M+M 012: Ask These 3 Questions to Drive action from Financials

Two weeks ago, I wrote about the power of financial curiosity.

The simple act of asking questions about your financial reports can save money, reduce risk, and create clarity.

I gave a few examples of questions you could ask to gain deeper insight from the financial reports. Here they are again:

• “Why does this expense look higher than last month?”

• “What’s included in this revenue line?”

• “Why haven’t we paid for insurance yet this year?”

Let’s expand on some other examples today.

Remember, there are no right answers to this. Only ideas and I recommend switching it up each month because you’ll continue to unravel different aspects about your organization when you do so.

Why Being Financially Curious Matters

Most boards and Executive Directors don’t need more numbers. They need the right questions to guide the conversation.

Otherwise, reports get “reviewed,” boxes get checked, and nothing changes.

Real issues go unnoticed until it’s too late.

So, let’s agree to spend time on these reports and ask questions.

If not, opportunities for savings, more revenue, or smarter decisions disappear quietly.

The fastest way to go from confusion to clarity in your financial reports is to start with three simple questions.

Most people don’t know what information they’re missing and the reports are too detailed so it just gets skipped over.

3 Financial Questions Every Executive Director (and Board Member) Can Ask

 

1.“What looks different from last month?”

By comparing this month to the last, you’ll spot changes that need attention. 

• Expenses trending up? Time to dig in.

• Revenue unexpectedly dips? Ask why.

• Cash balance shrinking? What’s the simple explanation?

This question is like the check engine light on a car. It might not tell you exactly what the root cause is, but it will signal that something needs more attention.

As a fractional CFO for nonprofits, I ask this of every single organization I work with every single month. Someone in your organization should be able to answer the why behind these questions relatively easily.

2.“Where are we headed over the next three months?”

Most financial reports are focused on the rear-view mirror. But you’re managing your organization through the windshield.

Sure history can always give you some insight, but when that history is applied to information that hasn’t shown up in financial reports yet it becomes a powerful tool for you to use to manage your organization.

If your current financial reports can’t answer this question, you have a gap. A forecast will help easily answer this question. 

This question helps you anticipate, rather than react. This helps you feel clarity and confidence in making decisions for your organization.  

3.“What is causing the biggest gaps vs. our plan?”

Numbers don’t mean much without context. By comparing actuals to budget, you’ll see if you’re on track. This is important because your budget most likely is tied to your long-term strategic plan. 

• Which assumption did we make in the budget that didn’t come true?

• Did we miss on grant revenue because our win rate was lower or did we not apply to enough grants?

• Cash is lower than we expected, but revenue is on track. Is it because XYZ donor made a pledge, but hasn’t sent the money yet?

These questions are focused on action. When you get the answers you can see a clear next step with that information. This equips you as the leader to identify the key levers that drive your organization. 

Why These Work

Imagine in a couple weeks when you get those financial reports if you had the answers to these questions.

Would you feel like you had more financial clarity, confidence and control?

How would that impact big decisions that need to be made for your organization? What if you uncovered some helpful information that highlighted an area your organization was just starting to drift off track in, but you’re able to course correct before it becomes an issue?

When you consistently ask these three questions, you’ll:

• Catch errors and risks before they grow.

• Build a culture where financial discussions feel safe and productive.

• Give your board the clarity they need to focus on strategy, not micromanagement.

• Grow your own confidence in navigating the numbers, even if finance isn’t your background. 

These questions are simple enough that anyone can ask them. They don’t require jargon, and they don’t assume expertise.

One Last Thought

Nonprofit leadership is stressful enough.

You don’t need financial reports that add to the confusion.

You need information from those reports that will help you drive action in your organization.

And you’ll start uncovering financial clarity, confidence, and control one question at a time.

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