Building Trust and Connection with Financial Reports

Financial reports for nonprofit organizations are important. Most people agree on this point. The challenge lies in getting people to connect with and trust financial reports. When trust and connection are absent, financial reports go unused. Getting users to trust financial reports requires mostly routine tactics while getting them to connect with financial reports requires more personalized creative approaches.

Trust can be routinely enhanced by adhering to basic accounting system internal controls and best practices. Start by making sure financial reports are completed timely each month. Next, check to see whether the financial reports are easy to read and understand. It is also important to make sure the financial reports are free of errors and misstatements. Trust is quickly lost when financial reports have visible errors. Even an error such as a misspelling or incorrect report date will have users questioning the dependability and quality of the report.

Also consider how to enhance access to financial reports. Extra effort here shows caring and respect for users’ time and busy schedules. Posting financial reports in a portal without alerting users is a big mistake. A courtesy email alerting users that financial reports are now available is simple but effective, and also serves as an opportunity to point users to important issues. For key leadership positions (CEO, Board chair, and treasurer) a courtesy email with a PDF of the financial reports is a good way to facilitate access to reports and alert them to changing issues, raise awareness, and avoid feelings of being surprised.

Getting users to connect with financial reports requires a little creative planning. Start by considering who are the core users of financial reports. There are two main user groups: internal (C-suite, project managers, staff, etc.) and external (Board members, executive committee, finance committee, etc.).

The key to enhancing connection with financial reports is understanding the differing needs of these user groups and subgroups, and providing financial reports that are tailored to meet each group’s  needs. Individuals will be motivated to read and engage with financial reports if they understand that the reports will help them to satisfy oversight responsibilities and/or meet their need for new information. This is where creative planning kicks in.

To tie together and balance oversight responsibility needs and the desire for new information, financial reports need to provide information that connects to users on both a “need-to-know” and “want-to-know” basis. Need-to-know connections satisfy individual fiduciary and management responsibility needs such as safeguarding financial assets, assessing financial performance, and protecting operating reserves. Want-to-know connections are driven by creative desires to improve operations, expand mission delivery, and bring about positive change.

Information derived from financial reports can be a wake-up call. Financial reports can act as leading indicators alerting users to possible changing financial as well as non-financial factors such as member and donor satisfaction trends, program effectiveness, and changing economic conditions, which can spur management and volunteer leadership to action pursuing new tactics and strategies.

Planning Tip – To make financial reports more accessible and useful, they should be condensed and simplified as much as possible. Financial reports that are long and contain unnecessary details that cannot be quickly understood by users will become an obstacle instead of a helpful resource. A well-designed financial dashboard accompanied by a short executive summary memo will help to convey priority financial information that is easy to absorb. User willingness to engage with financial reports will increase exponentially.

Plan to be proactive with tactics to increase engagement with financial reports. Periodically check in to see whether the financial reports are meeting user needs. Assess whether there are barriers to understanding and provide training to enhance financial acumen. Solicit feedback from users. Simple format changes accompanied by short training sessions can go a long way toward building trust and connection with financial reports.

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