Financial Stewardship Definitions

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Composite Financial Index (CFI) - The CFI is calculated by blending four key financial ratios (Primary Reserve, Viability, Return on Net Position, and Net Operating) into one weighted score to achieve an indication of the overall financial condition of an institution. An institution with a  CFI score of 3.0 or greater is considered to have a relatively healthy financial condition.

Primary Reserve – A measure of the level of financial flexibility

Net Income Ratio – A measure of the operating performance

Return on Net Assets – A measure of overall asset return and performance

Viability – A measure of the organization’s ability to cover debt with available resources

Operating Reserve - An unrestricted fund balance set aside to stabilize a nonprofit's finances by providing a "rainy day savings account" for unexpected cash flow shortages, expense or losses. These might be caused by delayed payments, unexpected building repairs, or economic conditions. A commonly used reserve goal is 3-4 months of expenses.