Financial Literacy – Part I

By: Jill Palmeter, CPA, Partner (Aug, 2012)

Wikipedia says that “financial literacy is the ability to understand finance.  More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions through their understanding of finances.”

When one relates this concept to the not-for-profit sector, it is easy to see that financial literacy and knowledge play a vital role in the creation and sustainability of vibrant organizations, particularly in a challenging economic environment.  As auditors we see a wide range of knowledge depth with regard to financial literacy as it applies to executive directors, financial managers and board members of not-for-profit organizations.  We also see the importance of understanding available economic and financial data as this will help effective decision-making.   The old adage “Knowledge is Power” is especially true in the not-for-profit sector.  Managers and board members need a high level of financial literacy to establish a sustainable, long-term financial plan, maintain a healthy cash balance and fulfill their organizations’ missions effectively.  A recent Indiana University study focusing on financial managers, “Financial Literacy and Knowledge in the Nonprofit Sector,” also reiterated the importance of improving their financial literacy and competency.  

Although improving management’s knowledge base may come at a cost of both time and money, this is probably outweighed by the benefit of avoiding fiscal difficulties or crisis management later on.  And an organization seen by the community as being financially stable may attract new donors who see that stability as worthy of their charitable investment.

UPCOMING SEMINAR
So how does an organization even begin thinking about how to improve their management’s financial literacy?  They can start by attending Dermody, Burke & Brown’s complimentary seminar entitled...

Not-for-Profit Financial Information---Helping you understand, interpret and present the information

Wednesday, October 17, 2012
8:00am - 9:30am
at Dermody, Burke & Brown
443 North Franklin Street
Syracuse

An invitation will be mailed in mid-September and the seminar is open to executive directors, agency financial managers and board members.

 

DB&B…Educating to Empower


The information reflected in this article was current at the time of publication. This information will not be modified or updated for any subsequent tax law changes, if any.