This article explores how the Financial Health Analysis Tool can bridge the gap between the capacity of grantmakers to conduct financial analysis and the need to incorporate financial considerations into both grantmaking and ongoing engagement with grantees.
The tool presents four years of key financial indicators in graphs and charts that create a kind of dashboard of a nonprofit's financial health over time. This small set of simple metrics highlights patterns and trends that can help grantmakers and nonprofits see how the financial management of an organization is advancing its mission and strategy.
Using a series of interviews with a group of early users of the tool, this article looks at how these metrics are deployed in practice by grantmakers and illustrates three areas where they can be of particular utility: due diligence and evaluating grants; capacity building; and recognizing larger patterns and opportunities.
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Polanco, H. H., & Snow, L. K. (2018). Less Is More: How Grantmakers Are Using Simple Financial Metrics. The Foundation Review, 10(2). https://doi.org/10.9707/1944-5660.1414
Open Access Sponsor
Open Access to this article is supported by FMA as part of the firm’s commitment to maximizing the availability of free tools and resources for understanding and communicating about nonprofit finance.