Five Financial Reports Every Nonprofit Board Member Should Understand
By Dr. Gabrielle (Gabi) Juba, CPA, CFE, DBA Founder, Juba Forensics PLLC
Serving on a nonprofit board is one of the most meaningful ways to give back to your community. Board members help guide organizations that provide food, shelter, education, healthcare, veterans services, arts programs, and countless other resources that make our towns stronger.
But many dedicated volunteers join a board with little or no financial background. They care deeply about the mission, yet they may feel intimidated when handed a packet of financial reports during a board meeting.
The good news is that you do not need to be an accountant to be an effective steward of a nonprofit’s finances. In fact, understanding just five key reports can dramatically improve your ability to ask informed questions, identify potential concerns, and help the organization make better decisions.
1. Statement of Financial Position (The Balance Sheet)
This report shows what the organization owns, what it owes, and what is left over at a specific point in time.
Think of it as a financial snapshot.
Key things to look for:
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Cash balance: Does the organization have enough cash to cover upcoming expenses?
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Accounts payable: Are bills being paid on time?
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Net assets: Is the organization building financial stability over time?
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Restricted funds: Are donor-restricted funds being kept separate from general operating funds?
Questions to ask:
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How many months of operating expenses do we have in cash reserves?
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Have any liabilities increased significantly since the last report?
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Are we relying too heavily on one funding source?
A healthy balance sheet helps a nonprofit weather unexpected challenges and continue serving the community even during difficult times.
2. Statement of Activities (The Income Statement)
This report shows the organization’s revenue and expenses over a period of time—usually monthly, quarterly, or annually.
Key things to look for:
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Total contributions and grants
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Program revenue
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Salaries and benefits
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Occupancy and administrative costs
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Whether revenue exceeds expenses
Questions to ask:
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Are we operating at a surplus or deficit?
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Which programs are generating the most impact relative to their cost?
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Are fundraising results meeting expectations?
A single month of negative results is not necessarily a problem, but a pattern of deficits should prompt a conversation about sustainability.
3. Budget vs. Actual Report
This is often the most important report for board members because it compares what the organization planned to spend and receive with what actually happened.
Key things to look for:
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Large variances in revenue
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Unexpected increases in expenses
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Programs that are significantly over or under budget
Questions to ask:
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Why is this line item different from the budget?
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Is this a timing issue or a long-term trend?
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Do we need to adjust the budget for the remainder of the year?
Board members should focus less on small fluctuations and more on variances that could affect the organization’s ability to achieve its mission.
4. Cash Flow Report
A nonprofit can show a surplus on paper and still run out of cash.
The cash flow report tracks when money actually comes in and goes out.
Key things to look for:
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Timing of grant payments
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Seasonal fundraising patterns
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Large upcoming expenditures
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Periods when cash balances may become tight
Questions to ask:
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Do we have enough cash to make payroll and pay vendors?
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Are there months when cash flow is historically weak?
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What is our plan if a major grant is delayed?
Understanding cash flow helps boards avoid last-minute financial emergencies and make proactive decisions.
5. Dashboard or KPI Report
Many nonprofits now use a simple dashboard that highlights a handful of key metrics.
Examples include:
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Months of cash on hand
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Fundraising progress
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Program participation
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Grant renewal rates
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Administrative expense ratio
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Volunteer engagement
A dashboard gives board members a quick overview of organizational health and helps keep discussions focused on strategy rather than getting lost in detailed accounting transactions.
What Board Members Should Remember
You do not need to memorize accounting rules or understand every line item. Your role is to provide oversight and ask thoughtful questions.
Here are three questions I encourage every board member to ask at each meeting:
1. “Do we have enough cash to operate safely?”
2. “Are we staying within our approved budget?”
3. “Are there any financial risks the board should be aware of?”
If the answer to any of these questions is unclear, that is a sign the board should request additional information or training.
Financial Confidence Strengthens Nonprofits
One of the most rewarding things I see is when a board member who initially says, “I’m not a numbers person,” begins asking insightful financial questions and helping guide the organization with confidence.
Strong financial oversight is not about finding fault—it is about ensuring the nonprofit can continue serving the community for years to come.
When boards understand their financial reports:
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Executive directors receive better support,
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donors gain greater confidence,
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grant applications become stronger,
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and organizations are better positioned to fulfill their mission.
That is a win for everyone in our community.
About the Author
Dr. Gabrielle (Gabi) Juba, CPA, CFE, DBA is the founder of Juba Forensics PLLC, a veteran-owned CPA firm specializing in nonprofit accounting, fractional CFO services, forensic accounting, and fraud prevention. She works with nonprofit boards and executive leaders across Western North Carolina to strengthen financial oversight, improve governance, and build sustainable organizations.
Learn more at www.jubaforensics.com.
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