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No More Boring Board Reports: Budgeting & Forecasting

No More Boring Board Reports: Budgeting & Forecasting

 

Tammy Bunting and Glenn Strack presented this “No More Boring Board Reports” presentation at The Church Network Conference in 2023. Watch the below video or read the presentation transcript about creating better budget reports for your leadership with Martus.

 

Tammy Bunting:

Today we’re going to talk about no more boring board reports. Myself, Tammy Bunting, and Glen Strack are going to go through this session with you today. Let me introduce a little bit about myself: I’m the Chief Revenue Officer of Martus Solutions. I am an evangelist for insightful systems! I’ve got 35+ years of experience in accounting, business administration, operations, management, and CFO for nonprofit and faith-based organizations. So, I feel like this is a topic that is near and dear to me. 

During our time together, we are going to explore the challenges we face in preparing meaningful, usable, relevant, board-level reporting in a timely manner. I don’t know if you’ve experienced this, but I certainly have, and that is being caught in a finance committee meeting where we seem to be stuck in endless circular conversations that sometimes don’t end well. Over the years, I’ve been moving away from just the numbers to telling the story.

A story is best told with pictures, right? When you see pictures or a scene from a story accompanying the narrative, it expresses the author’s emotions, or it may just give you a better understanding of what the author had in mind, so you can capture the essence of the plot. Boring reports can enhance confusion. So, our goal today is to show you that it is possible to capture the attention of the board and present meaningful and relevant information.

Have you ever handed out the board report package and someone flips to the last page and starts asking questions? Well, that’s happened to me several times. I also had one manager who could not read financial reports and always just said, “Just show me the baby.” One time I handed him a report that was wrapped in pink tissue in the form of a diaper. Thankfully he had a sense of humor. I have learned over the years that the numbers on a page sometimes are just not enough.

Our agenda today is to look at the challenges we face in presenting and preparing financial data:

  • We’ll start with the “why?”, which is the purpose. Why is this topic important? What problem are we trying to solve?
  • The “who?”: our audience and knowing our audience. That board is very important.
  • The “what?”, which is the information that we’re going to share.
  • The roadblocks, because we have those all the time. The challenges, how do we handle those, and what are they?
  • Sharing an example is the best part. That’s the “how?”, and we’ve got a case study. This is one of Martus’ very own customers that certainly doesn’t have boring reports. We’ll save the best for last.

 

1. Purpose

So let’s start with that “why?” or the purpose. I think it depends on how long you have been working in finance for a church to really grasp the challenges related to executive-level board or finance committee reporting presentations. I do believe things are much better today with the advance of technology than when I started. But with that said, I think it is time well spent determining if we are truly serving our decision-makers with not only the information we are sharing but how we’re sharing it. As mentioned a minute ago, our goal is to discuss effective reporting. By taking the time to examine who our audience is, what information is important to them, and how best they receive it, we can ultimately solve the problem of miscommunication or lack of information. This can often overtake a meeting, even when you really have good data.

 

2. Audience

Let’s talk about the audience: that board, the finance committee, or the executive team. Just to note, I have several of Michael Batts’ books and have relied on his expertise throughout my career. He has a book entitled Board Member Orientation, and in chapter five, he focuses on the board’s role in financial matters. He states that: “The board must maintain appropriate oversight over the organization’s financial affairs, either directly or through a committee. The two areas of oversight are as follows: one, ensuring that the organization’s financial condition is sound and that it has the financial capacity to conduct its programs and activities as intended. Two, approving and monitoring compliance with the organization’s operating budget and capital expenditures budget for each fiscal year. It may surprise you that some board members don’t understand their role. In understanding the dynamics of that audience, then we know that many opinions and or perceptions are brought to the table.”

This is one example that Michael Batts gave in his book regarding how preconceived ideas can inhibit how your reporting may be received by individuals in your audience: the board. He said “the battle of the budgeting philosophy”, and here it is: “Many nonprofit organizations operate under the belief that there is something improper about generating a positive bottom line, that is a surplus of revenue over expenses. In fact, in many organizations, a desirable budget is a balanced budget, but that is in no way to improve an organization’s financial condition. With only a balanced budget, you are left with no room for error. An unexpected dip in revenues can cause immediate financial stress for an organization and its leader.”

So here’s a question for you to digest. Like this example of differing philosophies on budgeting, have you ever been faced with a time in a finance committee meeting where there were varying opinions? The follow-up question would be: Has this caused you to change your data the next time? That may not always be a good thing. When your room is full of men and women from different business backgrounds and different points of view on how they run their own businesses, it is important to understand your audience. Many do not have backgrounds in accounting or finance, but the ones that do all come from different business backgrounds. You know, they only see this financial information occasionally, like monthly or quarterly. It’s not as familiar to them as it is to you.

Many of the board are more concerned with “what”, not the health. Sometimes they like to look at line-by-line reviews. Most are passionate about the role and mission of the church, and maybe sometimes too passionate. We must present the information in a way that is valuable to them. We need to understand key stakeholders’ learning styles. Do they like to discuss it? Are they more verbal, or do they need visual representation? Having both can be a plus and cover all your bases. Most importantly, the board members need to feel confident in their understanding of the financial health of the church, not whether or not we spent too many dollars on Goldfish crackers for the nursery. Those who have worked in churches know that is a key element of the budget!

 

3. Information

When we talk about the information that we are sharing, it’s up to you to own that information. Here are some questions you can ask yourself:

  • Do I know the numbers? Now with that said, it always happens. You come fully prepared except for the very first question about the one thing you don’t have the data on. So just keep that in mind, because we’ve all gone through that.
  • Have I worked to synthesize the information? This means to combine the numbers into a coherent whole, making it a story versus multiple line items.
  • How do I make it simple for them? That could be a way to make it simple.
  • How do I build on previous knowledge? Now remember, they’ve only been seeing these maybe once a month or once a quarter, so keep that in mind.
  • What are the complex aspects I need to help them understand? Be ready for that.

No matter what, we want to be sure we are telling the story with the ending being a healthy church. So what do we actually want to include? So here’s a list that I use. I ask these questions:

  • What do we have in cash liquidity?
  • What do we owe in payables and liabilities?
  • Where are we in regard to our revenue and expenses?
  • Where should we be in regards to our actual versus budget?
  • Where are we going with those projections and forecasts?
  • Are we successful (our scorecard)?

 

4. Roadblocks

As always, there are roadmap blocks. What can stand in our way? Here are some of the things that have happened to me in working with teams:

  • A lot of times the finance team does not have adequate time. We’re racing to the end to get those financials by the month’s end closing and then to prepare those reports.
  • Do I have the appropriate resources, manpower, systems, and all of those things in order to present the information?
  • Sometimes you’re stuck in Excel or Word versus a platform, and you don’t have the skillset for either, or some of your team may not as well.
  • We see special reporting format requests. Those seem to come in after the last board meeting and now you’re trying to put a square peg through a round hole, if you will, in order to accommodate one of the board members.

Another question for you to consider is: What do you feel is your biggest roadblock in either preparing or presenting your financial information? From the list of what I typically go through and asking questions so that I can prepare my financials. For this presentation, we’re only going to focus on the one: “What do we have?” Cash is king, so we’re going to focus on that. One of the things that you start out with is asking the question: Is our cash position weak or strong? Is it improving or declining? But, we don’t want to just focus on the cash balance. Looking at all cash is important, but what about looking at the net of restricted funds? Answer this question: If AP and current liabilities were paid, how many months of operating expenses would non-restricted funds cover? That puts a whole nother dynamic on cash, correct? Potentially, if your board has set some cash expectations, you would ask these questions:

  • How does this compare to our objectives or expectations?
  • Is there a plan in place to improve operating cash reserves?
  • How are we doing with respect to that plan?

All of those questions and the answers that follow give that board a lot more feeling of a healthy church, versus just what cash is. You could put this with your statement of financial position: What if you answered these questions around debt service reserves? So let’s say you have a statement of financial position, but in addition to that, you address the balance of your debt service reserves by asking these questions:

  • How many months of debt service for the church’s existing debt will the balance cover?
  • Is this within our objectives?
  • Do we have a plan to improve the debt service reserves balance?
  • How are we doing with respect to implementing the plan?

Again, you are focusing on the health and how we are doing. Cash reserves should be a hot topic, but if we are only looking at a statement of activity, you may be missing critical information. For example, a positive net balance, net income, and net asset balances won’t make up for inadequate cash reserves to fund outflows or to help handle months when giving is down. A church without necessary reserves will be scrambling to operate in the short term, no matter what the other balances are. Cash flow reserves ratio and measurements represent important indicators every church should understand. One such key ratio for churches is, for example, days of operating cash and investment on hand to fund annual expenditures. Usually, when churches are building up reserves, they have a goal in mind. A lot of auditors believe an appropriate benchmark for this ratio is between 40 to 80 days of annual expenditures on hand.

What about visually displaying cash balances as a good starting point, but adding in the expectations that we talked about and whether or not we are meeting them with the over and short? This presentation tells more of the story. This is building up to the second part of our presentation where Glen is going to talk about taking this information and utilizing systems to put it into a presentation.

We could take it even further with the days of operating cash, mentioned above, as it compares to approved days. So again, the board has approved some days: Are we healthy? Are we operating as expected? For example, days of approved cash is at 120, but we actually have 146, and they leave the meeting knowing that we are ahead of our days of operating cash than what we expected. We only focused on one question, “What do we have in cash?” But remember, there’s the rest of the story, which is: what we owe, where we are, where we should be, where we’re going, and are we successful. Those are for another day! Right now, I would like to pass it off to Glen Strack, who is going to walk through our case study to show how this Martus customer is taking reporting to the next level and eliminating the boring board reports.

 

5. Case Study

Glenn Strack:

Thank you, Tammy. To demonstrate the power of connecting Martus to Power BI, let’s look at a case study. Let me introduce you to Calvary Church in Winston-Salem, North Carolina. Their perspective comes from their mission, and they use Martus for their budget reporting and forecasting needs. Martus pulls their actual dollars from Sage Intacct via nightly API call. Budgets are created in Martus, and reports and graphs in Martus allow Calvary to combine actual and budget data to analyze and evaluate their finances. Calvary’s attendance data could be in Martus, but currently, it is in a separate database and then is pulled into Excel. Calvary’s goal is to pull the data together from numerous sources to create a set of specific graphs to use on their board report in deacon packages.

Let’s look at the specific goals for the board report. Calvary has these requirements in mind for the board report:

  • Produce a set of customizable graphs that tell Calvary’s story from mission, financial, and attendance perspectives.
  • They want to be concise and they want these reports easy to read.
  • It is so important that the information be timely. In terms of being timely, they would like to have these reports updateable from the original source.
  • Their goal is to have the presentation in a PowerPoint presentation that they’re going to use for the board report.

Today is a new day, and Calvary is looking at the board report with a fresh set of eyes. Their story is too important to tell on a copy-and-paste Microsoft Word document using data graphs and financials. To summarize, data will be transformed as it goes from Martus to Power BI to PowerPoint. The Martus Connector will be used to pull budget and actual dollars from Martus into Power BI. We will treat the Excel-based attendance data as a second source of data to be pulled into Power BI. Once the data tables are in Power BI, then graphs and charts will be created to conceptualize the story. Of course, the story is not complete until it’s all put together in a presentation with a narrative. In this case, Calvary will pull selected graphs into a PowerPoint presentation with a narrative that tells their story.

The first step in our plan starts with pulling actual data into Martus. Martus’ nightly sync is pulling three months of financial data and designated fund information from Calvary’s financial software. Budgets and forecasts are created in Martus, and currently, Calvary has a board-approved budget and three separate quarterly forecasts that are part actual and part budget. Each of these forecasts was created in Martus. With budget and actual dollars in Martus, we’re all set to use a Martus Connector to pull actuals, budget, account dimension, category tables, and more into Power BI. The generated code will be used in Power BI to pull in data tables from Martus. Note that the table listing includes attendance data that was pulled in separately from Excel.

Now we get to the fun part, where you get to be creative. Like an artist, you create representations of reality. Power BI desktop provides a lot of prebuilt examples to spur your creative side. Receipts and expenses for the day school and church are represented on bar graphs. We created this in Power BI from the imported data, and it is a story that the board wants to see. Bonus: Since you have a direct link back to Martus, you can refresh this data at any time! Your KPIs, reports, and graphs are created in Power BI desktop. The next step is to publish your work to the Power BI Cloud. This will allow you to share your data with coworkers or with other software. Let’s publish and see how our graphs show up in the Cloud.

Publishing to the Power BI Cloud opens up a whole new world where you can collaborate with coworkers, subscribe to reports, embed reports in PowerPoint, Excel, PDF, and so much more. Here we set up a scheduled subscription for our year-to-date receipts and expense graph. Imagine automatically sending out the latest version of your reports and graphs each week, each day, or each month! And yes, we can share reports and collaborate with coworkers. As an example, you can see me sharing the board report and graphs with Tammy.

The last step in our plan is so simple, yet so powerful. From our PowerPoint board report, we click on the insert menu and then choose a Power BI option. Here you paste a web URL from Power BI Cloud. This pulls the graphs into our PowerPoint and creates an updateable link between Power BI and PowerPoint. You heard me right! This data can be refreshed. Are you ready to tell your story using Martus, Power BI, and PowerPoint? Let’s review the process in Martus and Power BI.

Starting in Martus, we see a list of board-approved and forecast budgets. The forecasts have actual amounts from earlier months and budget dollars for later months. Once the forecast is created, the months with actual dollars are frozen (you see that indicated). You can then adjust future months to bring your full budget back in alignment with the original budget. These budgets are pulled into Power BI via the Martus Connector. Let’s take a look.

I am going to go to setup and API, and I’m going to quickly show you some of the tables that can be pulled from Martus into any analytical software, such as Power BI or Tableau. You can pull all use of actual and budget data, but that is just a sample of the data that can be pulled.

 

martus_power_bI_chart

 

So let us head over to the Power BI desktop. The data from Martus is pulled into the Power BI desktop using the Martus Connector. Above is one of the graphs we created for Calvary, but let me draw your attention to the right side of the screen. There are many options for charts, graphs, and KPIs that you can choose from. Also, look to the far right, and you’ll see tables that we pulled in from Martus and attendance data that we pulled in from Excel.

Let’s look at where we pulled in the Excel tables. If we go on the home tab and you click “get data”, you see the option to pull in from Excel. Please note that the data can be pulled in from many sources! We pulled the Martus data in from a blank query, but there are multiple sources from which you can pull data. Also along the menu, I want to draw your attention to the refresh option right here. Now, clicking this will refresh your graph directly from Martus, which is impressive. We’ve created numerous graphs and reports in here, but once these graphs, reports, and charts are created, the next step is to publish your work to the Power BI Cloud. Note the option under home and then publish. Publishing to the Power BI Cloud presents a whole new set of possibilities. Let’s explore! 

We’ve already previously published, so we’re going to head over to the Cloud. You’ll notice that once you’re in the Power BI Cloud, the screen looks a little bit different and you now have a URL. You also have a plethora of new options. 

Let me point out a few of the cool things you can do in Power BI Cloud:

  • First of all, we’re going to go to “file” and generate a QR code. Now this can be shared through a phone or it can be put in a report, but anyone’s access to the QR code and has rights to the report can open the report.
  • Note that we also have the option to share, and this allows you to collaborate with other people.
  • I also want to draw your attention to “subscribe to a report”. Now, we’ve already subscribed to this one, and I could open that and edit it, but I want to show you what a new subscription looks like. Notice the many options that you have, including date ranges, how often you repeat, scheduling the time, and more. It’s very easy to subscribe, report, and get the latest version on a regular basis.

There are a lot of other options to explore in here. Tammy, I’m going to let you take the screen back!

 

Tammy Bunting:

Just to recap:

  • We talked about the boring board reports that some of us who present to a board have been faced with.
  • We talked about what information would be valuable in a presentation that would have graphs or pictures that tell the story of the health of the church.
  • We also had an opportunity for Glen to show us using systems like Martus and Power BI Connector to build out said reports.

So now what we’re going to do is show you that example of Calvary Church and what their end product would look like. Again, this is exciting to me. This information is exactly what their board wants to see. We talked a little bit about different aspects or concepts, but this is what they like. We put it into a very exciting, enjoyable presentation.

 

Glen Strack:

Thank you, Tammy. Calvary Church has previously created deacon-packaged graphs in Excel with data pulled from Martus using the Martus Connector. The church’s goal is to use technology to tell their story. They determine Power BI to be a great fit to meet their needs since it is easy to pull from Martus tables into Power BI. There’s a specific set of data they target for their first year in Power BI. The future goal is to expand the use of Martus and Power BI to create additional KPIs and graphs.

 

Tammy Bunting:

You know why I love this, because it’s just so dynamic. This could not be done without what Glen put together! It’s so exciting to see how you can add pictures of the actual church and the mission along with the narrative, which is the narrative that speaks into these financials. For example, a very high-level overview:

  • For the period ending, the church continues to realize an excess in contributions over budget of 6.2%.
  • Our excess in revenue is offsetting the overage in expenses by 5%.
  • For period ending, the day school is operating outside of the expense budget estimates with a slight overage of approximately 4%.
  • Receipts make up a small portion of the excess expense for a net loss of approximately 3%.
  • Obviously, the year-over-year giving is incredibly important. In this scenario, this picture, or this story, we’re saying for the month ending May 2023, the church realized an excess in tithes over the prior year of approximately 12%.
  • Year to date, we hold a 4.36% increase over the prior year in tithes, again, telling the story of the health of the revenue as it relates to their generosity, tithes, and offerings.
  • One of the things that Calvary likes is to measure their increase or decrease in net assets. For the period ending, the church and day school have a collective positive variance of approximately $833,000.
  • The day school is performing below expectations by approximately $230,000. However, the church offsets this loss with excess net assets from expectations of approximately $1 million.

Glen, this is your screen, because, when we worked together in a church, managing the attendance was a nightmare! It was in a huge Excel spreadsheet. If anyone touched it, it would fall apart. Having something like this visual application would be wonderful for the board to view and see where we stand in regard to attendance. I’II let you take it from here.

 

Glen Strack:

Thank you, Tammy.

martus_calvary_church_budgeting

What a beautiful depiction of the average weekly attendance by monthly campus this is! Just think about how attendance day presentations have historically been a bit bland and just show a bunch of numbers. Here is a presentation that is pleasing to the eyes and draws your attention to key information.

 

martus_budget_report_examples_calvary_church

Here is a graphical representation of the data we saw on the previous screen. We are shown two graphical representations of the same data. If you are creating this presentation, which look would you prefer? Looking at Calvary’s main campus, we clearly see the expected drop in attendance during the summer months when families go on summer vacation. This may be a typical presentation, but it is data that can easily be refreshed and options for presentations are powerful. Turning to the West campus, we see large year-over-year growth. Great news! Know that you can refresh at any time, and also note that the date at the base shows the last time it was updated. Remember that each of these graphs was created in Power BI and then inserted into the PowerPoint board report with data flowing originally from Martus.

 

Tammy Bunting:

Thank you, Glen. This has been a dream of mine: to be able to have our systems work together, so that we don’t have to cut and paste, and the idea of it refreshing automatically! It’s always frustrating to be asked a question and not have the answer to something that’s more current than what you might have presented previously.

I love that Martus and the Connector to Power BI allow us to have much more powerful reporting, but actually no more boring reports! The visualization that can happen in these PowerPoint presentations, utilizing the Martus and the Martus Connector, tells the story beautifully and allows the board to leave knowing with confidence that the church is healthy. Thank you for joining us! Maybe we’ll do part two on all the other items, not just on what we have or what we owe and all of those things, and present even more really cool-looking reports.

 


Looking to improve the way you budget and report, or just want to make budgeting a whole lot easier on you? Martus Solutions is a Cloud-based budgeting software that allows you to create, execute, and analyze budgets with ease. This tool was designed intuitive enough for budget managers who might not be finance people, but is also robust enough for budgeting experts! Built for schools, non-profits, churches, small businesses, associations, and so much more, we have customers all over the world who budget better with Martus.

For more about Martus, learn about our budgeting tool here or contact us for a free demo today!

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