In 2010 Annual Conference, 2010 Conference - Monday


Going from a good to great PR practitioner means that you must be able see and understand your company’s “big picture.”  Helping to bring this picture into focus is your organization’s financial well-being. In this session, learn how to read your company’s top three financial reports, and learn the C-Suite jargon that will help ensure your communications efforts are supportive.

Debbie Mason, APR, CPRC, is an Accredited Public Relations/ Marketing counselor, and President of Strategists, Inc. Debbie has a wealth of corporate, agency and consulting experience spanning 25 years.
Debbie also serves as president of Sage Musings, Inc., a training and development company providing custom training programs and publications to Nonprofit Resource Centers, professional associations and nonprofit organizations. Debbie has received numerous honors and awards for her work with a variety of nonprofit and corporate clients. Those awards include a 2003 Silver Anvil awarded by the Public Relations Society of America. The Silver Anvil recognizes professionals who have demonstrated the highest quality standards in the public relations/marketing profession through outstanding achievement in strategic public relations/marketing planning and implementation.

The Strategists, Inc. team also includes a number of senior professionals with experience in research, strategic planning/governance, public relations/marketing and other specialty areas.

Debbie defined several basic financial literacy terms.

Financial Literacy

  • Increased understanding of basic financial documents with emphasis on budgeting
  • Understanding areas of audit concern for funders, auditors and the IRS


  • Cash Basis – revenue and expenses are booked when cash is received or check goes out
  • Accrual Basis – revenue and expenses are booked when the transaction occurs (pledged, purchased or ordered, even though payment may be later)

Financial Language

  • Assets – the “stuff” you own (cash, accounts receivable, vehicles, inventory)
  • Fixed assets – buildings
  • Liabilities – sources of how you got the assets (notes payable, taxes payable, loans, payroll, taxes, building mortgage)
  • Credit – increases liability, decreases assets
  • Debit – decreases liabilities, increases assets
  • Gross profit – money left after direct costs are subtracted
    • Income – Direct Cost = Gross Profit
  • Gross margin – same thing but expressed as a percentage
  • Net income is the “bottom line”
    • Also called net profit, net earnings, or current earnings
    • If expressed as a negative it’s called a “loss”
    • If expressed as a positive, it increases the owner’s equity
    • Revenue – ALL expenses = Net Income
  • Retained earnings – amount of net income retained by a business
    • Keeps track of how much of a total owner’s equity was earned and retained by the business versus how much of equity was capital invested by owner
    • Also serves as your “long-term score card” that is reviewed by banks, lenders, etc.
  • Return on investment or ROI
    • Net profits (after taxes) / total assets
  • Return on equity or ROE
    • Net income / average owner’s equity
  • Equity – shows ownership of assets or claims against assets (liabilities)
    • Total assets – Total liabilities = Net equity

Documents Essential in the Financial World

  • Balance Sheet
  • Profit and Loss Statement
  • Cash Flow Statement
  • Budget

Balance Sheet

  • Reflect assets and liabilities at a moment in time and is financial culmination of past actions
  • Useful to get overview of organization’s financial position
  • Assets = Liabilities + Owner’s Equity

Profit and Loss Statement

  • Shows financial operations during specified operating period
  • Associates revenue with costs to permit meaningful analysis
  • Used to monitor operations and prepare tax documents
  • Projected P&L serves as basis for budget

Cash Flow Statement

Cash flow is critical in the day-to-day operation of the organization.

  • Similar to profit and loss but without accruing revenues or costs and without depreciation
  • Used to make sure sufficient cash is in hand for operations and to identify needed financing
  • Used by organizations to understand near-term financial viability


  • Key financial planning document
  • Link between strategic plan and operations
  • Used to monitor operations throughout the year and identify anomalies
  • Discussions during preparation of budget are often as important as budgets themselves
  • Control through the annual budget
    • For maximum utility Annual Budget should be broken down by quarter with seasonality included
    • Monthly board meetings should review actual operations compared to adopted budget and discuss/act on divergence

Budget Summary

  • Involve all key decision makers in preparation of the yearly budget
  • Reflects the strategic and tactical goals of the organization
  • Performance should be reviewed periodically by governing body

Board Member Prudence

Some “red flags” that get non-profits in trouble include:

  • Payroll taxes to IRSC
  • Sale tax collected to state
  • Insurance policies

It is also a wise idea to have someone on the board reviewing duplicate financial statements.

Debbie Mason, APR, Fellow PRSA
Strategists, Inc.

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