By Bob Mims, CPA, CGMA
One of my favorite scenes from Schitt’s Creek is when Moira Rose is trying to teach her son, David, to cook a family favorite. When the recipe called for “folding in the cheese,” David was baffled and inquired what that meant. Moira, who has no idea, continues to say, “You just … fold it in.”
You can watch the scene here: https://www.youtube.com/watch?v=fCVKCUB5w50.
To a chef, or even someone with any cooking experience, “folding” is understood. (It’s lightly incorporating ingredients.) To someone with no cooking experience, folding doesn’t translate to gently stirring.
The same can be said for financial literacy. Oftentimes, the accounting team speaks about cash flows, balance sheets and income statements in terms and acronyms that can be confusing to those without a CPA. This can become an issue for nonprofits in strategic planning, budgeting and measuring program performance. Accounting teams need to simplify the way in which financial data is delivered, and other departments (fundraising and program) need to learn to understand the terminology.
What does simplification look like?
Development departments and accounting departments have different ways of measuring fundraising. As an example, development may see fundraising as when a gift is pledged or committed, whereas accounting may see it as when cash comes in the door. Both answers and viewpoints are correct, but working through these issues and reconciling them between teams can offer a common understanding that builds trust.
So, what should be done?
Leadership should focus on organizational priorities rather than simply addressing the everyday “urgent lists” that pull attention away from them. In my experience, organizations that require financial literacy training for everyone, including the financial officers themselves, build greater trust within their teams and prove to be more effective.
At the end of the day (or the end of the fiscal year), it’s the building of trust that leads to greater effectiveness and success.
Bob Mims, CPA, CGMA, has over 30 years of expertise in finance and nonprofit management and is a senior consultant and CFO at Sharpe Group. Previously, Bob was the CFO of Wetlands America Trust and served as controller, director of investments and strategic planning liaison for Ducks Unlimited. He has made significant contributions to the Financial Accounting Standards Board (FASB) through his terms on the Financial Accounting Standards Advisory and Not-for-Profit Advisory Councils.
As a sought-after author and speaker, he regularly presents at Sharpe training seminars, AICPA events and state society conferences. His expertise earned him the distinguished title of “National Instructor of the Year” three times from KPMG. In his work with Sharpe clients, he focuses on identifying training and recruiting needs while advising boards on philanthropic strategies that drive long-term financial sustainability and mission success.
