Financial Statement Review and Analysis

Strengths:

Liquidity – RFA has an adequate amount of cash to meet it short-term obligations. Most funders like to see a ratio of 1.5 or higher. RFA exceeds that requirement indicating that it is in good financial health.

Balance between administrative, fundraising and program related expenses - An average funder likes to see an organization whose program expenses are between 75 and 90% of their total expenses. RFA is a little on the high side at 87% but not high enough to raise any flags. This indicates that RFA is running efficiently.

Debt – Besides some outstanding accounts payable, RFA has no debt. The notes in financial statement reference two separate lines of credit for a combined amount of 250K, but there is no outstanding borrowing.

Government Funding - There is no heavy reliance on government funding, which is good since government funding can be so unreliable and rigid.

Areas of Concern:

Financial Reserve – RFA does not have a huge financial reserve. Most funders like to see that an organization has at least 3 months worth of liquid assets to cover the organization monthly expenses. RFA’s balance sheet indicates that it will consume its liquid assets within 1.28 months.

Revenue Sources – The agency seems to have only two revenue streams. One from foundation grants and the other from research contracts. A significant portion of the agency’s revenue is derived from a limited number of foundations and contractors. A loss from either revenue stream, or of a specific grantor or contractor could cause a major reduction in income.

Multi year Foundation Grants that are ending – From the looks of the financial statement it seems that some of your restricted grants are reaching their end in fiscal year 2014. Replacement of those grant funds should be a major concern, since the restricted