FD Soraya Joonas explains how Inyathelo looked inward to be more flexible during uncertain times.
Last year, Simone Biles, the most decorated gymnast of all time, withdrew from the Olympics to focus on her mental health because of something gymnasts describe as “twisties”, meaning they are dangerously no longer able to find themselves as they perform their acrobatics in the air. This becomes a very precarious and (in some cases) life threatening predicament.
During the 2020 crisis, the nonprofit sector stepped up (as they always do) to serve, feed, shelter and nurture, doing what they do best. However, as nonprofit financial practitioners, we also faced our own kind of “twisties”. We questioned how we were functioning and performing outside of normally acceptable sustainability principles and, perhaps more importantly, how some would survive and emerge from this crisis financially stronger and more resilient. As financial professionals we were also trying to find ourselves.
The term VUCA, meaning a volatile, uncertain, complex and ambiguous world, is increasingly referenced to try and provide a framework for the nature of the challenges we are facing in these dynamically changing times.
With the onset of national lockdown in March 2020, Inyathelo was submerged into a different mindset. We needed to be open, flexible and find ways to be able to streamline our financial record keeping and processes so that we could work remotely and proceed with our annual external audit. While we knew that transitioning to online systems was something we wanted to do, the impetus for this was thrust upon us in the pandemic environment.
During the onset of the crisis, Inyathelo looked very stringently inward at its financial position; where are we now, where we want to be and how will we get there. Scenario analysis as led by our finance sub-committee and board (which both became very involved and met at some point almost weekly), provided an approach to assist in navigating financial planning challenges. We consistently assessed and reassessed our financial position and shortfalls, and determined how we could manoeuvre the situation in the best way by looking at both sides of the equation; reducing costs and increasing income.
Each year, the Inyathelo finance sub-committee combs through the financial statements to make disclosure adjustments to improve financial reporting. This year, they have decided to additionally disclose the value of Inyathelo’s building assets in a note to the assets. They have also presented the reserve figure in two distinct categories: a financial sustainability reserve and an operational reserve, in order to demonstrate the metrics of a liquidity and sustainability approach more clearly.
In the latest financial statements the deficit has been brought down from R5.2 million to R1.4 million. To fund the accounting ‘deficit’ we have used income received in previous years i.e., grant income and a substantial amount of interest income that we had historically saved and ploughed back into the organisation’s reserves.
The significant reduction in deficit is mostly attributed to investment returns. The board, advised by the finance sub-committee and financial investors, adopted a closely guarded financial investment and reserve strategy aiming to leverage on the best growth and savings. Investment balances were monitored weekly and in December 2020, our board resolved to divest from direct fossil fuel, alcohol and tobacco holdings congruent with ethical investing in our space. These securities were sold off during the year and fortunately losses were not incurred.
While a deficit is not a holistic way of assessing the performance of a nonprofit, as nonprofit financials are not standardised in how they report their income, we are hoping that these results set us on a trajectory of narrowing the gap in shortfalls.
The financial story of Inyathelo is a case in point of how a strong financial sustainability strategy can contribute to performance during times of crisis.
In conclusion, as the finance office at Inyathelo not only holds the financial backbone of Inyathelo, but also imparts learnings and capacity building within the sector, we have been involved over the past year in sharing and supporting our peers in respective finance journeys.
We wish the civil society organisations that we work with good financial health and resilience over what is likely to be a recovery and reinvention period. We will journey with you through this recalibration during the manifestation of this emerging VUCA world and, together, we hope to overcome our own financial “twisties”.
