Financial Statements for Healthy Start Coalitions: The James Moore Guide

Financial statements are critical decision-making tools for Healthy Start Coalitions, providing leadership and board members with accurate information about the organization’s current financial position and projected outlook. These statements help stakeholders assess the health of their organization and provide decision-makers the insights they need for effective future planning.

A comprehensive set of financial statements paints a complete picture of an organization’s financial health. The full package of statements tells a more nuanced story than any individual report could provide, as each statement offers different insights into an element of the organization’s financial performance.

To maximize the utility of their financial statements, organizations should include supplemental schedules that compare actual performance to budget projections. This comparison helps leadership identify areas where spending is exceeding projections or where revenue expectations may have been set too high, allowing for timely course corrections throughout the fiscal year.

Primary Users and Reporting Frequency

Before we dive into the details of each type of financial statement, it’s first important to understand who’s reading them. The typical audience for a Healthy Start Coalition’s financial statement includes:

• Management teams: They need detailed information for day-to-day operational decisions
• Board members: They require clear financial reports to fulfill their fiduciary responsibilities
• Potential grant providers: They may request statements as part of funding applications

While some grantors request financial statements, they’re most valuable as internal management tools. Grantors will typically request audited financial statements, which Healthy Start Coalitions will produce on an annual basis. But it’s vital for organizations to compile the statements themselves much more routinely.

While financial statements should be produced on at least a quarterly basis, monthly financial reporting is better for Healthy Start Coalitions. This consistent rhythm of review enables leaders to quickly identify changes in productivity or revenue streams. Monthly reporting also establishes a regular communication channel with the organization’s board of directors, keeping them well-informed about the organization’s financial status without becoming overwhelmed by excessive detail.

 

 

Core Financial Statements for Healthy Start Coalitions

Healthy Start Coalitions must compile a comprehensive set of financial statements that provide a complete picture of organizational health and compliance. The core statements outlined below work together to create a detailed financial narrative that supports informed decision-making by management and board members while addressing the unique aspects of coalition funding structures.

Statement of Financial Position (Balance Sheet)

The Statement of Financial Position, commonly known as the balance sheet, provides a snapshot of the organization’s financial standing at a specific point in time. Healthy Start Coalitions face several unique requirements that distinguish their Statement of Financial Position from other nonprofit organizations.

Contingency Balances

Healthy Start Coalitions earn monthly revenue by providing services reimbursed through Medicaid. The Healthy Start MomCare Network typically holds back 3% of these earnings in a contingency fund to cover potential disallowed claims. This reserve, held for approximately three years, can represent a significant asset that organizations must account for.

Organizations handle this contingency differently in their financial statements:

• Some record the hold-back as an asset on their balance sheet, acknowledging it as earned revenue awaiting future payment.
• Others create an allowance against this amount and only record the funds as revenue when released and received.

Either approach can be appropriate depending on the organization, but consistency and transparency are essential. The chosen method affects how revenue appears from year to year and should be clearly communicated to the board.

Advances and Deferred Revenue

Some grants provide advance funding before services are rendered. Proper accounting requires recording these funds as deferred revenue or a refundable advance (a liability) until the services are performed and the revenue is actually earned.

For larger grants, advance amounts can reach hundreds of thousands of dollars, significantly impacting financial statements if recorded incorrectly. This is a good area for board members to question when reviewing the financial statements. Ask questions like “Do we have any advances on our grants and where are those shown on the financial statements?” and “Do we expect to earn the full amount?”

Net Assets with Donor Restrictions

Many Healthy Start Coalitions benefit from donations from foundations or individual donors. Foundation funding often comes with specific restrictions on the programs for which the funding should be used. Examples might include supporting fatherhood programs, purchasing cribs for newborns or funding car seat purchases. These restrictions must be properly tracked and classified on the organization’s Statement of Financial Position to ensure compliance with donor intentions.

Statement of Activities and Change in Net Assets

This statement, similar to a profit and loss statement in the business world, captures the organization’s revenue and expenses over a specific period. For Healthy Start Coalitions, key considerations include:

• Grant revenue: Most revenue comes from grants, which should be clearly identified at the top of the statement.
• Major expense categories: The largest expenditures typically include personnel costs for staff delivering services and running programs, as well as subrecipient costs for Medicaid services contracted out.
• Subrecipient vs. vendor distinctions: Proper classification of subrecipient contracts versus general vendor contracts is critical. This distinction impacts indirect cost calculations and should be segregated appropriately in audited financial statements. Refer to the Uniform Guidance to ensure your organization is appropriately classifying subrecipients and vendors.
• Net asset changes: Understanding increases or decreases in net assets requires context beyond the raw numbers. Decreases might reflect planned spending of previously recognized restricted revenue rather than operational losses. Financial statements should be presented in a format that clearly shows changes with and without donor restrictions.

Proper presentation of this statement enables board members and leadership to understand not just whether the organization is operating at a surplus or deficit, but the underlying factors driving financial performance and how those align with the coalition’s activities.

Statement of Functional Expenses

This highly informative statement breaks down expenses by grant or program so boards can see how the organization’s resources are allocated across different initiatives. Additional context, such as grant end dates, can enhance the utility of this report.

The statement of functional expenses helps organizations:

• Visualize spending priorities across different programs
• Identify resource-intensive grants that may require additional staffing or support
• Connect financial investments with programmatic impact
• Compare the financial commitment to various initiatives (e.g., maternal health programs versus fatherhood initiatives)

This detailed breakdown often generates the most engagement from board members, as it directly connects financial data to the mission-focused work of the organization.

Statement of Cash Flows

The Statement of Cash Flows explains changes in an organization’s cash position. A substantial cash balance doesn’t necessarily indicate financial strength; it might reflect unpaid bills or other timing issues. Similarly, a lower cash balance might result from timely bill payments rather than financial distress.

This statement helps contextualize cash balances by showing:

• Changes in accounts receivable (awaiting payment for services rendered)
• Changes in accounts payable (bills that need to be paid)
• Other factors affecting the organization’s liquidity

By providing this deeper analysis of cash movement, the Statement of Cash Flows helps board members and management make more informed decisions about the timing of expenditures, cash reserve policies and overall fiscal sustainability beyond what could be determined by examining account balances alone.

 

 

Supplemental Schedules

The core financial statements described above are required by Generally Accepted Accounting Principles (GAAP). However, supplemental schedules (which are not required) provide additional insights tailored to the specific needs of Healthy Start Coalitions. Supplemental schedules may include:

Budget vs. actual comparisons: These comparisons show progress against annual projections, making them excellent decision-making tools. Effective presentations include benchmarks (e.g., six months into the fiscal year, revenue should be approximately 50% of the budgeted amount) and explanations for significant variances.

Restricted funds tracking: Detailed schedules showing the status of donor-restricted funds can provide clarity on available resources and spending progress. For example, if an organization received $300,000 in restricted funding and has spent $150,000, a supplemental schedule could clearly show the remaining $150,000 and any associated spending requirements.

Program-specific revenue monitoring: Some organizations benefit from monthly tracking of specific revenue streams, particularly those with significant fluctuations. These schedules can help boards identify trends and determine if additional providers or program adjustments are needed to maximize available funding.

Best Practices for Financial Statement Presentation

For optimal effectiveness, financial statements for Healthy Start Coalitions should:

• Maintain consistency: Use consistent formats and accounting methods from period to period to enable meaningful comparisons.
• Provide context: Include narrative explanations for significant variances or unusual items to help board members understand the story behind the numbers.
• Balance detail and clarity: Present enough detail to be informative without overwhelming users with excessive information.
• Connect to mission: Where possible, link financial data to programmatic outcomes to reinforce the connection between financial management and mission fulfillment.
• Educate board members: Take time to explain financial concepts and statement structures to ensure board members can properly interpret the information presented.

Implementing these best practices transforms financial statements from mere compliance documents into strategic tools that strengthen governance, improve decision-making, and ultimately enhance the coalition’s ability to fulfill its mission of supporting healthy pregnancies and reducing infant mortality in at-risk communities.

James Moore’s Outsourced Accounting Support for Healthy Start Coalitions

Financial statements are more than just numbers on a page—they tell the story of a Healthy Start Coalition’s financial health, operational decisions and mission fulfillment. When properly prepared, understood and utilized as decision-making tools, these documents become powerful frameworks that help coalitions maximize their impact on maternal and infant health.

The time invested in developing meaningful financial reporting systems and educating stakeholders on their interpretation pays dividends through improved decision-making, stronger governance and enhanced sustainability. For organizations focused on critical community services, having clear financial visibility isn’t just good practice — it’s essential for mission success.

At James Moore, we provide accounting support designed specifically for Healthy Start Coalitions. With extensive experience serving Healthy Start Coalitions throughout Florida, our professionals bring a comprehensive understanding of the unique financial reporting needs these organizations face.

By partnering with James Moore, Healthy Start Coalitions can focus on their core mission while accessing specialized financial expertise that helps them make informed decisions and maintain compliance with regulatory requirements. To learn more about how James Moore can support your Healthy Start Coalition, contact us today.

 

 

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