Financial Teaching Moments are All Around Us

As financial professionals, we are immersed in the language of finance and all its silent and not so silent nuances. To everyone else, the language of finance is mysterious at best and frightening to most. We must constantly strive to make the language of finance accessible to non-financial managers and build their financial acumen and confidence.

Like any second language or infrequently applied skill, there is a “use it or lose it” retention factor, so repeated teaching moments must be used as they periodically surface. The good news is that there are many regularly recurring teaching and messaging opportunities in our financial world.

We need to consider adding an element of explanation and stage-setting with each opportunity to distribute financial information, and not just focus on timely and accurate delivery. You cannot do this for every element of financial information because the volume is too great. Consequently, you need to apply this selectively to key line-items (for example, occupancy) at key times (headquarters lease expiring) and at the right stage (Board meeting, staff budget meeting, auditor planning meeting, etc.). If you view financial information as a teaching opportunity, it will impact the way you craft the message and make it more beneficial and insightful to the many non-financial managers who regularly receive and use this information.

Let’s first discuss the “when” opportunities and then explore strategies for “who” we message to.

“When” Opportunities

The “when” opportunities are all around us. Most are already baked into our financial operations and finance calendar. Chronologically, they are there on a daily, weekly, monthly, quarterly and annual basis. Examples of some of these many opportunities include:

• Daily: Emails, virtual staff meetings, correspondence and conference calls

• Weekly: Vendor interactions, employee pay cycles and benefits management, time management and other HR management related issues

• Monthly: Financial reporting, accounting system monthly close interactions, grant reporting, program and budget performance reporting, newsletters and blog posts

• Quarterly: Board and executive committee meetings, finance committee, audit committee and investment committee meetings, program and membership committee meetings, and fundraising, development and communication committee meetings

• Annually: Budget preparation cycle, annual reports, Form 990, charitable solicitation registration filings, annual financial statement audit, and election and appointment of Board members and officers

The one commonality for each of these opportunities is that there is always an element of financial information embedded within. We need to recognize these opportunities and take advantage of them.

“Who” Strategies

Three keys to successful financial messaging include: (1) knowing your audience; (2) being aware of how frequently particular matters occur; and (3) being mindful of turnover.

Audience – This is often the most important factor. Most end-users of financial information fall into one of the following categories: Board member, staff member, volunteer, funder/donor/sponsor, service provider/vendor, service recipient, or member or general public. Each of these categories has a different use for financial information and a different level of financial acumen. Consequently, communications related to a basic issue such as a new capital budget needs to be messaged differently depending on who is receiving the information. There will be one capital budget, however, each of these constituents will view and react to that capital budget differently.

Frequency – I think about this factor a lot. For issues that only arise infrequently, an element of “back-tracking” and supplying extra explanation and context is needed. On the other hand, some issues recur often and do not need regular extra explanation. Using the capital budget as an example, new additions to the capital budget need to be explained in detail while recurring monthly depreciation of assets in use is constant and self-explanatory.

Turnover – In the nonprofit world turnover occurs constantly. Board members and officers change due to term limits and voluntary departures. Staff members change as a result of promotions, departures, new hires, and terminations. And turnover also occurs with volunteers, funders/donors/sponsors, members, and vendors. This heightens the need to explain financial information regularly, since the audience may have shifted substantially since the last time the explanation was provided.

Planning Tip – Annual orientation meetings will provide an excellent avenue for recurring teaching moments. Consider separate annual orientation meetings for the Board and staff, and perhaps separate annual orientation meetings for volunteers, vendors, and funders. It is best to include returning persons with new attendees to learn and relearn, mentor and interact with each other.

A lot of effort is required to report accurate and timely financial information. Adding extra effort around messaging and explanation of financial information will increase end-user acumen, enhance their decision-making, and help them to fulfill their different fiduciary responsibilities.