“Seventy-six percent of financial managers at mid-size nonprofits said they are knowledgeable about financial principles, but only a third correctly answered all three basic financial literacy questions asked,” said Una Osili, director of research at the Center on Philanthropy. “This disconnect has potentially significant implications for nonprofits and the donors who place their trust in them. Solid financial knowledge is critical to sound decision making as nonprofits strive for financial well-being and greater impact.”
Other key findings:
- Respondents said they were knowledgeable about negotiating with banks or lenders (78 percent), cash flow projections (75 percent) and financial scenario planning (72 percent).
- Only 46 percent reported knowing about debt restructuring.
- Financial literacy increased with the number of courses taken in accounting, economics, operations and financial management, and with the nonprofit’s revenue.
- Boards were involved in accountability (66 percent), but less so in managing investments (38 percent), developing budgets (30 percent) and scenario planning (27 percent).
- Less than 40 percent of nonprofits surveyed had an audit committee.
Follow the link above to the press release and the study.