What Should a Nonprofit Board Review Each Month?

Serving on a nonprofit board does not require an accounting background. It does require clear information and a willingness to ask questions.

A useful financial review helps answer three questions: Can we meet our obligations? Are we operating according to plan? Are we using funds consistently with their intended purpose?

The following is a practical monthly review framework. If your board meets less frequently, your treasurer or finance committee can review monthly reports and bring significant issues to the full board.

1. Cash available for upcoming obligations

Start with cash, but look beyond the bank balance. Ask how much is available for general operations after considering donor restrictions and upcoming payments.

For example, an organization may have $60,000 in the bank, including $40,000 restricted to a future program. The full $60,000 should not be treated as available for routine operating expenses.

Ask: Can we cover payroll, rent, and other obligations over the next 30–90 days? Are we relying on a grant payment or donation that could arrive late?

2. Actual results compared with the budget

Compare revenue and expenses with the approved budget for both the month and the year to date. Focus on differences large enough to affect decisions.

A shortfall may reflect timing, such as a fundraising event moving to a later month. It may also signal a longer-term problem, such as lower participation or the loss of a recurring donor.

Ask: What explains the difference? Is it temporary? Does management need to adjust spending or update the forecast?

The National Council of Nonprofits recommends periodically comparing budgets with actual cash flow and expenses and considering revisions when circumstances change. Read its budgeting guidance.

3. Financial position and operating results

The statement of financial position shows assets, liabilities, and net assets at a particular date. The statement of activities shows revenue, expenses, and changes in net assets over a period.

Review these reports together. Look for growing unpaid bills, overdue receivables, recurring operating deficits, or unusual changes that need explanation.

Ask: Are we becoming financially stronger or drawing down resources? Are reported results being affected by a large one-time contribution?

4. Donor restrictions and grant activity

Request a clear summary of significant restricted gifts and grants, including their purpose, spending to date, remaining balances, and approaching deadlines.

Distinguish donor restrictions from amounts the board has designated internally. They are different and should be clearly identified in reports.

Ask: Are expenditures consistent with the funding terms? Are any programs behind schedule? Are required reports or reimbursement requests approaching their due dates?

Financial policies should help organizations use resources in support of their mission and donors’ intent. See the National Council of Nonprofits’ financial management guidance.

5. Reporting quality and follow-up actions

Before relying on the numbers, ask whether bank and credit card accounts have been reconciled and whether any material transactions or adjustments remain outstanding.

Finish with a short list of decisions, responsible people, and follow-up dates. An unexplained variance should become a question someone owns, with an answer expected by a specific time.

Keep the review manageable

A concise packet can include the core financial statements, a budget comparison, a cash forecast, a restricted funding summary, and brief explanations of significant changes.

The goal is to give board members enough clarity to recognize concerns and make informed decisions.

Open Book CPA helps small and growing nonprofits with bookkeeping, reconciliations, and financial reporting. Contact us to discuss reporting that supports your organization’s leadership and board.