Community Action Board Discussion Guide for Uncertain Financial Times
The National Community Action Partnership provides a roadmap to help board members ask critical questions, gain consensus, and explore strategic actions to navigate financial uncertainty:
Uncertain times can create financial volatility. Economic shifts, policy changes, and funding fluctuations can all impact an organization’s financial health. Community Action Agency (CAA) Boards of Directors have a legal and ethical duty to safeguard the organization’s long-term sustainability while ensuring its mission remains at the forefront.
Getting Started: Understanding Your Current State
When facing uncertainty, the board must understand key aspects of the organization’s financial health and solvency:
- Revenue Mix: What percentage of funds are federal, state, local, or private? Which state funds originate from the federal government/budget?
- Key Financial Ratios: What are our assets-to-liabilities ratio, unrestricted cash reserves, administrative cost ratio, and debt ratio?
- Liquidity: How much of our assets are liquid? How much is illiquid (e.g., real estate)? Do we have a line of credit and if so, to what level have we used it?
- Payment Basis and Restrictions: What funder restrictions exist on our funds? How are we paid funds (on advance, reimbursement, milestone, etc.)? In the case of reimbursement, does the organization have the available funds to “float” the funder?
- Funding Security: How stable are our funding sources? Are they likely to continue or be reduced?
