Don’t Fear the Balance Sheet

Megan Ritter, Vice President of Communications

Savvy foundation funders typically ask for several different types of financial documentation – and they really do review them carefully. It’s vital, therefore, to have strong financial documentation that positions your organization as well-governed and headed for long-term success. Get a head start now to make sure you’re prepared well before the next proposal due date!

What you’ll need: Budgets!
How to prepare: Spend time at the start of each fiscal year developing several proposal-ready budget documents. You should have both an organizational budget that outlines all your spending for the year to come, and a project budget for each of your major initiatives.
What foundations are looking for: Does the budget match the proposal? Anyone reviewing your proposal should be able to draw a clear line from each deliverable to the line item that pays for it. The budget should also include projected revenues to assure potential funders that you’ve thought through the resources needed to bring your project to fruition.

What you’ll need: A donor list.
How to prepare: Keep a running list of your largest donors for the year (names and amounts) in a secure document. If your organization adheres to a donor privacy policy, keep identifying information blind.
What foundations are looking for: Who’s currently supporting your work? If other well-known funders with good reputations have already taken a chance on you, a foundation will consider it a seal of approval. More broadly, they’re looking for assurance that your donor base is sufficiently diverse for long-term financial stability.

What you’ll need: IRS Form 990 and audited financial statement.
How to prepare: Work with your accounting team or outside contractor to prepare early each year.
What foundations are looking for: These documents are a gold mine. Are your officially reported expenses and revenue in line with the budget you submitted, and how have they changed year-over-year? How are your top staff and board of directors compensated? A savvy foundation is looking for assurance that your organization is competently managed at the leadership level.

Final thoughts: Potential funders will sometimes ask for unexpected documents like profit-and-loss statements or more extensive lists of staff salaries. If they ask for it, they’ll have a reason, so be sure to accommodate their requests! Cultivate a good working relationship with your accounting team so you can get what you need quickly. Don’t fear the balance sheet!

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