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May 15, 2007

balance sheets

I spent yesterday at a board meeting, part of which was devoted to reviewing balance sheets. It was my fourth experience with an accountant's report since spring arrived. During the budget portion of any board meeting, I always feel like a "b-minus" student. I can follow the discussion, but only with a delay that prevents me from participating much. If there were a test, I would get about 20 percent of the answers wrong. I would answer some items correctly by repeating phrases, not because I understood the fundamental concepts. (In other words, I would bluff my way to 80%.) Since I have difficulty in following my more competent peers, my attention tends to wander.

However, I do have good motivation, and that keeps me from failing entirely. It seems to me that a balance sheet is an excellent tool for planning in the non-profit world--if the spreadsheet is organized to answer questions that matter for management. If all you want to know is whether you are headed for bankruptcy, then the exercise is not very illuminating. Usually, all you can conclude is that everyone had better work hard and cross their fingers for grants and contracts to come through. If, however, you want to know whether you are putting discretionary resources, such as time or cash, in the right places, a well-constructed balance sheet can be enormously informative.

May 15, 2007 2:43 PM | category: none


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