When nonprofit board meetings roll around, it’s common for finance-related questions to catch staff or leadership off guard — even when the financials themselves are in good shape. The good news? Most board questions are predictable, and you can prepare for them in advance.
Here are some of the most common ones we see, and how to be ready with clear, confident answers:
1. “Why does our budget show a surplus/deficit?”
Boards want to understand variances between budgeted and actual results. Be ready to explain:
- Whether the difference is due to timing (e.g., a grant award arrived early or late).
- Whether it’s related to restricted funds (surplus might be restricted and not available for general use).
- Any significant unplanned income or expenses.
Preparation Tip: Maintain a monthly budget-to-actual report with brief variance notes so you’re not scrambling to remember details.
2. “Do we have enough cash to cover upcoming expenses?”
This question is all about liquidity and cash flow. Be ready to share:
- Current cash balance and any funds that are restricted.
- Key upcoming obligations (e.g., payroll, large program expenses).
- How cash flow is expected to change in the next 30–90 days.
Preparation Tip: Use a simple cash forecast that aligns with your board meeting schedule.
3. “What’s included in [this line item]?”
A single budget line can combine several expenses, which can lead to confusion. Be prepared to:
- Break down the key components of major line items.
- Point to the original source (e.g., “This includes all costs associated with the annual gala — venue, catering, and marketing”).
Preparation Tip: Keep a reference sheet of what’s included in each account or class for quick look-up.
4. “Are we in compliance with our grant restrictions?”
Boards want to ensure the organization is meeting funder requirements. Be ready to:
- Report on restricted fund balances.
- Confirm whether expenses have been properly coded to the correct grant/class.
- Highlight any upcoming reporting deadlines.
Preparation Tip: Track restricted fund activity monthly, not just at reporting periods.
5. “Are there any financial risks we should be aware of?”
This question often comes up when there’s economic uncertainty. Be prepared to:
- Identify potential risks (loss of a major funder, unexpected facility repairs).
- Outline mitigation plans.
Preparation Tip: Maintain a short “risk watch list” you update quarterly.
Bottom line: Board questions are an opportunity to demonstrate transparency, preparedness, and sound financial management. By anticipating common inquiries, you can keep the conversation focused on strategy instead of scrambling for answers.
Need help preparing board-ready financials?
Our team specializes in helping nonprofit leaders feel confident and prepared for any boardroom question.
