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 often mysterious at best and frightening to many. We must constantly remind ourselves to strive to make the language of finance accessible to non-financial managers, Board members, and staff 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. Consequently, we need to learn to take advantage of small teaching moments as they periodically surface. The good news is that there are many regularly recurring teaching and messaging opportunities to help non-financial people connect and better understand financial reports and the world of finance.
We need to consider how to add an element of explanation and context to the numbers when we distribute financial information and avoid focusing only on accurate financial reports that are delivered on time. You cannot do this for every element of financial information because the volume is just too great. Consequently, you need to apply this approach selectively for key line-items (for example, occupancy expenses) at key times (when the headquarters lease is expiring) and in the right setting (finance committee meeting, staff budget meeting, senior manager planning meeting, etc.). If you view delivery of financial information as a teaching opportunity, it will impact the way you approach financial reporting and financial messaging.
To better help with identifying small teaching moments, first keep your eyes open for “when” opportunities followed closely by applying strategies to identify “who” we will be messaging to and how to engage these individuals.
“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, senior management, staff, volunteer, funder/donor/sponsor, service provider/vendor, service recipient, member, or general public. Each of these categories has a different use for financial information and differing levels of financial acumen. Consequently, communications related to a basic financial issue such as a new capital budget need 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 due to memory retention and distraction challenges. 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 re-explain financial information on a regular basis, since the audience may have shifted substantially since the last time the explanation was provided.
Planning Tip – Annual orientation meetings will provide an excellent opportunity and avenue for regular recurring teaching moments. Consider separate annual orientation meetings for the Board, finance committee and other important committees, staff, and perhaps separate annual orientation meetings for volunteers, vendors, and funders. It is best to include returning people along 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, lessen barriers to engagement with financial reports (as we discussed in Are Your Financial Reports Being Ignored?), enhance their decision-making, and help them to fulfill their different fiduciary responsibilities.
