Are Your Financial Reports Being Ignored?
Why are nonprofit financial reports often ignored by people who have been entrusted with operational management and fiduciary oversight roles? This important question needs to be considered first as a statement of fact and second as a priority “call-to-action” to help optimize finding real-world solutions. We must recognize the reality that on-time and error-free financial reports are not enough by themselves if these same financial reports are hard to read, difficult to access, and generally not beneficial to Board members, management, staff, and other people who will be using and reading these reports.
The key challenge to increasing user engagement with financial reports lies mostly with understanding user needs and wants and less with satisfying accounting system procedures and GAAP compliance. The latter is important but does not provide a pathway to greater engagement with financial reports. The solution is for finance professionals to take extra time with users to identify and consider user needs and wants and explore how that information can lead to removing the barriers that are causing user avoidance.
Exploring the Human Element and Setting Expectations
As finance professionals we tend to focus on the numbers and the operational and accounting systems behind those numbers. This naturally limits the time we have to interact with the people reading and using our financial reports. To correct this imbalance, consider treating financial report users like an audience at a conference. You need to “know your audience” to be an effective communicator. Pay close attention to their key attributes, such as financial knowledge (basic, medium, advance), years of experience, job titles, management responsibilities, and also understand the different fiduciary roles for staff, management, and volunteer Board members.
Treat the human element like a two-way street, where the finance team must understand their audience while users must understand the role of finance. This dynamic hinges on a fundamental question: does the finance team view educating users on financial statements as part of their core responsibility? The answer must be “yes.”
Identifying Barriers
The first step is to focus on the non-financial barriers that are keeping users from “opening” and interacting with financial reports. Consider these barrier chokepoints and related solutions to consider for working around these issues:
1. Barriers to Access: Often the traditional methods used to deploy financial reports are anchored in legacy financial reporting systems that have not received regular feedback from users related to whether these access points are accessible and easy to navigate. Users may be intimidated by numbers, or may simply be busy or distracted, and not feel connected to their oversight and assessment roles related to financial reports.
Solutions: Start by observing open rates and check in with users periodically to see if they are having any difficulties accessing financial reports. Listen closely to their comments and observations. Effective action steps often include simple courtesy notification messages, providing options for multiple reporting delivery protocols, and taking the time to walk new or hesitant users through access options to make sure any access barriers are eliminated.
2. Barriers to Comprehension: All users face some level of comprehension barriers related to financial reports, regardless of their experience or level of financial acumen. Common barriers include busy schedules, memory retention issues caused by infrequent use, and unexpected operational and governance distractions. Barriers can also arise from general responsibility misunderstandings such as Board members over-relying on the treasurer to fulfill fiduciary financial oversight roles and staff leaning too heavily on the finance department to track budget to actual performance.
Solutions: To build comprehension, consider implementing regular financial acumen training both formal (scheduled throughout the year) and informal (sitting down with individual users to fill in comprehension gaps as they surface). As described in Financial Teaching Moments are All Around Us, providing regular financial training at staff, Board, and finance committee meetings along with finance department open-door policies will go a long way towards solving comprehension issues. Including short learning opportunities inside regular board, committee, and staff meetings is a good way to avoid adding too many extra meetings just for formal training.
3. Barriers to Use: Most financial reports are designed to satisfy generally accepted accounting principles (GAAP) as a primary responsibility. This is further complicated by the general hesitancy to make design and format changes to legacy financial reports. Consequently, satisfying user needs has become a secondary point of emphasis. This equation needs to be reversed. If we satisfy user needs, engagement (open rates) will increase.
Solutions: Adjust your design metrics to be centered on information that will help individual users improve job performance, meet programmatic and operational goals, and align with strategic governance priorities. Start by adding or reconfiguring dashboards to meet staff needs while encouraging staff to share information collaboratively. To these dashboards add key performance indicators (KPIs) that are interactive and nimble (i.e., KPIs that can be changed to meet new conditions). Finally, pull dashboards and KPIs together with a short-written cover synopsis that highlights information relevant to progress and meeting goals. Keep full GAAP financial statements as supporting documents but not the leading document. A dashboard with timely KPIs and a supporting synopsis will become the executive summary that can be read in a few minutes.
Reposition Financial Reports to Add More Value
Tired financial reporting adds little value. Financial reports that augment planning, trigger collaborative thinking, and start a conversation about the future will add real value. Aspire to have financial reports that “come alive,” virtually talking to users about future opportunities, pitfalls to avoid, and needed changes. The key is to make financial reports forward-looking by adding rolling projections to income statements, dashboards, and KPIs. Financial reports that lead the user to consider what could happen in the future rather than merely what has just happened are game-changers and can be a proactive tool to drive innovation. Interim financial reports with a forward-looking year-end projection will tell a more complete picture. KPIs that look forward as well as backwards provide real insight into trends with the added benefit of helping to shape and change the future. Looking back can be enlightening but we cannot change what has already occurred.
Planning Tip – Consider adding customized access point options for users to make financial reports more assessable, such as an email with a convenient link with some special welcome language and a message targeted to match their needs and responsibilities. This very effective tool will help users to be more comfortable accessing financial reports and show care by offering customized access options to meet their needs.
“How Does This Help Me?”
To get busy directors, program managers, and Board members to take the initiative to access financial reports, financial reports must answer the question most users will ask themselves: “How does this help me?”. You must always show how financial reports connect with their respective roles and duties, helping to drive change and innovation while also satisfying backward-looking oversight responsibilities. Connecting the dollars to past outcomes as well as future possibilities will take financial reports from being merely an obligation to becoming a useful tool.
If users do not understand financial reports and do not see immediate value, they will not be motivated to engage. To build engagement, we must master three pillars:
1. Right-Sizing the Data: Right-sizing means focusing more on the specific metrics users need to track. This must include both financial and as well as non-financial data.
Right-sized financial reports must quickly answer questions of most concern to users:
What is the progress compared to expectations and the budget?
Are there any emerging risks, unexpected progress variances, or changing conditions that need to be considered?
Keep financial report formats tight and concise. The goal is to address user needs with as little noise as possible.
2. Delivery Dynamics
When it comes to delivering financial information, the key is simplicity:
Dashboards: To leverage digital dashboards, keep them straight-forward (less is more). Most organizations already have a summary dashboard report. Consider introducing user specific role-based dashboards “right-sized” to meet individual user needs and responsibilities.
Emails: While sending Excel spreadsheets or PDF reports via email might seem old-school, this method remains a highly effective option that can be personalized on the fly and adapted to user preferences and comfort zones. Ultimately, the best delivery method is the one that is easily utilized by end-users.
3. Two-Way Collaboration
Delivery does not stop when a report is received. This is only the beginning of the process. A mechanism must be in place that encourages collaborative touchpoints between the finance department and others in the organization who will be reading and using financial reports (for example, regular interactive meetings between the finance department and project managers). Two-way collaboration benefits all parties involved:
Users gain a dedicated partner to help them track progress, interpret variances, and explore adjusting to changing conditions.
Finance department gets real-time updates, a clear understanding of the remaining efforts to be completed, and an opportunity to assist with forecasting (looking ahead).
Active collaboration helps to encourage questions and explore answers to better improve performance and identify emerging risks.
Planning Tip – If you suspect or know that users are not reviewing financial reports, don't wait—initiate a direct conversation to establish clear expectations. While open communication can be challenging, alignment is the essential first step. Use these expectation-setting meetings as a two-way street: listen to the specific challenges and needs your users face and clearly define how the finance team can support them. This will build a foundation of mutual accountability and collaborative problem-solving.
AI and Conversational Finance
For organizations that use modern enterprise resource planning (ERP) systems with embedded AI features, there can be additional opportunities for interaction and collaboration. These features enable users to ask direct questions through a conversational system interface designed to get answers in plain English. When implemented thoughtfully, this can enhance engagement by removing traditional barriers to understanding and hesitancy to ask questions about financial reports.
Conclusion
Transforming financial reports from being viewed as an uncomfortable obligation into a value-added resource will expand engagement. Financial reports can act as a call-to-action, spurring innovation, and help reshape for a better future. We just need to reposition financial reports so users can have easy access and better see the light.
Buu-Linh Tran, CPA is SVP Financial Solutions for JMT Consulting, a firm that helps nonprofit organizations strengthen financial management through purpose-built technology, advisory services, and long-term support, with a focus on improving visibility, simplifying reporting, and enabling better financial decision-making.
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