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Financial Data as a Planning Tool: 4 Tips for Nonprofits

Financial Data as a Planning Tool: 4 Tips for Nonprofits

UPDATEDJan 10, 2024

By Jon Osterburg, Chief Operating Officer, Jitasa

Between managing your programs, ensuring IRS compliance, and improving donor relations, your nonprofit’s financial data is crucial for optimizing many essential processes. But what if you could use your financial data to manage more than day-to-day operations? 

To achieve sustainable growth, your nonprofit needs to create a strategic plan, which is an in-depth overview of your upcoming activities and goals. With the right approach, your nonprofit can make the most of your financial data as a strategic planning tool. In this post, we’ll help you chart a path for your nonprofit with these tips:

  1. Keep Financial Information Organized
  2. Set Clear Financial Goals
  3. Create Accurate Budgets
  4. Compile and Analyze Financial Statements

By leveraging your financial data for planning purposes, you can see benefits such as improved resource management, smoother operations, and better short- and long-term decision-making. Let’s dive in!

1. Keep Financial Information Organized

Though keeping financial information in your accounting database is critical, it won’t be helpful to your strategic planning process if it’s out of date, incorrectly inputted, or disorganized. Incorporating data hygiene best practices into your daily operations ensures that your team has fresh, accurate data to drive your planning. 

If your nonprofit needs help organizing your database, NPOInfo’s guide to nonprofit data hygiene suggests:

  • Understanding what your financial data should look like. Knowing the ideal result of your organizational improvements helps you set benchmarks for your financial data’s quality. Prioritize clarity, accessibility, and consistency while setting standards for collecting financial data. 
  • Conducting a database audit. An audit can pinpoint discrepancies, duplicates, and other gaps in your data so you don’t have to comb through all of your records manually. If your accounting software has built-in audit capabilities that automatically flag issues, use that to generate a comprehensive audit. Or, you can work with a database expert to conduct the audit for you and provide data hygiene recommendations.
  • Logically organizing your data. Once you’ve standardized your data after your audit, lay it out in an organized way to avoid confusion. In particular, your chart of accounts will help keep your data tidy and easily accessible. This example from Jitasa can help you format your own:
An example chart of accounts for nonprofits with the following categories: assets, liabilities, net assets, income, and expenses.

While these improvements take time to implement, the efficiency gains you’ll experience from a clean dataset are well worth the initial investment. For instance, you may receive clear insights into your cash flow, expenses, and other key metrics to jumpstart your data-driven strategy.

2. Set Clear Financial Goals

Once your accounting database has been organized, your nonprofit can start translating your financial information into actionable goals. Kick off this important part of your strategic planning process by:

  • Referencing past data. Past financial information helps you build a foundation for your goal-setting. Use this data to understand the success of your previous endeavors and identify areas for improvement. 
  • Creating short-term and long-term goals. As you begin creating objectives to achieve your goals, specify whether they’re for short-term (within the year) or long-term goals. Separating goals helps your team create a realistic timeline and prioritize your activities.
  • Using the SMART framework. The SMART framework (which stands for specific, measurable, achievable, relevant, and time-bound) helps your nonprofit create high-quality goals for spending and fundraising.

No matter what each goal’s timeline or focus is, ensure that it aligns with your nonprofit’s mission and vision. To prevent mission drift and gauge your activities’ effectiveness, regularly review your progress with your team as you collect more data.

3. Create Accurate Budgets

A budget is a financial planning document used to reserve funds and estimate expenditures for different activities. Though your budgets likely won’t perfectly predict your financial standing, they’re still important for allocating resources throughout the year. Your past financial data can help you forecast approximately how much you’ll spend and earn so your budgets are as realistic and precise as possible. You should include the following information on your nonprofit budget:

  • Expected revenue, such as funds from donations, investments, and grants
  • Expected expenses, including overhead and program operation costs

Also, remember to create budgets for individual projects based on stored records. For example, if you host a fundraising gala each year, you should create an individual budget for that event based on your performance last year and your nonprofit’s overarching benchmarks.

4. Compile and Analyze Financial Statements

Your nonprofit’s financial statements are comprehensive records that summarize your financial data, providing a snapshot of your overall financial health. Creating financial statements provides structure to your data and simplifies analysis.

The major nonprofit financial statements that you should know include:

  • Statement of activities. This statement is used to supply details about your nonprofit’s revenue and expenses to aid in the budgeting process. 
  • Statement of financial position. This statement provides a snapshot of your nonprofit’s financial position by highlighting your assets, liabilities, and net assets. 
  • Statement of cash flows. This statement shows how cash flows in and out of your nonprofit’s accounts via operating, investing, and financing activities. 
  • Statement of functional expenses. This statement is a matrix-style representation of program costs, administrative costs, and fundraising costs to show how your funding is being used to further your mission.

Collecting this information can streamline your annual reporting, tax filing, and other financial processes. For instance, Form 990 requires nonprofits of any size to report on their annual gross receipts, information that the statement of financial position provides.


Between cleaning your database, creating budgets, and compiling statements, it can feel overwhelming to step into the world of financial management for nonprofits. However, by reviewing your daily practices, leveraging data, and even working with a professional accountant, you can set financial goals that closely align with your mission and empower you to do right by your beneficiaries.

This is a guest blog from Kantata customer Jitasa, the largest national accounting & bookkeeping services provider focused exclusively on nonprofits. Jon Osterburg has spent the last nine years helping more than 100 nonprofits around the world with their finances as a leader at Jitasa, an accounting firm that offers bookkeeping and accounting services to not for profit organizations.

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