Strategic reporting is a key way to see your nonprofit from an outside perspective, as well as spot opportunities you aren’t seeing from the inside.
Strategic reporting involves analyzing the full potential of your company with several distinct sets of data so that you have a clearer picture of what you need to do to succeed in the long term.
If you are in the nonprofit sector and need to learn more about nonprofit reporting, keep reading to learn more about strategic reporting and how it’s useful to you.
What Is Strategic Reporting?
Strategic reporting is the process of taking data from different departments and combining them in a way that creates a comprehensive overview of your business and its goals.
A strategy report can include relevant data, such as information about your customers, products, sales, finances, and more. When you have this complete picture of your business, it’s much easier to make strategic decisions that will help you improve internal communication, achieve your long-term goals, and hit your targets.
Strategic reports are similar to BI (business intelligence) and analytics, but they are more comprehensive. It’s a way of looking at all this data and honing it into relevant metrics that you can use to make strategic recommendations.
What Does That Mean for the Nonprofit Sector?
Every year, tax-exempt organizations release an annual report. It includes generating financial statements and producing audited financial statements. It also includes communicating this information to members, donors, volunteers, employees, and the general public.
These strategic reports are a great way to raise money. They may be used to build new ties with significant contributors and sponsors and honor those who have helped you so far.
A good strategy report can make the difference between reaching your organizational goals for the next year and falling short. With the tax-exempt status, the public accountability of your entire organization is a must.
When to Resort to Strategic Reporting?
A good reporting strategy lets you showcase all the necessary data and important metrics of your nonprofit both to the senior management and government agencies. You can focus the analysis on the current performance, objectives, or even future projections.
Here are some instances when you should consider strategic reporting.
Initial System Implementation
When implementing any new technologies, it’s important to understand the current business processes in order to create a solution that will best address those needs. This includes understanding current reporting methods and the data that’s needed to create those reports.
Information regarding current reporting methods and data sources is typically available in the documentation provided by the implementation team. It’s also helpful to ask people for their insight.
New Funding Sources
If you are trying to obtain funding from a new donor, the information in your reports may need to be tailored to meet their specific requirements. This could also require a new methodology to analyze and organize the data in a way that’s useful to the funding source.
When obtaining funding from a new donor, you may also be required to provide more detailed reporting. It may also mean having to provide reports more frequently than currently required.
New Regulatory Requirements
If your organization is required to comply with government regulations or meet certain standards, your reporting needs may be different than those of a non-profit without those reporting requirements.
Similarly, if you are receiving funding from a specific funder, you may be required to meet their specific reporting requirements. For example, if you are receiving federal funding, you may be required to comply with the Federal Financial Management Improvement Act (FFMIA).
This act requires that all federal agencies receiving federal funds comply with certain financial management requirements. One of these requirements is that all financial data be reported in an auditable format. While this requirement may not apply to organizations that have tax-exempt status and are receiving federal funds, it is common.
New Board or Management
If there has been a change in management or on the board of directors, it’s possible that their expectations for the type of information presented in reports have also changed.
If a new board member has been added to the board, you may need to provide them with reports that are customized for their interests and needs. It might also mean generating reports to meet their specific needs.
Periodic Review and Adjustment
As nonprofits continue to operate, it’s likely that their financial activities will change. It’s possible that the data included in reports and the way that data is organized will no longer be as effective or relevant.
It’s possible that the data included in a report is no longer relevant due to changes in processes. That could mean that historical data might not be relevant anymore, and new analysis should be done.
Configuring a system to support both an internal strategic report and an external strategic report
A strategic report can be made for internal or external use. Internal reports are produced so that management may monitor progress over time and make informed decisions.
Nonprofits often provide external reports in order to increase transparency and foster public confidence. They are useful for both internal operations and, in the case of public organizations and publicly traded companies, for external transparency and accountability.
Identify Reporting Stakeholders
The next step in creating a strategic report is to identify the different stakeholders who will be looking at and using the reports. This will help narrow down the content and format of the report to help with the decision-making process.
Next, assign each stakeholder a “report personality.” This will help the team to come up with a general idea of what the report should look like and what information it should contain. Report personalities are not meant to be set in stone, but should act as a guide for the team to create a report that is useful for everyone.
Current and Future Requirements
Once you’ve identified the stakeholders, you can start to pull content from your COA. This will help you create a report that will automatically generate the data that is necessary for the stakeholders while leaving out any unnecessary information.
If a report is necessary that goes beyond what the COA contains, you can start to create segments and fields to add to the COA. These new fields can be formatted and used the same way as fields that already exist in the COA (for example, revenue, cost, and profit). This will create a more robust and useful analysis for each stakeholder.
Alignment of the COA
If you already have a robust COA, you may not need to create new segments and fields for strategic reporting. Instead, you’ll want to ensure that the COA is organized in a way that will be useful for and accessible to all of the stakeholders.
If there are any areas of the COA that are difficult to find or use, you’ll want to modify those sections to make them more user-friendly. This way, each report can be easily generated from the information in the COA without having to create new segments or fields.
Alignment of the Financial Report Outlines
Financial Report Outlines (FROs) are essentially the building blocks for almost every report. The COA contains the general details of every transaction in the company, but it needs the help of the FROs to translate that information into a report.
Each FRO essentially pulls out a specific piece of data (such as revenue, cost, assets, or inventory) from the COA and uses it to create a report.
So, if you want to create a new report based on data in the COA, you’ll want to make sure that it translates that data into the same piece of information in the same FRO.
Identify other non-segment-related fields for filtering and reporting to avoid a cluttered COA
Depending on the type of report you’re creating, there may be fields in the COA that aren’t specific to segments, but are used for filtering or reporting. It’s important to identify those fields now while working on the COA so they can be added to the COA and used the same way in any report.
Business Processes and Procedures
When it makes sense to use strategic reporting, there are a couple of things you should do to ensure you’re capturing the data necessary for reporting. The first is to make sure that the data you want to report on actually exists in the system.
You should also make sure that the data is being reported at the appropriate level of detail. For example, the number of staff hours required to process a specific type of grant might be useful for management to know. However, it’s probably not necessary to report that information in a report presented to the board.
Alignment of hard copy forms and data entry screens with system structures
When possible, match the data included in hard copy forms and data entry screens with system structures. This will make it easier to transition the information from the system to the appropriate hard copy form. It’ll also make it easier to transition the data from hard copy forms back into the system.
For example, if you’re collecting revenue and expense information in a system, it’s a good idea to create a separate data entry screen for each revenue and expense item. This will make it easier to report on the information in both the system and on hard copy reports. It’ll also make it easier to reconcile the data from the system with the data included in hard copy reports.
System of Business Rules
After you’ve made sure that the data you want to report on exists and is being reported at the appropriate level of detail, it’s time to create system of business rules. System business rules are instructions to the system about how it should organize the data about past performance.
They’re also instructions about how the system should react when specific data is entered. For example, a system business rule may be that revenue should be reported on a monthly basis. Another example might be that third-party donation information is only included in revenue reports.
Create processes to ensure data is captured and recorded appropriately
If you’re using a system that relies on users to manually enter data, it’s important to create processes for ensuring that data is captured and recorded appropriately.
This may include training for data entry procedures, reviewing and correcting errors, and providing instructions for how to report on specific types of data.
If you’re tracking revenue and you have a revenue data entry field, you’ll want to make sure employees understand how to report revenue in the system. This may include letting them know that revenue is the money that’s received from sales of products and services. It may also include reminding them that revenue should not be reported if any payment is expected to be made.
Staff Training
To be able to capture and record data for a strategic report, especially if done manually, you need to be able to task a staff member to do it. For them to be able to manage such a task, you’d need to train them to use tools and software to process the data.
Wrapping up
Strategic reports are ideal solutions for organizations that have been operating for a while and want to use data to make better decisions. With strategy reports, you can take data from every department in your company and create a comprehensive report that will help you focus on your strengths and weaknesses.
If you want to keep track of your organization’s financial health, and need some strategic report examples, you might benefit from using a project management tool. An agency such as Capital Business Solutions uses programs that can help with your report generation to save time and resources.