This document summarizes a presentation about analyzing Form 990 data from nonprofits to better understand their financial health and inform funding decisions. It provides an overview of the Financial SCAN tool, which analyzes 5 years of 990 data to show financial trends, ratios, expenses, revenues, and compares organizations to peers. As a case study, it examines the nonprofit Help for Homeless Youth, showing metrics like their income statement, balance sheet, expenses over time, and liquidity issues. The presentation concludes with considerations for funders to have more data-driven conversations with grantees about their financial situations.

1. Peter Kramer
Manager
Nonprofit Finance Fund
Scott Menzel
Product & User Experience Manager
GuideStar
May 30, 2013
Financial Analysis in Action:
Getting the most out of 990 data

2. AGENDA
 Re-orienting to the Form 990
 Case analysis using Financial SCAN
 Brief online tour
 Q & A

3. From Form 990 Instructions:
Momentum is growing to make 990 data even more
readily available
A compliance document AND
a public profile for many nonprofits

4. How can funders put the Form 990 to
better use?
 Use 990 data to conduct analysis of past
financial trends during the due diligence process
 Engage with grantees in conversation about
how these trends inform current plans and resource
needs

5. Key Considerations: What 990 data can and
cannot do
 990 data CAN help:
 Understand an organization’s financial trajectory and recent
revenue, expense, and balance sheet dynamics
 Show how an organization compares to its peers across
standardized fields
 990 data CANNOT:
 Provide the authoritative and most up-to-date financial
picture of your organization
 Tie exactly to the information presented in an audit
 Show revenue restrictions
 Distinguish between operating dollars and capital dollars

6. Today, our analysis guide will be
Financial SCAN
What: Data platform for assessing nonprofit financial
health and fostering dialogue among all stakeholders
involved in making social impact
Who: Private and public grantmakers/donors,
nonprofit organizations, philanthropic advisors,
consultants and media
How: Private and public grantmakers/donors,
nonprofit organizations, philanthropic advisors,
consultants and media
WHAT
Data platform for assessing nonprofit financial
health, decision making, and informing
grantmaker-grantee dialogue
WHO
Nonprofit organizations, private and public
grantmakers, individual donors, philanthropic
advisors, and consultants
HOW
Draws data directly and automatically from
IRS Forms 990,* presenting complex
information in an easy-to-analyze and
communicate format (313K orgs)
*Note: Financial SCAN v. 1.0 does not include data from Form 990 EZ

7. What’s in a Financial SCAN?
Organizational Dashboard: Five
years of key financial trends and ratios
Graphs & Explanatory Text: More
detailed overview of an organization’s:
 Expenses
 Revenue
 Profitability
 Balance Sheet
 Liquidity
Peer Comparison Dashboard:
Comparison with up to five peer
nonprofits you select

8. Meet today’s case organization:
Help for Homeless Youth
 MISSION: To provide homeless and at-risk youth with
the resources, relationships, and skills to become self-
sufficient.
 PROGRAMS:
 Health Services
 Case Management
 Drop-in Center
 Basic Employment Skills
 RECENT DYNAMICS:
 Increased demand for services
 Uncertain revenue sources
 Maintaining an aging facility

9. Help for Homeless Youth

10. Dashboard: Income Statement

11. Dashboard: Balance Sheet

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Peer Comparison Dashboard
 Standardized 990
fields allow for side
by side comparison
 Contrasts operating
and balance sheet
characteristics
 Offers broader
environmental
context for
consideration

13. Topics explored in Financial SCAN graphs:
 Expense detail & composition
 Revenue detail & composition
 Profitability
 Full cost of doing business
 Asset composition
 Depreciation of fixed assets
 Liability composition
 Liabilities as a % of assets
 Liquidity

14. Estimated full costs have not been
consistently covered, limiting HHY’s ability to
satisfy longer-term organizational needs
Full costs include: operating expenses, covering
depreciation, purchases of fixed assets, debt principal
payments, and savings

15. Asset composition has shifted over time,
reflecting a decline in liquid assets and
growth in fixed assets
Facility ownership is its own line of business, and can
sometimes be at odds with other organizational needs.

16. While HHY’s assets have grown over the
period, its liquidity has contracted
Available liquidity represents a nonprofit’s ability to
handle risks and seize new opportunities.

17. Next steps and considerations for
funders of HHY
 Use 990 data as a starting point for additional
diligence
 Engage in a data-based conversation with HHY
leadership about how recent growth has impacted
the organization’s financial health
 Use insights from data and conversation with HHY
leadership to inform grantmaking
 Consider providing for full costs of services in future
grants and/or funding reserves

18. Brief demonstration of online interface

19. Q&A

20. nonprofitfinancefund.org 19
Thank you!
Peter Kramer
Manager, Consulting Services
Nonprofit Finance Fund
617-204-9772
peter.kramer@nffusa.org
To learn more:
www.guidestar.org/financialSCAN