What this report tells you
The Statement of Financial Position is a snapshot of what your church owns and owes on a single day. It answers one question: what is our financial position right now? It has three parts, assets, liabilities and net assets.
Assets: what you own
Assets include your bank balances, money owed to you, and property or equipment. Cash is usually the line leaders care about most, but remember that some of that cash may be restricted to specific funds.
Liabilities: what you owe
Liabilities are your obligations, such as unpaid bills, payroll owed, or a mortgage on the building. Subtracting liabilities from assets gives you net assets.
Net assets: the part that is unique to non-profits
What to look for each month
- Is unrestricted cash enough to cover a few months of operating expenses?
- Are any restricted funds overspent, which should never happen?
- Are liabilities trending up in a way the budget did not plan for?
Questions a good board asks
‘How many months of operating reserve do we have?’ ‘Is any restricted fund in the red?’ ‘What changed since last month?’ If your current reports cannot answer these quickly, a fractional CFO can build reporting that does.
