"A board’s greatest responsibility is not just supporting the mission—it’s sustaining it."

Why do many nonprofit organizations fail? Harvard Business School has identified three common reasons why businesses fail, including (a.) the inability to make informed, timely decisions about prioritizing finite resources, (b.) the lack of internal processes and systems to consistently deliver quality products and services, and (c.) insufficient resources to maintain operations. These business principles apply just as much—if not more—to mission-driven nonprofit organizations.

Far too many nonprofits are navigating increasingly volatile financial environments without the tools or training their boards need to lead effectively. Additionally, external funding conditions can quickly change and adversely affect the prudent stewardship of mission-driven organizations' financial resources. According to a recent survey, 47% of nonprofit organizations lack the resources to deliver programs and services, and nearly half are increasingly concerned about their financial future (Source).

Rising program expenses and talent-related costs, decreased donor contributions, increased competition for limited charitable grant funds, and even the elimination of government funding are converging into a perfect storm. Consequently, many nonprofit organizations face serious financial challenges, for example, not having minimum cash on hand to pay current liabilities or lacking access to a line of credit to cover expenses until grant resources or reimbursements for services rendered are received.

Financial Stewardship Starts in the Boardroom

Despite these challenges, many nonprofit organizations are not failing because of a flawed mission or lack of effort—but because their organization’s and governance practices do not have sufficient internal accountability systems nor the critical information needed to guide decision making, including the ability to anticipate problems, adapt quickly, and act with purpose.

To guide nonprofits through changing financial environments, board members must regularly ask three strategic questions:

• What do our clients, donors, and key stakeholders need and value most?

• What does our organization do differently and exceptionally well?

• What impact are we achieving in generating long-term sustainable revenue and support?

When boards keep these questions at the forefront, they can strengthen internal decision-making, align organizational capacity with community and stakeholder needs, and secure financial health for the long haul.

The Oversight Gap: A Common Crisis

Many board members, especially those new to nonprofit governance, lack formal training in financial oversight. Even those with strong business or academic backgrounds often find nonprofit financial statements to be unfamiliar territory, as did I when I started my nonprofit board service career.

When I first started analyzing nonprofit financial statements as a foundation professional, I did not understand anything I was reviewing. This is after I earned my master's in business administration. More than 20 years ago, the financial statements of a nonprofit organization were foreign to me, having first learned how to read and understand business financial statements. Today, after analyzing hundreds of nonprofit financial statements and working with dozens of organizations facing financial peril, I have realized that nonprofit board members need to start their board service with basic financial statement training to help steer mission-driven organizations clear of inevitable financial challenges.

Too often, boards rely on the treasurer, the finance committee, or the executive director to carry out fiscal oversight duties. However, in reality, every board member shares fiduciary responsibility for the organization’s financial health. Without the skills and knowledge to ask critical financial questions, boards risk missing early warning signs of fiscal instability and opportunities to strengthen their organization’s foundation.

The Solution: Building Financial Confidence

A nonprofit’s ability to not just survive (to break even financially) but thrive (operate with a surplus) depends on its board’s financial leadership. Beyond balancing the budget, sustainable nonprofit organizations cultivate unrestricted net revenue—the lifeblood that funds innovation, builds reserves, replaces aging infrastructure, and creates “rainy day” funds needed during tough times. Unrestricted net revenue is the resources the organization retains that are left to the board's discretion to allocate after all expenses and service on existing debt have been paid.

That’s why Wheeler Social Impact is stepping in to help.

Today, we're proud to share a free Introductory Board Financial Training Tool—an easy-to-use resource designed to help nonprofit board members build basic competency in understanding nonprofit financial statements, build fiscal stewardship skills, and strengthen strategic decision-making.

In addition to this free training tool, Wheeler Social Impact is offering 30-minute pro-bono consultations to executive directors, board chairs, and treasurers who want to take the next step in strengthening their organization’s financial stewardship.

Download the Free Tool & Strengthen Your Board Today

Don’t wait until a financial crisis forces your board to act. Give your board the knowledge and confidence to lead with clarity and accountability.

Download the free Nonprofit Board Financial Training Tool now [Download Free Tool]

For questions or to schedule a pro bono consultation, visit www.wheelersocialimpact.com or contact us at [email protected]