In my 3 decades of experience as a CPA, nonprofit CFO, and now a fractional CFO serving churches and nonprofits, I’ve sat through more board meetings than I can count. And across organizations of every size and mission, I see the same issue surface again and again:

Board members are expected to govern the finances—but many don’t feel confident reading the financial reports placed in front of them.

If that sounds familiar, you’re not alone. Financial reports can feel intimidating, especially if you don’t come from a finance background. But fulfilling your fiduciary duty does not require you to be a financial expert. It does require that you consistently review the right reports and understand what questions they help you answer.

There are two financial reports every nonprofit board should review at every single board meeting—no exceptions.

Report #1: Statement of Financial Position (Balance Sheet)

The Statement of Financial Position—commonly called the balance sheet—shows the nonprofit’s financial position at a specific point in time. It answers one critical question: Where do we stand financially right now? 

This report includes three key sections:

Assets

Everything the organization owns, including cash, investments, receivables, and property.

Liabilities

Everything the organization owes, such as accounts payable, payroll liabilities, and loans.

Net Assets

The difference between assets and liabilities. This section tells the real story of the organization’s financial strength and flexibility.

Net assets typically fall into three categories:

• Net assets without donor restrictions: Funds the board can use to support operations and mission priorities.
• Net assets with donor restrictions: Funds restricted by donors for a specific purpose or time.
• Board-designated net assets: Funds the board has intentionally set aside for a future purpose, such as reserves or a capital project.

Understanding these categories helps board members evaluate sustainability, assess risk, and make informed decisions about future commitments.

At every board meeting, this report should include comparative information—such as the prior period and changes—so trends and concerns are visible, not hidden.

Report #2: Statement of Activities (Income Statement)

The Statement of Activities is the nonprofit version of a profit and loss statement. It shows financial activity over a period of time, answering the question: How did we perform financially this month, quarter, or year? 

This report details:

• Revenue and contributions
• Expenses
• The resulting surplus or deficit

When reviewing this report, board members should start with the bottom line and then consider expectations. Does the result make sense given the season the organization is in? Are there trends in income or expenses that deserve attention?

It’s also important to understand how restricted funds are reflected, so operational performance is not confused with timing differences related to grants or campaigns.

Together, the Statement of Financial Position and the Statement of Activities give board members the information they need to govern well—without drowning in data.

Financial Training for Nonprofit Boards

If you’re a new board member—or if you’ve been serving for years but never received clear financial training—I’ve created a resource specifically for you.

My YouTube playlist, Financial Training for Nonprofit Boards, walks through what board members need to know to fulfill their financial oversight responsibilities with confidence.

The playlist includes practical videos like “5 Things You Need to Know Before Your First Board Meeting” and training on how to read and understand nonprofit financial reports—without requiring a finance background.

And one important note as you reflect on this:

If you are not receiving these two reports at every board meeting, be sure to subscribe to the channel and catch next week’s video. I’ll walk you through exactly what to do if these reports aren’t being provided—and how to ask for them in a way that strengthens accountability and leadership.

Good governance starts with clarity.
And clarity starts with the right financial information.