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Liquid Unrestricted Net Assets (LUNA) or sometimes called Expendable Unrestricted Net Assets is a calculation that takes the net balance sheet value of buildings/equipment out of the Unrestricted Net Assets number. There are several reasons for this – first the balance sheet value of property may bear little resemblance to the fair market value of the building. The balance sheet value is based on the cost – in some cases the appraised property valueis significantly more and in other cases it may be substanially less. The second reason is that it takes time to turn property into cash hence the terms Liquid and Expendable.
I do a lot of analysis using this measure as well as others pulling the data from the 990s. Here are some examples –
When training a group of Grantmakers, I did a chart of of a dozen local nonprofits all doing $5 million in revenue but all with different missions, funding streams, and ages. This way I was able to show that trying to set specific ratios didn’t work because of the breed differences.
I often do salary studies. When doing one for a local mental health provider, I was able to identify ten or so nonprofits of a similar size. The nonprofits have a similar funding structure and age. This made it possible to determine that while my nonprofit was not the best in breed it was a close runner up and that the ED was under-paid.
For a number of years, I worked for the state association of nonprofits. Every year I woul compare our state’s financials, number of members with the other state associations. I would also factor in the total number of nonprofits by state and the total population. It is worth a pat on the back when to find that our state had the highest percentage membership of existing nonprofits.
These are some examples of how this data can be used.