fine month after month after month until the day that there's no more cash, right, or until the day where we're desperate, we can't make payroll tomorrow. And we're fine feels sort of kind in the moment. Right? We don't wanna stress anybody out. We have faith that, like, we'll figure it out and we bear the burden ourselves. But when the crisis happens, the board isn't just dealing with, you know, the cash. They're also maybe have, lost a little bit of trust. Right? Maybe you've lost a little credibility with them because they're wondering, like, why didn't I hear about this sooner? Or is this organization, like, not paying attention? Right? So we're fine sounds reassuring, but it actually usually ends in chaos in in my, experience. So the good story has three parts. First, here's where we are, black and white facts. Second, here's what we are watching. Right? We're gonna flag things that we see. And then third, here's our plan. That's it. Right? We're not spinning anything. We're not pretending everything is perfect. It is honest, it's calm, it's very specific. I have seen funders extend a lot of grace and a lot of flexibility to organizations that can explain their position, tell this story very clearly because clarity means competence. Funders and our boards believe that we are competent when we're coming to them with this framework. Here's our challenge and here's our plan. I'm going to share a little bit more about this. We don't want to hand our board or our funders a bunch of spreadsheets. We want to tell the story, where we are, where we're going, and what we're going to do. So our financial narrative, like I said, really only needs to be three to five sentences. What the numbers say, so putting our financial statements and our forecast into plain English so everyone gets it, no accounting lingo. What we're watching, so we're gonna flag any warning signs now so nobody's surprised if it actually happens. And then finally, what our plan is. What are we gonna do? What levers are we going to pull from flexibility if needed? So for the board, okay, we could say something like this. We ended March with three point two months of cash on hand just below our target. We're watching the timing of our state contract reimbursement, which is running behind. If payment hasn't arrived by May 15, we'll draw on our line of credit to cover the gap and hold our two open positions until it lands. Right? That is very clear. That is a black and white what is going on, what we are maybe concerned about, and what our plan if that happens. So the next one, same organization, same month now for a funder. Our financial position remains stable with just over three months of reserves. Like many organizations, we're managing delayed reimbursements, and we have a bridge plan in place to ensure uninterrupted programming. We'd welcome a conversation about payment timing as we plan for next quarter. Right? Your funders would much rather hear this from you, you know, now than discover some sort of situation in your audit next year or in your renewal. And then finally, for your staff. Yes. We need to be communicating our financials with our staff. It might be simpler. It might be warmer. So here's where we stand financially this quarter. We're stable with about three months of operating cushion. One of our state payments is running late, which we're actively managing, and we have a plan that protects programs and payroll. If you have questions, feel free to ask. So here's what I believe about staff and financial transparency. Your team can handle real information. Right? What they can't handle, what is not fair, is silence followed by some sort of surprise. Right? So those organizations where staff are sticking around through even the toughest seasons are the ones that have included their staff in conversations from the beginning. When a narrative is missing, people don't think nothing. Right? They don't their not their brains are not just silent. They're going to fill that silence with their own version of the story. And honestly, most times, it's usually worse than the truth. Right? Boards assume the worst. Maybe they start micromanaging. Staff hear a rumor about a late payment, and they're over there updating their resumes. Funders sense vagueness in the organization and maybe they're hesitating on your renewal. By not telling a story, you are telling a story, and it's not the one that you actually want to tell. So let's look at this whole framework in one more view, one more time. Visibility is the forecast that sees what's coming. Liquidity is your months of cash on hand. Flexibility is your lever list built when things are calm and stable, and your narrative is three to five clear sentences for the people that need them. Now, none of this requires, anything complex or an accounting degree, and each one really starts with a single action that takes probably less than an hour. Like I said, I want you to walk away with one action item that you have jotted down that you're going to do. For visibility, maybe you're building or dusting off a twelve month cash flow forecast, and you're also reminding yourself that it doesn't have to be perfect to be powerful. For liquidity, maybe this week you're going to calculate your months of cash on hand. It's your available cash divided by your average monthly expenses. Maybe you already wrote this down twenty minutes ago. If so, well done. Otherwise, maybe this is your action item. Flexibility. Pull up last year's financials. Figure out what percent of revenue came from your top two sources and start your revenue and expense lever list. Even just like having three items on that list is more of a plan than a lot of organizations have. And then finally, for narrative, if this is the missing piece for you, write three sentences about your financial position for your board, where we are, what we're watching, and what the plan is. So alright. I hope, like I said, that you all have an assignment for yourselves. Pick one. I know that your plate is already really full. We don't need four new projects. So choose which one you're going to, you're gonna take action on, and, I would love to hear about it. And finally, as we're wrapping up, the organizations that move through disruption with clarity are not bigger than yours. They haven't been around longer. They're not luckier. They just built their systems when things were stable. Okay? So that's what I want you to think about today because every system we talked about really exist to protect your programs and the people that counts on them. So financial resilience is how you make sure that the communities and the people that you serve never feel that disruption. And so with that, I would love to share. I have a template here. If you wanna grab the cash this cash flow forecast template, and then I will pass it back over to the Blackbaud team to wrap us up. Alright. Thank you so much, Stephanie. My name is Gregory Heath, by the way. I'm a director here at, Blackbaud. I focus on our financial solutions and not to date myself too much, but, you know, I started working with financial solutions when, the platform was DOS. If anybody remembers DOS, little while ago. So, anyway, I love a framework. I particularly love, the visibility and the narrative parts of the framework. I think it's so important to understand what our cast position is to work on those projections. And I also think it's it's, you know, that the narrative part is just so important, not only just to to feel a sense of partnership with with our internal, team members, with our board, but also with our funders. Right? I mean, our funders are getting smarter by the day. It's no longer... Back when I started, it was all about, goodness, how much of your admin, you know, fees go... You know, coming out of my gift and, you know, what's your cost per dollar raise? You know, today, it's what's my impact. Right? Well, where do you think that information is coming from? And by and large, it's the business office. Right? And so I think it's rather clever to be able to explain financial data to nonfinancial folks. Right? Not everybody has that accounting degree or that economics or finance degree, and to, state those positions in plain language is, it's it's a real talent in my opinion. So nonetheless, and and by the way, it's such a good time of the year to be receiving this information, right, as we kinda wrap up the year, as we kinda get into planning and aspirations, I think we've got some really great guidance overall. And just like I said, to wrap up, the CFO summit that I hosted in Toronto this past week, For those of you who have those grants, check-in on those grants. I talked to way too many organizations that get into this time of year, and they haven't spent all that money or their pacing is off. Right? So we wanna make sure that, those grants are in a good position so that, you know, we're we're on with guidance and, we can get that money again. So, really appreciate, the content today, Stephanie, as always. Love that we have a template that we're sharing here, and, certainly hope to see some of the folks in chat. We've had good conversation. Really appreciate the participation and guidance there as well, but hope to see some of you folks next week at our annual, Blackbaud conference in, Columbus, Ohio. So thanks, everyone. I appreciate everyone's, time and guidance today, and, hope everyone has a good afternoon and week. Thank you.