February 9, 2025 • 31 mins
In this episode of Nonprofit411, Sarah Barton sits down with Joseph Scarano, CEO of Araize, to discuss the often-overlooked but essential topic of fiscal management for nonprofits. With over 40 years of experience in nonprofit financial software and consulting, Joseph shares actionable insights on how nonprofits can achieve financial sustainability through sound fiscal practices.
Key topics include the importance of diversified funding streams, the need for proper tools and systems to ensure accurate financial reporting, and how to navigate nonprofit-specific accounting requirements. Joseph also explains how integrating accounting, payroll, and fundraising systems can save nonprofits time and resources while ensuring compliance with reporting standards. This episode is packed with valuable advice for nonprofit leaders looking to strengthen their financial foundation.
Resources:- Araize Software Solutions: www.araize.com
- Explore nonprofit accounting, fundraising, and payroll solutions.
- Nonprofit Financial Management YouTube Channel: Araize YouTube
- Learn key concepts in nonprofit accounting and fiscal management.
- Grant Writing Proposal Guide: Nonprofit411 Grant Guide
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Episode Transcript
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(00:00):
Hello and welcome to Nonprofit411, where we dive into resources and strategies that help nonprofits not just survive, but truly thrive.
I'm Sarah Barton, your host and fundraising advocate.
.346938776Each episode, we bring you inspiring conversations with experts in fundraising, sustainability, and best practices to equip you with the tools and confidence you need to make a real impact. 4 00:00:25,468.360465634 --> 00:00:31,538.360465634 Nonprofit leaders know that funding is key to making a lasting impact, but finding the right approach can be challenging. 5 00:00:32,18.360465634 --> 00:00:38,868.360465634 At Nonprofit 411, we understand that grants are just one piece of the puzzle, but an important skill for every nonprofit to master. 6 00:00:39,328.359465634 --> 00:00:45,758.360465634 That's why we created the Grant Writing Proposal Guide to help you turn your mission into actionable plans that attract funding. 7 00:00:46,288.360465634 --> 00:00:49,158.360465634 Let us support you in taking your fundraising to the next level. 8 00:00:49,608.360465634 --> 00:00:51,968.360465634 Download the Grant Writing Proposal Guide at Nonprofit411. 9 00:00:51,978.360465634 --> 00:00:54,978.360465634 org today, and let's build a stronger future together. 10 00:00:59,44.27883298 --> 00:01:00,104.27883298 Hi there and welcome. 11 00:01:00,134.27883298 --> 00:01:01,864.27883298 I'm thrilled you're here with us today. 12 00:01:02,184.27883298 --> 00:01:10,924.27883298 Each week we have conversations with nonprofit experts who offer practical strategies and inspiring stories to help nonprofits build sustainable funding and stronger communities. 13 00:01:11,404.27783298 --> 00:01:16,74.27783298 Whether you're here to learn, to be inspired or simply to recharge, I'm glad you've joined us. 14 00:01:16,84.27783298 --> 00:01:17,144.27783298 So let's jump in. 15 00:01:17,554.27883298 --> 00:01:18,734.27883298 I'm your host, Sarah Barton. 16 00:01:18,874.27883298 --> 00:01:23,264.27883298 And today I am joined by Joseph Scarano with Arise. 17 00:01:24,649.27883298 --> 00:01:26,709.27883298 And he currently serves as the CEO. 18 00:01:26,709.27883298 --> 00:01:27,329.27883298 Welcome. 19 00:01:28,319.27883298 --> 00:01:28,949.27883298 Thank you, Sarah. 20 00:01:29,49.27883298 --> 00:01:30,179.27883298 It's a raise. 21 00:01:30,299.27883298 --> 00:01:32,479.27783298 I know a lot of people, no problem. 22 00:01:32,479.27883298 --> 00:01:35,329.27783298 A lot of people have difficulty pronouncing the name. 23 00:01:35,379.27783298 --> 00:01:37,209.27783298 We kind of, we may actually made up the name. 24 00:01:37,209.27783298 --> 00:01:40,469.27933298 So, you'll, this will be perfect for your audience. 25 00:01:40,499.27933298 --> 00:01:44,809.27933298 It's a raise like raising funds and you work hard. 26 00:01:44,809.27933298 --> 00:01:46,239.27933298 You deserve a raise. 27 00:01:47,64.27933298 --> 00:01:47,654.27933298 I love that. 28 00:01:47,864.27933298 --> 00:01:48,694.27933298 I even wrote it down. 29 00:01:48,694.27933298 --> 00:01:51,954.27933298 And I, you know, short term memory, that's okay. 30 00:01:52,74.27933298 --> 00:01:53,574.27933298 No, no, not a problem. 31 00:01:53,574.37933298 --> 00:01:57,474.27933298 You got my last name, right? So that's, that's a good one. 32 00:01:58,44.27933298 --> 00:01:58,654.27933298 Yeah. 33 00:01:59,274.27933298 --> 00:02:00,684.27883298 I grew up in Pennsylvania. 34 00:02:00,684.27883298 --> 00:02:03,954.27833298 So like having, is it Italian? It is Italian. 35 00:02:04,34.27933298 --> 00:02:04,374.27933298 Yes. 36 00:02:04,434.27833298 --> 00:02:04,944.27833298 Yeah. 37 00:02:04,974.27933298 --> 00:02:07,714.27933298 So having Italian names all around me was pretty common. 38 00:02:07,714.27933298 --> 00:02:07,984.27933298 So yeah. 39 00:02:08,749.27933298 --> 00:02:09,529.27933298 Well, welcome. 40 00:02:09,709.27933298 --> 00:02:12,49.27933298 I'd like to start with a fun question. 41 00:02:12,49.27933298 --> 00:02:12,79.27933298 Okay. 42 00:02:12,79.27933298 --> 00:02:13,999.27933298 Just to learn a little bit more about you. 43 00:02:13,999.27933298 --> 00:02:19,999.27933298 And my question always is, what is your favorite hobby? Well, cooking. 44 00:02:20,729.27933298 --> 00:02:22,909.27933298 Cooking is I, I mean, I love to cook. 45 00:02:22,909.27933298 --> 00:02:27,819.27933298 I love to feed people, so I guess, you know, hand it down from my Italian grandmothers. 46 00:02:27,909.27933298 --> 00:02:34,339.27933298 So I really enjoy, you know, cooking and, and, and having people enjoy what I, what I cook. 47 00:02:34,429.27933298 --> 00:02:37,279.27933298 So I would say that would be my favorite hobby. 48 00:02:38,154.27933298 --> 00:02:39,54.27933298 I love that. 49 00:02:39,54.27933298 --> 00:02:44,244.27933298 I, if on the weekends, you will always find me in the kitchen at some point, because I love to prepare food. 50 00:02:44,244.27933298 --> 00:02:46,634.27933298 I just love the process of preparing food. 51 00:02:47,214.27933298 --> 00:02:49,684.27933298 And I am the entertainer in our family. 52 00:02:49,694.27933298 --> 00:02:56,314.27933298 My mom says I'm the matriarch, even though she's older than me, she's like, you're the matriarch in the family because. 53 00:02:56,669.27933298 --> 00:03:04,229.27933298 I love to have people come into my house and I can imagine being, you know, the true matriarch at some point in my life. 54 00:03:04,529.27933298 --> 00:03:07,429.27883298 Yeah, well, you kind of reminded me of a song back in the 80s. 55 00:03:07,429.27883298 --> 00:03:14,389.27833298 I don't know if you know this one, but there was a, I guess, a pop song called You'll Always Find Me in the Kitchen at Parties. 56 00:03:15,579.27933298 --> 00:03:15,879.27933298 Yeah. 57 00:03:16,179.27933298 --> 00:03:17,289.27933298 Yep, that's true. 58 00:03:17,289.27933298 --> 00:03:18,249.27933298 That's where you'll find me. 59 00:03:18,639.27933298 --> 00:03:20,529.27933298 So that's so fun. 60 00:03:21,59.27933298 --> 00:03:22,439.27933298 Well, thank you for sharing that. 61 00:03:22,439.27933298 --> 00:03:28,79.27933298 So, can you tell our guests a little bit about yourself and your role and what you currently work at? Sure. 62 00:03:28,129.27933298 --> 00:03:31,159.27933298 I started my professional career back in the early eighties. 63 00:03:31,209.27933298 --> 00:03:37,889.27933298 I'm a, I'm a CPA I was licensed in the state of New York and the firm that I worked for the majority of our clients were nonprofits. 64 00:03:37,949.27933298 --> 00:03:40,559.27933298 So being in the eighties, that was the introduction of the pc. 65 00:03:40,839.37933298 --> 00:03:51,329.27833298 The IBM PC and, and the Mac and my partner in the firm had this brilliant idea of we should write accounting software for nonprofits. 66 00:03:51,819.27933298 --> 00:03:58,299.27833298 So we started the business in the mid 80s, and it was a separate business from the accounting firm. 67 00:03:58,814.27933298 --> 00:04:01,494.27933298 And so we grew into where we are now. 68 00:04:01,564.27933298 --> 00:04:04,164.27933298 So software became my ticket out of public accounting. 69 00:04:04,164.27933298 --> 00:04:08,994.27933298 I left the accounting industry in 1991 and never looked back. 70 00:04:09,114.27933298 --> 00:04:12,724.27933298 So, Arrays has been around, started in New York. 71 00:04:12,744.28033298 --> 00:04:22,414.28033298 We're now in North Carolina, but we've been around for 40 years and serving Over 1500 nonprofit municipal government agencies around the world. 72 00:04:23,774.28033298 --> 00:04:24,124.28033298 Yeah. 73 00:04:24,124.28033298 --> 00:04:37,684.27833298 So I was really interested in having you on because I think the fiscal management side of nonprofits is something that we don't talk a lot about you know, in the sector, but it's such a vital piece in fundraising. 74 00:04:37,684.27833298 --> 00:04:40,514.27833298 You know, I, I deal with fundraising and. 75 00:04:41,449.27933298 --> 00:04:46,659.27933298 You, you can't create a strategy without understanding your fiscal situation. 76 00:04:46,659.27933298 --> 00:04:46,919.27933298 Right. 77 00:04:46,919.27933298 --> 00:04:48,969.27933298 And so I really, yeah. 78 00:04:49,409.27933298 --> 00:05:00,439.27933298 So I just am so excited to have this conversation and just to hear, you know, what are some of the, what are some of the things that you recommend every nonprofit? Well, no. 79 00:05:01,304.27933298 --> 00:05:31,149.68033298 Well, all the nonprofits, regardless of their mission, whether it's social service, community services, economic development, you know, religious, arts whenever, you know, whatever they form the nonprofit and create their mission the most important thing is identifying funding streams, because you can't fulfill your mission without proper resources, and those are financial resources, even, even if you're, you know, You know, if you want to be able to totally volunteer run, you need financial resources. 80 00:05:31,159.68033298 --> 00:05:48,119.68033298 So, you know, the number one thing that I emphasize, you know, when I am consulting with nonprofits is build out your mission, you know, what is your mission statement? And the second thing is, how are you going to fund that mission? So you have to identify multiple funding streams. 81 00:05:48,119.68033298 --> 00:05:53,49.68033298 It can't be 100 percent reliant on, on donations or fundraising events. 82 00:05:53,779.68033298 --> 00:05:56,219.68033298 There has to be something that diversifies. 83 00:05:56,704.68033298 --> 00:06:04,914.68033298 funding to enable you to do it properly execute your mission and provide the services that the nonprofit has been created for. 84 00:06:05,174.68033298 --> 00:06:13,874.67933298 So, you know, again, from us, fiscal management is one of the key things to proper sustainability for any nonprofit organization. 85 00:06:15,134.68033298 --> 00:06:22,34.68033298 Yeah, yeah, I really, I have begun speaking about nonprofit development, like business development in many ways. 86 00:06:22,64.68033298 --> 00:06:27,664.67933298 You have started a type of business, you know, a nonprofit is just a type of business. 87 00:06:28,194.68033298 --> 00:06:44,549.68033298 And I don't think that we often talk about it in those terms, but Can you help our listeners understand the difference between a nonprofit business and a for profit business, you know, because it's true. 88 00:06:45,144.68033298 --> 00:06:50,444.68033298 In both business and nonprofits, we talk about diversification of funding streams. 89 00:06:51,224.68033298 --> 00:07:00,214.68033298 But the difference I know is in the budgeting, correct? Yes, but it's also the responsibility of the nonprofit when revenues received. 90 00:07:00,574.68033298 --> 00:07:07,574.68033298 I always like to draw the analogy of If you go to the local bakery and buy a loaf of bread, you know, whatever that loaf of bread costs. 91 00:07:07,574.68033298 --> 00:07:10,944.68033298 Now, the only thing you're really concerned with is the bread fresh. 92 00:07:10,974.68033298 --> 00:07:12,194.67933298 And it doesn't taste really good. 93 00:07:12,284.68033298 --> 00:07:20,454.67983298 What, what the bakery does with the funds that they receive from selling bread, they reinvest in the business. 94 00:07:20,454.67983298 --> 00:07:21,874.68033298 They can do whatever they want with it. 95 00:07:22,284.67933298 --> 00:07:22,864.67933298 Whereas. 96 00:07:23,534.68033298 --> 00:07:29,384.68033298 On for a nonprofit, the revenue that they receive typically has strings attached. 97 00:07:30,94.68033298 --> 00:07:34,834.68033298 You know, the nonprofit really can't do what they want with money that they receive. 98 00:07:35,34.67933298 --> 00:07:46,204.68033298 Typically, a donor will designate their funds for a specific purpose or expect the nonprofit to invest their funds in in their mission and also in overhead. 99 00:07:46,224.68033298 --> 00:07:51,344.68033298 And, you know, a nonprofit will not will not be able to operate with proper without proper overhead. 100 00:07:51,344.68033298 --> 00:08:16,719.68033298 So There's always a portion of revenue that has to be allocated towards the management of, of the non profit, you know, the, and so, again, it, it, the differences when funds are received from a non profit, it's their responsibility to demonstrate to their various funding sources that the funds were used for their designated purpose, and that's why they have what they call restricted funds and unrestricted funds. 101 00:08:18,79.68033298 --> 00:08:19,849.68033298 So that really is the key difference. 102 00:08:21,154.68033298 --> 00:08:36,324.67933298 Yeah, and I think that understanding that difference is so important, especially when we look at our funding streams, having a nice plan for the unrestricted funds is really important because like you said, that's all of the operating costs. 103 00:08:36,734.67833298 --> 00:08:41,554.67933298 So what are some of the restrictions, or how does an organization go about. 104 00:08:42,829.67933298 --> 00:08:46,179.67933298 Developing a strong, unrestricted fundraising plan. 105 00:08:47,439.67933298 --> 00:08:49,419.67933298 Well, number one is communication. 106 00:08:49,539.67933298 --> 00:09:04,689.67933298 You know, they have to communicate to their communities, you know, the work that they're doing and their, their need to, in order to fulfill that mission to perform, you know, the work that they wanted, want to execute it in their community. 107 00:09:05,39.67933298 --> 00:09:06,409.67933298 So communication. 108 00:09:06,744.67933298 --> 00:09:38,424.67933298 Of course, you know, building a strong board, a board of directors will help them with their outreach, you know, with their connections and raising funds, you know, they have to understand they have to communicate to whether it's donations, you know, they're trying to solicit donations or solicit grant funding or possibly a program service revenue, because there's all different, you know, Types of revenue that a nonprofit could generate, but the three main would be fundraising, grant revenue and program services. 109 00:09:38,884.67933298 --> 00:09:48,754.67933298 So with each of those three funding streams, you know, the nonprofit has to develop a strategy on what they're going to focus on that's going to fund the nonprofit. 110 00:09:48,824.67933298 --> 00:10:00,499.67933298 If they don't think that they are going Eligible for for grants, then they have to focus on the other two, whether it's fundraising events or charitable contributions coming in. 111 00:10:00,979.67933298 --> 00:10:04,989.67933298 And so, you know, the nonprofit, you know, they really have to have a, a. 112 00:10:05,434.67933298 --> 00:10:28,754.67833298 A very diversified plan, and they need to execute that plan by outreach to the community, you know, whether it's you know, through social media now, because that's a great way that they can outreach, you know, that, that goes beyond just their, you know, their geographic community, you know, it could be worldwide outreach if they execute and, and use social media properly. 113 00:10:28,754.67833298 --> 00:10:29,464.67833298 Okay. 114 00:10:30,19.67833298 --> 00:10:30,499.67833298 Yeah. 115 00:10:30,769.67833298 --> 00:10:31,89.67833298 Yeah. 116 00:10:31,429.67833298 --> 00:10:32,559.67833298 I think that that's true. 117 00:10:32,559.67833298 --> 00:10:46,649.67733298 And I, I think that we sometimes underestimate the generosity of our donors because donors really do understand that you need unrestricted funds and they'll invest in you. 118 00:10:46,659.67733298 --> 00:10:47,79.67733298 Right. 119 00:10:47,549.67733298 --> 00:10:47,719.67733298 Yes. 120 00:10:49,14.67733298 --> 00:10:52,654.67733298 I like to use that terminology, invest, you know, yeah, yeah. 121 00:10:52,754.67733298 --> 00:11:11,464.67733298 And it's really important that, you know, the nonprofit has systems in place to acknowledge every single donation they receive, whether it's a dollar or a thousand dollars, you know, it, if you donate to a, an organization and you receive no feedback, no, thank you. 122 00:11:11,794.67733298 --> 00:11:18,134.67733298 You're don't know if your donation went into a black hole and acknowledgement of that, of that donation. 123 00:11:18,339.67733298 --> 00:11:32,39.67833298 And to explain how that donation is going to benefit the community at large that the nonprofit is serving goes a long way in in, in building trust and building proper stewardship of those funds. 124 00:11:32,99.67833298 --> 00:11:36,29.67733298 So, you know, the nonprofit, you know, once when they get started. 125 00:11:36,429.67833298 --> 00:11:47,229.67833298 They really need to, as I said, develop a funding stream plan and then implement systems that enable them to properly manage their funds that are coming in. 126 00:11:47,269.67733298 --> 00:11:51,289.67733298 And on the other side of it, the funds going out their expenses. 127 00:11:52,799.67833298 --> 00:11:53,219.67833298 Yeah. 128 00:11:53,769.67833298 --> 00:11:54,69.67833298 Yeah. 129 00:11:54,99.67833298 --> 00:11:54,989.67833298 Thank you so much. 130 00:11:54,989.67833298 --> 00:11:56,479.67833298 I think that this is great information. 131 00:11:56,719.67833298 --> 00:12:14,399.67833298 So what are some common challenges that you see when you're serving nonprofits? What do you consistently see are some of the barriers or challenges? The biggest issue that I see, you know, it's not 100 percent of the time, but lots of nonprofits, you know, God bless them for what they're doing. 132 00:12:14,909.67833298 --> 00:12:23,129.67833298 They totally underestimate the importance of fiscal management, you know, they, they will find a volunteer to handle their books, so to speak. 133 00:12:23,529.67833298 --> 00:12:32,669.67933298 And that person doesn't understand basic bookkeeping, doesn't understand accounting, doesn't know, you know, how to do a bank reconciliation, can't read a financial statement. 134 00:12:32,959.67833298 --> 00:12:34,349.67833298 And then they wonder why. 135 00:12:34,744.67833298 --> 00:12:39,854.67833298 They're, they're struggling fiscally because they don't have a good handle on their finances. 136 00:12:40,344.67833298 --> 00:12:50,654.67833298 So, you know, they might use a off the shelf accounting system that they perceive as providing proper fiscal management, but if they have someone that's. 137 00:12:51,34.67833298 --> 00:12:58,844.67833298 Managing that system, recording the income and expenses, but not recording it properly, they're going to get inaccurate financial statements. 138 00:12:58,844.67833298 --> 00:13:10,374.67833298 So they really can't rely on those financial statements to see how they're doing, you know, from month to month, you know, building budgets and, and properly allocating expenses to the appropriate areas. 139 00:13:10,734.67833298 --> 00:13:12,944.67833298 So, you know, it's really important that. 140 00:13:13,629.67833298 --> 00:13:26,919.67833298 You know, as they plan on getting the nonprofit started, you know that they find a volunteer if they are not hiring someone, but find someone that understands basic accounting. 141 00:13:26,919.67833298 --> 00:13:32,669.67833298 So that person, you know, could record all of their cash in and cash out. 142 00:13:33,29.67833298 --> 00:13:46,929.67833298 And, you know, proper nonprofit reporting so they can pull out financial statements to see how much money came in, where that money was designated for, how much money has gone out and where that money is being spent. 143 00:13:47,39.67833298 --> 00:13:55,819.67833298 And so that way they get a good idea of whether or not that were specific programs that they're operating their mission based programs. 144 00:13:56,189.67833298 --> 00:14:01,479.67733298 Are they bringing in enough resources to cover the expenses so they could continue running those programs. 145 00:14:03,229.67833298 --> 00:14:03,719.67833298 Oh, yeah. 146 00:14:03,799.67833298 --> 00:14:07,139.67833298 I think this is a very important for nonprofits here and to understand. 147 00:14:07,599.67833298 --> 00:14:16,869.67833298 And I think so often we do rely on volunteers and kind of whoever's willing to volunteer to be the treasurer for a nonprofit, right? Yeah, exactly. 148 00:14:16,959.67733298 --> 00:14:17,239.67733298 Yeah. 149 00:14:17,579.67733298 --> 00:14:21,119.67733298 But it's, you know, it's like any other business, they're nonprofit, but it's still a business. 150 00:14:21,119.67733298 --> 00:14:27,639.67833298 So, you know, you wouldn't take your, your dog or pet to the local vet. 151 00:14:27,639.77833298 --> 00:14:27,654.57833298 Right. 152 00:14:27,954.67833298 --> 00:14:37,694.67833298 And have a volunteer, you know, take care of your dog or pet or go to the doctors, you know, you, you want someone who's qualified, you know, that could diagnose an issue. 153 00:14:37,724.67833298 --> 00:14:40,14.57833298 So it really is a yeah. 154 00:14:40,554.67833298 --> 00:14:56,914.67933298 The nonprofit is doing themselves a disservice if they don't have someone in place that understands accounting and specifically understands nonprofit accounting, because as I said, it's, it's a completely different reporting structure than a for profit business. 155 00:14:58,554.67833298 --> 00:14:58,944.67833298 Yeah. 156 00:14:58,964.67833298 --> 00:14:59,324.67833298 So. 157 00:14:59,709.67933298 --> 00:15:05,59.67933298 Is this an area then you typically advise organizations to outsource? Yes. 158 00:15:05,119.67933298 --> 00:15:11,879.68033298 If, if they don't have an in house person that is qualified to do the job, then I would advise that they outsource it. 159 00:15:12,929.68033298 --> 00:15:15,979.68033298 You know, outsource it to an accounting firm or a bookkeeping service firm. 160 00:15:16,389.67933298 --> 00:15:21,779.68033298 And ideally, an accounting or bookkeeping service firm that specializes in nonprofit accounting. 161 00:15:22,589.68033298 --> 00:15:23,679.58033298 Is it very expensive? Yes, it is. 162 00:15:24,729.68033298 --> 00:15:25,369.68033298 Not really. 163 00:15:25,379.68033298 --> 00:15:29,829.68033298 I mean, again, it really all depends on the scope of of the of the job. 164 00:15:29,839.68033298 --> 00:15:44,579.68033298 I mean, if it if it's a relatively small nonprofit with, you know, maybe 100 transactions a month, it shouldn't be more than four or five hours of accounting work. 165 00:15:44,934.68033298 --> 00:16:07,194.67833298 To prepare financial statements, you know, based on those one say 100 transactions, but you know, if the nonprofit is a little bit more complex with payroll with grant reporting, then, then the, the job, you know, and the responsibilities of the outside accounting firm, you know, a little bit more intensive or, you know, a little bit more involved. 166 00:16:07,914.67933298 --> 00:16:08,304.67933298 Yeah. 167 00:16:08,524.67933298 --> 00:16:08,694.67933298 Yeah. 168 00:16:08,694.67933298 --> 00:16:16,504.67933298 I think a lot of people may hesitate, but I think that, you know, it's just an investment in the business and it provides such great outcome. 169 00:16:17,324.67933298 --> 00:16:19,504.67933298 You mentioned something that I really want to touch on. 170 00:16:19,764.67933298 --> 00:16:24,504.67933298 You said you need a firm that understands the reporting requirements for a nonprofit. 171 00:16:24,674.68033298 --> 00:16:28,264.67933298 Can you tell us a little bit about those reporting requirements? Sure. 172 00:16:28,364.67933298 --> 00:16:34,634.67933298 So as a nonprofit, the, you have to track three different pieces of information. 173 00:16:34,644.67933298 --> 00:16:49,64.679333 You have to track revenue and expenses by what we like to refer to as who, what, and why, who is pretty simple, you know, who donated to you or who did you pay the expense to the, the, what is. 174 00:16:50,244.679333 --> 00:16:52,884.679333 Well, if it's a donation, it's fundraising revenue. 175 00:16:52,894.679333 --> 00:16:57,494.679333 If it's an expense, you know, it's office supplies or utilities or rent or payroll. 176 00:16:57,944.679333 --> 00:17:03,84.679333 The why is the part of the equation that makes nonprofit accounting unique. 177 00:17:03,384.679333 --> 00:17:07,929.679333 The why is, is this an expense? A mission based program expense. 178 00:17:08,469.679333 --> 00:17:25,539.679333 Is it a management in general administrative expense, or is it a fundraising expense? So proper nonprofit reporting requires that you break out all of your expenses by those three main, what are referred to as functional expense categories, mission based program. 179 00:17:25,879.679333 --> 00:17:32,429.679333 And then support services, which which includes management in general or administration and fundraising. 180 00:17:32,979.679333 --> 00:17:43,759.680333 So any nonprofit who has revenue over 250, 000 a year has to file an annual 990 and there's a report on the 990 for your functional expense report. 181 00:17:44,419.680333 --> 00:17:48,399.680333 So this, so all of your expenses need to be broken down by those three categories. 182 00:17:50,349.680333 --> 00:18:00,629.680333 Yeah, I think that's really good for all of our nonprofits to know, because I think that a lot of times that's the area they're least familiar with when they start the nonprofit. 183 00:18:01,369.680333 --> 00:18:01,629.680333 Yeah. 184 00:18:01,759.680333 --> 00:18:12,29.680333 So again, even though they're, they're not taxable because they are a nonprofit, the IRS requires that they file an annual report that report is a nine 90. 185 00:18:12,629.680333 --> 00:18:18,689.680333 There are different versions of the 990 depending on the size of the nonprofit. 186 00:18:18,719.680333 --> 00:18:24,669.680333 So real small nonprofits with a revenue less than 50, 000, that's an e file online. 187 00:18:24,679.680333 --> 00:18:27,869.579333 You go to irs. 188 00:18:27,869.679333 --> 00:18:31,349.680333 gov and file your 990 electronically online. 189 00:18:31,869.680333 --> 00:18:33,299.680333 There's very little information on that. 190 00:18:33,574.680333 --> 00:18:37,44.680333 Post, they call it a postcard because it used to be a, a mailed in postcard. 191 00:18:37,434.680333 --> 00:18:46,394.680333 Then there's the 990 EZ for revenue between 000 that has a lot more information than the postcard. 192 00:18:46,874.680333 --> 00:18:53,839.681333 But then the final 990, if your revenue is over, 250, 000. 193 00:18:53,849.681333 --> 00:18:56,369.681333 That's where your functional expense report comes. 194 00:18:56,459.681333 --> 00:18:59,479.681333 You have to have that's where you have to complete that reform. 195 00:18:59,879.681333 --> 00:19:01,599.681333 You also have your balance sheet. 196 00:19:01,769.681333 --> 00:19:07,159.680333 There's a lot of supplemental schedules on the 990 regarding your mission. 197 00:19:07,279.680333 --> 00:19:17,789.580333 How much, how many, how much resources were dedicated to the mission, your sources of revenue, information about your board and you know, And your donors. 198 00:19:20,179.580333 --> 00:19:21,149.580333 So good to know. 199 00:19:21,149.580333 --> 00:19:21,659.580333 Good to know. 200 00:19:22,119.580333 --> 00:19:22,569.580333 Now. 201 00:19:22,869.580333 --> 00:19:27,939.580333 So tell me, tell me about the best nonprofit that you work for. 202 00:19:27,949.580333 --> 00:19:29,769.580333 They have all their ducks in a row. 203 00:19:29,799.579333 --> 00:19:34,409.580333 Do you have one of those? Well, I mean, we have a lot, you know, about 1500 worldwide. 204 00:19:34,789.579333 --> 00:19:45,529.580333 It's kind of hard to pick out what I would think is the best, but off the top of my head, there's an organization in Hendersonville, North Carolina called Safe Light Family. 205 00:19:46,89.580333 --> 00:19:50,989.580333 They've been a user of our fast fund system over 20 years. 206 00:19:51,359.580333 --> 00:19:59,959.580333 They have all three pieces of our applications, our full accounting suite, our fundraising suite for donor management, and payroll. 207 00:20:00,729.579333 --> 00:20:07,345.6136663 Unfortunately, they were also, they were just I don't know if this is that this was recently, you know, hit by Hurricane Alene. 208 00:20:07,345.6136663 --> 00:20:09,770.1469996 So they were closed down for a week or so. 209 00:20:09,770.1469996 --> 00:20:14,30.1469996 And, so they went through a difficult time, but fortunately, they're back up and running. 210 00:20:14,380.1469996 --> 00:20:21,250.1459996 But I've been working with the fiscal director and development director, as I said for over 20 years. 211 00:20:21,540.1459996 --> 00:20:23,340.1459996 It's a mother, daughter. 212 00:20:23,585.1459996 --> 00:20:54,825.2454996 Team, the mother was work, and then the daughter took over for the mother, and they provide services for families women who might be undergoing spousal abuse, or, you know, they need a shelter, and so they, they provide services to hundreds of families in, in the Western North Carolina area and You know, many times we hear from them how easy their audits are, you know, with our system, how their, their fundraising database integrates automatically to accounting. 213 00:20:54,825.2454996 --> 00:20:57,305.2459996 So it's really easy to do in their reconciliations. 214 00:20:57,815.2459996 --> 00:21:16,990.2459996 But the most important thing is you know, why I picked them off the top of my head is, you know, the, the length of time we've been working with them, And getting to know them personally, the executive director, the development director, the fiscal director, and knowing the hard work that they that they do to serve their community. 215 00:21:17,10.2449996 --> 00:21:31,660.2449996 And it's really gratifying for us, knowing that the software we're providing to SafeLight is helping them, you know, fulfill their mission and be more sustainable and and helping them just continue to operate. 216 00:21:33,525.2449996 --> 00:21:41,925.2444996 Do they have an excellent way? Like, I love organizations that have a nice way of being transparent to their donors, like how their donations are used. 217 00:21:41,925.2444996 --> 00:21:52,685.2439996 Do they do that? Yeah, they you know, through their fundraising system from a raise, they're able to automatically acknowledge their donors, you know, for gifts that they received. 218 00:21:52,890.2439996 --> 00:21:58,380.2439996 When they have fundraising events, you know, they, they track, you know, the revenue coming in from, from the events. 219 00:21:58,450.2439996 --> 00:22:14,20.2439996 And at the end of the year, they send out year end donor statements, you know, with a summary of what the organization accomplished during the year and how gratifying, you know, they are thankful to their donors, you know, for helping them you know, with their donations during the year. 220 00:22:14,785.2439996 --> 00:22:15,785.2439996 Yeah, that's great. 221 00:22:15,785.2439996 --> 00:22:32,535.2429996 I think it's so important for us to remember to like, close that feedback loop and really give our donors that information about the change that they're making in the world because the donors are, I mean, I feel like the nonprofits are the conduit, but the donors are the ones who really make that happen. 222 00:22:32,655.2429996 --> 00:22:33,305.2439996 Yeah, they do. 223 00:22:33,365.2439996 --> 00:22:37,685.2439996 And there's a lot of competition for donations, you know, as all nonprofits know, so. 224 00:22:38,365.2439996 --> 00:22:54,355.2439996 You need to do something to help you stand out, you know, whether it's a, you know, a thank you note, you can even get a letter of appreciation, even if you know you didn't donate, you know, we, you know, we appreciate your past donations and this is what we've been able to accomplish, you know, through your help. 225 00:22:54,625.2439996 --> 00:23:00,965.2439996 So any kind of acknowledgement, you know, you know, for the to the donors is really helpful. 226 00:23:02,365.2439996 --> 00:23:04,985.2439996 Yeah, because they really do help make it all possible. 227 00:23:05,395.2439996 --> 00:23:22,930.2429996 So, what, what advice would you, like, if, what is, The number one piece of advice that you give leaders or you give non profit leaders when it comes to their fiscal management? Well, number one, they need to make sure that they have the proper tools. 228 00:23:23,40.2429996 --> 00:23:55,180.2429996 If whether it's an inside accountant, bookkeeper, accountant, fiscal director, or if they're outsourcing their accounting, they want to make sure that The accountants doing the job are provided and use proper tools for nonprofit reporting because of the major differences, how nonprofits have to present their financial statements and off the shelf accounting package typically doesn't provide them with proper segregation of their functional expenses of their unrestricted and restricted funds. 229 00:23:55,510.2429996 --> 00:24:00,210.2429996 You know, proper statement of financial positions or balance sheet and proper statement of activities. 230 00:24:00,210.2429996 --> 00:24:17,400.2429996 So if you're not using a nonprofit accounting application, then typically you have to export all your data into Excel to try to formulate your financial statements, which in and of itself could create a internal control deficiencies if your statements don't agree with what's in your accounting. 231 00:24:17,790.2429996 --> 00:24:21,820.2419996 So getting the having the proper tools in place is really important. 232 00:24:22,140.2429996 --> 00:24:27,270.2429996 And having an integrated system where the fundraising and payroll systems. 233 00:24:27,590.2429996 --> 00:24:29,320.2429996 And the accounting all talk to each other. 234 00:24:29,580.2429996 --> 00:24:43,630.2429996 So that way, you know, you don't generate a report from your fundraising system that says we raised 20, 000 in donations this year, this this month, and the accounting system says, Well, we only booked 15, 000. 235 00:24:43,640.2419996 --> 00:25:00,780.2429996 Where's that 5000 discrepancy? And so they go crazy trying to figure out why does fundraising say 20? And why does accounting say 15? And so having a single system that tracks both You know, without exporting and importing and trying to reconcile makes their jobs a lot easier. 236 00:25:01,200.2429996 --> 00:25:09,300.2429996 And it, it, it just eliminates the, the need to try to figure out why there are differences in our systems. 237 00:25:09,340.2429996 --> 00:25:10,410.2419996 Same thing with payroll. 238 00:25:11,440.2429996 --> 00:25:14,630.2419996 You know, you want to make sure that in payroll. 239 00:25:16,455.2429996 --> 00:25:24,645.2429996 The difference in nonprofit payroll and accounting and for profit payroll is typically nonprofits have to allocate individual salaries. 240 00:25:25,125.2429996 --> 00:25:36,345.2419996 So if you have multiple programs or multiple grants and funding sources, you might have an employee that during their payroll cycle, let's say a semi monthly payroll cycle that they work. 241 00:25:36,970.2429996 --> 00:25:39,40.2429996 Part time and the homeless shelter. 242 00:25:39,70.2429996 --> 00:25:41,180.2429996 The other part time they work in food pantry. 243 00:25:41,180.2429996 --> 00:25:42,610.2429996 Sometimes they're there. 244 00:25:42,650.2429996 --> 00:25:49,420.2429996 And the counseling center and those three programs might be funded by three different grants. 245 00:25:49,750.2429996 --> 00:26:01,160.2429996 So, a single salary or paycheck is not just posted to salaries it's posted to salaries to three different line item expenses for those three different programs and or. 246 00:26:01,210.3429996 --> 00:26:02,130.3429996 Funding sources. 247 00:26:02,580.3429996 --> 00:26:13,180.3429996 So, you know, having a system that allows the nonprofit to do that just makes it a lot easier when it comes to budgeting, when it comes to financial reporting grant management and, and grant reporting. 248 00:26:14,190.3419996 --> 00:26:14,760.3419996 Yeah. 249 00:26:14,760.3429996 --> 00:26:16,920.3429996 So I you're singing my language right now. 250 00:26:17,100.3419996 --> 00:26:29,740.3429996 So I, I have been director of human resources for a very large organization and I have done grant management for years and that having, not having systems that communicate with one another does create. 251 00:26:30,245.3429996 --> 00:26:31,585.3429996 It creates extra steps. 252 00:26:31,645.3429996 --> 00:26:35,105.3429996 And so I love that you recommend that they all be integrated. 253 00:26:35,555.3429996 --> 00:27:08,247.8623996 And if, if they're not integrated organizations have to schedule in and plan that time to help create that consistency across all the books, because especially with grant management, which has been a huge focus for my career you know, it's so simple for a item that should be reimbursed from the grant to be to not be linked with the grant, right? Because we may be purchased it in our on our credit card, but it didn't go back with the correct grant. 254 00:27:08,247.8623996 --> 00:27:10,967.8628996 So I know that there are a lot of headaches in that area. 255 00:27:11,187.8628996 --> 00:27:13,647.8618996 So I love that you recommend that. 256 00:27:13,747.8618996 --> 00:27:13,937.8618996 Yeah. 257 00:27:13,937.8628996 --> 00:27:19,347.8628996 And typically, if they are receiving grants, they are subject to an audit. 258 00:27:19,347.8628996 --> 00:27:19,387.8628996 Right. 259 00:27:19,927.8628996 --> 00:27:33,277.8628996 And so having a clean audit trail from their accounting system to their financial statements to their grant reports if everything ties together, it just makes the grant reporting and the audit much easier. 260 00:27:33,677.8628996 --> 00:27:45,687.8628996 You know, the, the, unfortunately during my time as an auditor, the biggest challenge that we had was financial statements that did not tie into the accounting system. 261 00:27:45,737.8628996 --> 00:27:49,937.8628996 You know, there was discrepancies and then you have to go crazy trying to figure out those discrepancies. 262 00:27:51,517.8628996 --> 00:27:51,817.8628996 Yeah. 263 00:27:51,817.8628996 --> 00:27:53,747.8618996 And it can be hours and hours. 264 00:27:54,7.8628996 --> 00:27:55,597.8628996 Sometimes wasted time. 265 00:27:55,677.8628996 --> 00:27:56,237.8628996 Yes. 266 00:27:57,127.8628996 --> 00:27:57,737.8628996 Yes. 267 00:27:57,877.8628996 --> 00:28:00,247.8628996 I've lived that life multiple times. 268 00:28:00,307.8628996 --> 00:28:01,617.8628996 So, yeah. 269 00:28:01,617.8638996 --> 00:28:03,237.8628996 So thank you so much. 270 00:28:03,647.8638996 --> 00:28:08,737.8638996 So can you tell our listeners how they can get in touch with you and learn more about a race? Sure. 271 00:28:08,947.8638996 --> 00:28:09,407.8638996 Sure. 272 00:28:09,447.8628996 --> 00:28:15,707.8628996 Again, it's a raise a R a I Z E so they can go to a raise. 273 00:28:16,57.8628996 --> 00:28:16,537.8628996 com. 274 00:28:16,887.8628996 --> 00:28:19,87.8628996 That lists all of our. 275 00:28:19,372.8628996 --> 00:28:22,832.8628996 Fast fund modules, the accounting, the fundraising and payroll. 276 00:28:23,402.8628996 --> 00:28:29,802.8628996 They could sign up for a a meeting or a demo or download a trial version. 277 00:28:30,112.8618996 --> 00:28:33,212.8608996 They can send an email directly to me if they're interested. 278 00:28:33,242.8618996 --> 00:28:36,42.8618996 That's Joe at a raise. 279 00:28:36,282.8608996 --> 00:28:39,402.8608996 com a R a I Z E. 280 00:28:39,682.8608996 --> 00:28:40,102.8608996 com. 281 00:28:41,502.8608996 --> 00:28:42,42.8608996 Awesome. 282 00:28:42,512.8608996 --> 00:28:49,77.8618996 And do you have any resources available that like, just let Non profits know like what they need to have. 283 00:28:49,357.8618996 --> 00:28:50,37.8618996 Oh, yes. 284 00:28:50,77.8618996 --> 00:29:04,802.8618997 Besides arrays specializing in nonprofit software, we also have a small branch within our company or a different, you know, Department that provides education resources. 285 00:29:05,162.8618997 --> 00:29:07,702.8618997 We have a nonprofit financial management course. 286 00:29:08,322.8618997 --> 00:29:20,842.8598997 We have a YouTube channel that has a series of videos that explains the differences of nonprofit between nonprofit and for profit accounting, you know, how to track. 287 00:29:21,82.8608997 --> 00:29:25,382.8608997 Restricted and unrestricted donations, how to track allocation of expenses. 288 00:29:25,802.8608997 --> 00:29:39,212.8608997 So if you go to YouTube and just search a raise, it'll pop up with our YouTube channel with the educational resources that we provide to, to help people understand, you know, proper nonprofit accounting. 289 00:29:40,167.8608997 --> 00:29:40,757.8608997 Yes. 290 00:29:40,777.8608997 --> 00:29:41,277.8608997 Thank you. 291 00:29:41,397.8608997 --> 00:29:48,807.8608997 Thank you so much for that because it is such a needed educational area, like it for all nonprofits. 292 00:29:48,817.8608997 --> 00:29:50,157.8608997 So I appreciate that. 293 00:29:50,667.8608997 --> 00:29:52,397.8608997 So thank you for joining us. 294 00:29:52,457.8608997 --> 00:30:00,377.8608997 Is there any last piece of advice or last tips or tricks or whatever you'd like to give our listeners before we sign off? Well, Sarah thank you for having me. 295 00:30:00,377.8608997 --> 00:30:03,77.8608997 I really appreciate the time you afforded me. 296 00:30:03,87.8608997 --> 00:30:09,677.8608997 And, you know, hopefully your, your listeners will heed our advice when it comes to proper fiscal management. 297 00:30:10,127.8608997 --> 00:30:18,647.8598997 And I mean, my last piece of advice is continue doing the work that you're doing to serve your communities, regardless of what your mission is. 298 00:30:19,72.8608997 --> 00:30:29,672.8618997 And, you know, we, we, we really value what you add to all of our communities, and we're happy to be able to help some of you out there with proper fiscal management. 299 00:30:30,722.8618997 --> 00:30:31,692.8618997 Ah, thank you. 300 00:30:31,732.8618997 --> 00:30:32,582.8618997 I echo that. 301 00:30:32,592.8608997 --> 00:30:33,842.8608997 That's, that's perfect. 302 00:30:33,842.8608997 --> 00:30:34,112.8608997 Yes. 303 00:30:34,142.8618997 --> 00:30:35,332.8618997 Keep doing what you're doing. 304 00:30:35,342.8608997 --> 00:30:40,112.8618997 So, to all of our listeners, thank you for joining us this week, and Joe, thank you so much. 305 00:30:40,142.8618997 --> 00:30:44,452.8618997 We look forward to being able to have more conversations again in the future. 306 00:30:44,902.8618997 --> 00:30:45,102.8618997 Great. 307 00:30:45,102.9618997 --> 00:30:46,762.5748997 Sarah. 308 00:30:49,0.8618996 --> 00:30:56,360.8618996 Thank you so much for tuning in to this episode of Nonprofit411 I hope you found today's conversation as insightful and inspiring as I did. 309 00:30:56,950.8618996 --> 00:31:00,310.8608996 Remember, building a healthy nonprofit requires a holistic approach. 310 00:31:00,630.8618996 --> 00:31:07,450.7618996 There are many resources available to support your staff and we're dedicated to helping your organization access what it needs to thrive. 311 00:31:08,230.8618996 --> 00:31:12,470.8618996 One key to creating a thriving organization is a diverse fundraising strategy. 312 00:31:13,0.8618996 --> 00:31:16,870.8618996 While grants are an important part of that strategy, they're just one piece of the overall puzzle. 313 00:31:17,690.8608996 --> 00:31:23,110.8608996 If you're looking to strengthen your grant writing skills as part of this bigger picture, I've got a resource to help you get started. 314 00:31:23,660.8618996 --> 00:31:31,960.8618996 Download my free grant writing guide, packed with practical tips and best practices to help you craft proposals that align with your overall fundraising goals. 315 00:31:32,450.8618996 --> 00:31:33,940.8618996 You'll find the link in the show notes. 316 00:31:34,210.8618996 --> 00:31:40,380.8618996 And as always, if you enjoyed today's episode, Please subscribe, leave a review, and share it with your fellow changemakers. 317 00:31:40,980.8618996 --> 00:31:43,580.8618996 Let's work together to build a vibrant nonprofit community. 318 00:31:43,900.8618996 --> 00:31:46,906.1680221 Until next time, keep pushing forward and making a difference.
Hello and welcome to Nonprofit411, where we dive into resources and strategies that help nonprofits not just survive, but truly thrive.
I'm Sarah Barton, your host and fundraising advocate.
.346938776Each episode, we bring you inspiring conversations with experts in fundraising, sustainability, and best practices to equip you with the tools and confidence you need to make a real impact. 4 00:00:25,468.360465634 --> 00:00:31,538.360465634 Nonprofit leaders know that funding is key to making a lasting impact, but finding the right approach can be challenging. 5 00:00:32,18.360465634 --> 00:00:38,868.360465634 At Nonprofit 411, we understand that grants are just one piece of the puzzle, but an important skill for every nonprofit to master. 6 00:00:39,328.359465634 --> 00:00:45,758.360465634 That's why we created the Grant Writing Proposal Guide to help you turn your mission into actionable plans that attract funding. 7 00:00:46,288.360465634 --> 00:00:49,158.360465634 Let us support you in taking your fundraising to the next level. 8 00:00:49,608.360465634 --> 00:00:51,968.360465634 Download the Grant Writing Proposal Guide at Nonprofit411. 9 00:00:51,978.360465634 --> 00:00:54,978.360465634 org today, and let's build a stronger future together. 10 00:00:59,44.27883298 --> 00:01:00,104.27883298 Hi there and welcome. 11 00:01:00,134.27883298 --> 00:01:01,864.27883298 I'm thrilled you're here with us today. 12 00:01:02,184.27883298 --> 00:01:10,924.27883298 Each week we have conversations with nonprofit experts who offer practical strategies and inspiring stories to help nonprofits build sustainable funding and stronger communities. 13 00:01:11,404.27783298 --> 00:01:16,74.27783298 Whether you're here to learn, to be inspired or simply to recharge, I'm glad you've joined us. 14 00:01:16,84.27783298 --> 00:01:17,144.27783298 So let's jump in. 15 00:01:17,554.27883298 --> 00:01:18,734.27883298 I'm your host, Sarah Barton. 16 00:01:18,874.27883298 --> 00:01:23,264.27883298 And today I am joined by Joseph Scarano with Arise. 17 00:01:24,649.27883298 --> 00:01:26,709.27883298 And he currently serves as the CEO. 18 00:01:26,709.27883298 --> 00:01:27,329.27883298 Welcome. 19 00:01:28,319.27883298 --> 00:01:28,949.27883298 Thank you, Sarah. 20 00:01:29,49.27883298 --> 00:01:30,179.27883298 It's a raise. 21 00:01:30,299.27883298 --> 00:01:32,479.27783298 I know a lot of people, no problem. 22 00:01:32,479.27883298 --> 00:01:35,329.27783298 A lot of people have difficulty pronouncing the name. 23 00:01:35,379.27783298 --> 00:01:37,209.27783298 We kind of, we may actually made up the name. 24 00:01:37,209.27783298 --> 00:01:40,469.27933298 So, you'll, this will be perfect for your audience. 25 00:01:40,499.27933298 --> 00:01:44,809.27933298 It's a raise like raising funds and you work hard. 26 00:01:44,809.27933298 --> 00:01:46,239.27933298 You deserve a raise. 27 00:01:47,64.27933298 --> 00:01:47,654.27933298 I love that. 28 00:01:47,864.27933298 --> 00:01:48,694.27933298 I even wrote it down. 29 00:01:48,694.27933298 --> 00:01:51,954.27933298 And I, you know, short term memory, that's okay. 30 00:01:52,74.27933298 --> 00:01:53,574.27933298 No, no, not a problem. 31 00:01:53,574.37933298 --> 00:01:57,474.27933298 You got my last name, right? So that's, that's a good one. 32 00:01:58,44.27933298 --> 00:01:58,654.27933298 Yeah. 33 00:01:59,274.27933298 --> 00:02:00,684.27883298 I grew up in Pennsylvania. 34 00:02:00,684.27883298 --> 00:02:03,954.27833298 So like having, is it Italian? It is Italian. 35 00:02:04,34.27933298 --> 00:02:04,374.27933298 Yes. 36 00:02:04,434.27833298 --> 00:02:04,944.27833298 Yeah. 37 00:02:04,974.27933298 --> 00:02:07,714.27933298 So having Italian names all around me was pretty common. 38 00:02:07,714.27933298 --> 00:02:07,984.27933298 So yeah. 39 00:02:08,749.27933298 --> 00:02:09,529.27933298 Well, welcome. 40 00:02:09,709.27933298 --> 00:02:12,49.27933298 I'd like to start with a fun question. 41 00:02:12,49.27933298 --> 00:02:12,79.27933298 Okay. 42 00:02:12,79.27933298 --> 00:02:13,999.27933298 Just to learn a little bit more about you. 43 00:02:13,999.27933298 --> 00:02:19,999.27933298 And my question always is, what is your favorite hobby? Well, cooking. 44 00:02:20,729.27933298 --> 00:02:22,909.27933298 Cooking is I, I mean, I love to cook. 45 00:02:22,909.27933298 --> 00:02:27,819.27933298 I love to feed people, so I guess, you know, hand it down from my Italian grandmothers. 46 00:02:27,909.27933298 --> 00:02:34,339.27933298 So I really enjoy, you know, cooking and, and, and having people enjoy what I, what I cook. 47 00:02:34,429.27933298 --> 00:02:37,279.27933298 So I would say that would be my favorite hobby. 48 00:02:38,154.27933298 --> 00:02:39,54.27933298 I love that. 49 00:02:39,54.27933298 --> 00:02:44,244.27933298 I, if on the weekends, you will always find me in the kitchen at some point, because I love to prepare food. 50 00:02:44,244.27933298 --> 00:02:46,634.27933298 I just love the process of preparing food. 51 00:02:47,214.27933298 --> 00:02:49,684.27933298 And I am the entertainer in our family. 52 00:02:49,694.27933298 --> 00:02:56,314.27933298 My mom says I'm the matriarch, even though she's older than me, she's like, you're the matriarch in the family because. 53 00:02:56,669.27933298 --> 00:03:04,229.27933298 I love to have people come into my house and I can imagine being, you know, the true matriarch at some point in my life. 54 00:03:04,529.27933298 --> 00:03:07,429.27883298 Yeah, well, you kind of reminded me of a song back in the 80s. 55 00:03:07,429.27883298 --> 00:03:14,389.27833298 I don't know if you know this one, but there was a, I guess, a pop song called You'll Always Find Me in the Kitchen at Parties. 56 00:03:15,579.27933298 --> 00:03:15,879.27933298 Yeah. 57 00:03:16,179.27933298 --> 00:03:17,289.27933298 Yep, that's true. 58 00:03:17,289.27933298 --> 00:03:18,249.27933298 That's where you'll find me. 59 00:03:18,639.27933298 --> 00:03:20,529.27933298 So that's so fun. 60 00:03:21,59.27933298 --> 00:03:22,439.27933298 Well, thank you for sharing that. 61 00:03:22,439.27933298 --> 00:03:28,79.27933298 So, can you tell our guests a little bit about yourself and your role and what you currently work at? Sure. 62 00:03:28,129.27933298 --> 00:03:31,159.27933298 I started my professional career back in the early eighties. 63 00:03:31,209.27933298 --> 00:03:37,889.27933298 I'm a, I'm a CPA I was licensed in the state of New York and the firm that I worked for the majority of our clients were nonprofits. 64 00:03:37,949.27933298 --> 00:03:40,559.27933298 So being in the eighties, that was the introduction of the pc. 65 00:03:40,839.37933298 --> 00:03:51,329.27833298 The IBM PC and, and the Mac and my partner in the firm had this brilliant idea of we should write accounting software for nonprofits. 66 00:03:51,819.27933298 --> 00:03:58,299.27833298 So we started the business in the mid 80s, and it was a separate business from the accounting firm. 67 00:03:58,814.27933298 --> 00:04:01,494.27933298 And so we grew into where we are now. 68 00:04:01,564.27933298 --> 00:04:04,164.27933298 So software became my ticket out of public accounting. 69 00:04:04,164.27933298 --> 00:04:08,994.27933298 I left the accounting industry in 1991 and never looked back. 70 00:04:09,114.27933298 --> 00:04:12,724.27933298 So, Arrays has been around, started in New York. 71 00:04:12,744.28033298 --> 00:04:22,414.28033298 We're now in North Carolina, but we've been around for 40 years and serving Over 1500 nonprofit municipal government agencies around the world. 72 00:04:23,774.28033298 --> 00:04:24,124.28033298 Yeah. 73 00:04:24,124.28033298 --> 00:04:37,684.27833298 So I was really interested in having you on because I think the fiscal management side of nonprofits is something that we don't talk a lot about you know, in the sector, but it's such a vital piece in fundraising. 74 00:04:37,684.27833298 --> 00:04:40,514.27833298 You know, I, I deal with fundraising and. 75 00:04:41,449.27933298 --> 00:04:46,659.27933298 You, you can't create a strategy without understanding your fiscal situation. 76 00:04:46,659.27933298 --> 00:04:46,919.27933298 Right. 77 00:04:46,919.27933298 --> 00:04:48,969.27933298 And so I really, yeah. 78 00:04:49,409.27933298 --> 00:05:00,439.27933298 So I just am so excited to have this conversation and just to hear, you know, what are some of the, what are some of the things that you recommend every nonprofit? Well, no. 79 00:05:01,304.27933298 --> 00:05:31,149.68033298 Well, all the nonprofits, regardless of their mission, whether it's social service, community services, economic development, you know, religious, arts whenever, you know, whatever they form the nonprofit and create their mission the most important thing is identifying funding streams, because you can't fulfill your mission without proper resources, and those are financial resources, even, even if you're, you know, You know, if you want to be able to totally volunteer run, you need financial resources. 80 00:05:31,159.68033298 --> 00:05:48,119.68033298 So, you know, the number one thing that I emphasize, you know, when I am consulting with nonprofits is build out your mission, you know, what is your mission statement? And the second thing is, how are you going to fund that mission? So you have to identify multiple funding streams. 81 00:05:48,119.68033298 --> 00:05:53,49.68033298 It can't be 100 percent reliant on, on donations or fundraising events. 82 00:05:53,779.68033298 --> 00:05:56,219.68033298 There has to be something that diversifies. 83 00:05:56,704.68033298 --> 00:06:04,914.68033298 funding to enable you to do it properly execute your mission and provide the services that the nonprofit has been created for. 84 00:06:05,174.68033298 --> 00:06:13,874.67933298 So, you know, again, from us, fiscal management is one of the key things to proper sustainability for any nonprofit organization. 85 00:06:15,134.68033298 --> 00:06:22,34.68033298 Yeah, yeah, I really, I have begun speaking about nonprofit development, like business development in many ways. 86 00:06:22,64.68033298 --> 00:06:27,664.67933298 You have started a type of business, you know, a nonprofit is just a type of business. 87 00:06:28,194.68033298 --> 00:06:44,549.68033298 And I don't think that we often talk about it in those terms, but Can you help our listeners understand the difference between a nonprofit business and a for profit business, you know, because it's true. 88 00:06:45,144.68033298 --> 00:06:50,444.68033298 In both business and nonprofits, we talk about diversification of funding streams. 89 00:06:51,224.68033298 --> 00:07:00,214.68033298 But the difference I know is in the budgeting, correct? Yes, but it's also the responsibility of the nonprofit when revenues received. 90 00:07:00,574.68033298 --> 00:07:07,574.68033298 I always like to draw the analogy of If you go to the local bakery and buy a loaf of bread, you know, whatever that loaf of bread costs. 91 00:07:07,574.68033298 --> 00:07:10,944.68033298 Now, the only thing you're really concerned with is the bread fresh. 92 00:07:10,974.68033298 --> 00:07:12,194.67933298 And it doesn't taste really good. 93 00:07:12,284.68033298 --> 00:07:20,454.67983298 What, what the bakery does with the funds that they receive from selling bread, they reinvest in the business. 94 00:07:20,454.67983298 --> 00:07:21,874.68033298 They can do whatever they want with it. 95 00:07:22,284.67933298 --> 00:07:22,864.67933298 Whereas. 96 00:07:23,534.68033298 --> 00:07:29,384.68033298 On for a nonprofit, the revenue that they receive typically has strings attached. 97 00:07:30,94.68033298 --> 00:07:34,834.68033298 You know, the nonprofit really can't do what they want with money that they receive. 98 00:07:35,34.67933298 --> 00:07:46,204.68033298 Typically, a donor will designate their funds for a specific purpose or expect the nonprofit to invest their funds in in their mission and also in overhead. 99 00:07:46,224.68033298 --> 00:07:51,344.68033298 And, you know, a nonprofit will not will not be able to operate with proper without proper overhead. 100 00:07:51,344.68033298 --> 00:08:16,719.68033298 So There's always a portion of revenue that has to be allocated towards the management of, of the non profit, you know, the, and so, again, it, it, the differences when funds are received from a non profit, it's their responsibility to demonstrate to their various funding sources that the funds were used for their designated purpose, and that's why they have what they call restricted funds and unrestricted funds. 101 00:08:18,79.68033298 --> 00:08:19,849.68033298 So that really is the key difference. 102 00:08:21,154.68033298 --> 00:08:36,324.67933298 Yeah, and I think that understanding that difference is so important, especially when we look at our funding streams, having a nice plan for the unrestricted funds is really important because like you said, that's all of the operating costs. 103 00:08:36,734.67833298 --> 00:08:41,554.67933298 So what are some of the restrictions, or how does an organization go about. 104 00:08:42,829.67933298 --> 00:08:46,179.67933298 Developing a strong, unrestricted fundraising plan. 105 00:08:47,439.67933298 --> 00:08:49,419.67933298 Well, number one is communication. 106 00:08:49,539.67933298 --> 00:09:04,689.67933298 You know, they have to communicate to their communities, you know, the work that they're doing and their, their need to, in order to fulfill that mission to perform, you know, the work that they wanted, want to execute it in their community. 107 00:09:05,39.67933298 --> 00:09:06,409.67933298 So communication. 108 00:09:06,744.67933298 --> 00:09:38,424.67933298 Of course, you know, building a strong board, a board of directors will help them with their outreach, you know, with their connections and raising funds, you know, they have to understand they have to communicate to whether it's donations, you know, they're trying to solicit donations or solicit grant funding or possibly a program service revenue, because there's all different, you know, Types of revenue that a nonprofit could generate, but the three main would be fundraising, grant revenue and program services. 109 00:09:38,884.67933298 --> 00:09:48,754.67933298 So with each of those three funding streams, you know, the nonprofit has to develop a strategy on what they're going to focus on that's going to fund the nonprofit. 110 00:09:48,824.67933298 --> 00:10:00,499.67933298 If they don't think that they are going Eligible for for grants, then they have to focus on the other two, whether it's fundraising events or charitable contributions coming in. 111 00:10:00,979.67933298 --> 00:10:04,989.67933298 And so, you know, the nonprofit, you know, they really have to have a, a. 112 00:10:05,434.67933298 --> 00:10:28,754.67833298 A very diversified plan, and they need to execute that plan by outreach to the community, you know, whether it's you know, through social media now, because that's a great way that they can outreach, you know, that, that goes beyond just their, you know, their geographic community, you know, it could be worldwide outreach if they execute and, and use social media properly. 113 00:10:28,754.67833298 --> 00:10:29,464.67833298 Okay. 114 00:10:30,19.67833298 --> 00:10:30,499.67833298 Yeah. 115 00:10:30,769.67833298 --> 00:10:31,89.67833298 Yeah. 116 00:10:31,429.67833298 --> 00:10:32,559.67833298 I think that that's true. 117 00:10:32,559.67833298 --> 00:10:46,649.67733298 And I, I think that we sometimes underestimate the generosity of our donors because donors really do understand that you need unrestricted funds and they'll invest in you. 118 00:10:46,659.67733298 --> 00:10:47,79.67733298 Right. 119 00:10:47,549.67733298 --> 00:10:47,719.67733298 Yes. 120 00:10:49,14.67733298 --> 00:10:52,654.67733298 I like to use that terminology, invest, you know, yeah, yeah. 121 00:10:52,754.67733298 --> 00:11:11,464.67733298 And it's really important that, you know, the nonprofit has systems in place to acknowledge every single donation they receive, whether it's a dollar or a thousand dollars, you know, it, if you donate to a, an organization and you receive no feedback, no, thank you. 122 00:11:11,794.67733298 --> 00:11:18,134.67733298 You're don't know if your donation went into a black hole and acknowledgement of that, of that donation. 123 00:11:18,339.67733298 --> 00:11:32,39.67833298 And to explain how that donation is going to benefit the community at large that the nonprofit is serving goes a long way in in, in building trust and building proper stewardship of those funds. 124 00:11:32,99.67833298 --> 00:11:36,29.67733298 So, you know, the nonprofit, you know, once when they get started. 125 00:11:36,429.67833298 --> 00:11:47,229.67833298 They really need to, as I said, develop a funding stream plan and then implement systems that enable them to properly manage their funds that are coming in. 126 00:11:47,269.67733298 --> 00:11:51,289.67733298 And on the other side of it, the funds going out their expenses. 127 00:11:52,799.67833298 --> 00:11:53,219.67833298 Yeah. 128 00:11:53,769.67833298 --> 00:11:54,69.67833298 Yeah. 129 00:11:54,99.67833298 --> 00:11:54,989.67833298 Thank you so much. 130 00:11:54,989.67833298 --> 00:11:56,479.67833298 I think that this is great information. 131 00:11:56,719.67833298 --> 00:12:14,399.67833298 So what are some common challenges that you see when you're serving nonprofits? What do you consistently see are some of the barriers or challenges? The biggest issue that I see, you know, it's not 100 percent of the time, but lots of nonprofits, you know, God bless them for what they're doing. 132 00:12:14,909.67833298 --> 00:12:23,129.67833298 They totally underestimate the importance of fiscal management, you know, they, they will find a volunteer to handle their books, so to speak. 133 00:12:23,529.67833298 --> 00:12:32,669.67933298 And that person doesn't understand basic bookkeeping, doesn't understand accounting, doesn't know, you know, how to do a bank reconciliation, can't read a financial statement. 134 00:12:32,959.67833298 --> 00:12:34,349.67833298 And then they wonder why. 135 00:12:34,744.67833298 --> 00:12:39,854.67833298 They're, they're struggling fiscally because they don't have a good handle on their finances. 136 00:12:40,344.67833298 --> 00:12:50,654.67833298 So, you know, they might use a off the shelf accounting system that they perceive as providing proper fiscal management, but if they have someone that's. 137 00:12:51,34.67833298 --> 00:12:58,844.67833298 Managing that system, recording the income and expenses, but not recording it properly, they're going to get inaccurate financial statements. 138 00:12:58,844.67833298 --> 00:13:10,374.67833298 So they really can't rely on those financial statements to see how they're doing, you know, from month to month, you know, building budgets and, and properly allocating expenses to the appropriate areas. 139 00:13:10,734.67833298 --> 00:13:12,944.67833298 So, you know, it's really important that. 140 00:13:13,629.67833298 --> 00:13:26,919.67833298 You know, as they plan on getting the nonprofit started, you know that they find a volunteer if they are not hiring someone, but find someone that understands basic accounting. 141 00:13:26,919.67833298 --> 00:13:32,669.67833298 So that person, you know, could record all of their cash in and cash out. 142 00:13:33,29.67833298 --> 00:13:46,929.67833298 And, you know, proper nonprofit reporting so they can pull out financial statements to see how much money came in, where that money was designated for, how much money has gone out and where that money is being spent. 143 00:13:47,39.67833298 --> 00:13:55,819.67833298 And so that way they get a good idea of whether or not that were specific programs that they're operating their mission based programs. 144 00:13:56,189.67833298 --> 00:14:01,479.67733298 Are they bringing in enough resources to cover the expenses so they could continue running those programs. 145 00:14:03,229.67833298 --> 00:14:03,719.67833298 Oh, yeah. 146 00:14:03,799.67833298 --> 00:14:07,139.67833298 I think this is a very important for nonprofits here and to understand. 147 00:14:07,599.67833298 --> 00:14:16,869.67833298 And I think so often we do rely on volunteers and kind of whoever's willing to volunteer to be the treasurer for a nonprofit, right? Yeah, exactly. 148 00:14:16,959.67733298 --> 00:14:17,239.67733298 Yeah. 149 00:14:17,579.67733298 --> 00:14:21,119.67733298 But it's, you know, it's like any other business, they're nonprofit, but it's still a business. 150 00:14:21,119.67733298 --> 00:14:27,639.67833298 So, you know, you wouldn't take your, your dog or pet to the local vet. 151 00:14:27,639.77833298 --> 00:14:27,654.57833298 Right. 152 00:14:27,954.67833298 --> 00:14:37,694.67833298 And have a volunteer, you know, take care of your dog or pet or go to the doctors, you know, you, you want someone who's qualified, you know, that could diagnose an issue. 153 00:14:37,724.67833298 --> 00:14:40,14.57833298 So it really is a yeah. 154 00:14:40,554.67833298 --> 00:14:56,914.67933298 The nonprofit is doing themselves a disservice if they don't have someone in place that understands accounting and specifically understands nonprofit accounting, because as I said, it's, it's a completely different reporting structure than a for profit business. 155 00:14:58,554.67833298 --> 00:14:58,944.67833298 Yeah. 156 00:14:58,964.67833298 --> 00:14:59,324.67833298 So. 157 00:14:59,709.67933298 --> 00:15:05,59.67933298 Is this an area then you typically advise organizations to outsource? Yes. 158 00:15:05,119.67933298 --> 00:15:11,879.68033298 If, if they don't have an in house person that is qualified to do the job, then I would advise that they outsource it. 159 00:15:12,929.68033298 --> 00:15:15,979.68033298 You know, outsource it to an accounting firm or a bookkeeping service firm. 160 00:15:16,389.67933298 --> 00:15:21,779.68033298 And ideally, an accounting or bookkeeping service firm that specializes in nonprofit accounting. 161 00:15:22,589.68033298 --> 00:15:23,679.58033298 Is it very expensive? Yes, it is. 162 00:15:24,729.68033298 --> 00:15:25,369.68033298 Not really. 163 00:15:25,379.68033298 --> 00:15:29,829.68033298 I mean, again, it really all depends on the scope of of the of the job. 164 00:15:29,839.68033298 --> 00:15:44,579.68033298 I mean, if it if it's a relatively small nonprofit with, you know, maybe 100 transactions a month, it shouldn't be more than four or five hours of accounting work. 165 00:15:44,934.68033298 --> 00:16:07,194.67833298 To prepare financial statements, you know, based on those one say 100 transactions, but you know, if the nonprofit is a little bit more complex with payroll with grant reporting, then, then the, the job, you know, and the responsibilities of the outside accounting firm, you know, a little bit more intensive or, you know, a little bit more involved. 166 00:16:07,914.67933298 --> 00:16:08,304.67933298 Yeah. 167 00:16:08,524.67933298 --> 00:16:08,694.67933298 Yeah. 168 00:16:08,694.67933298 --> 00:16:16,504.67933298 I think a lot of people may hesitate, but I think that, you know, it's just an investment in the business and it provides such great outcome. 169 00:16:17,324.67933298 --> 00:16:19,504.67933298 You mentioned something that I really want to touch on. 170 00:16:19,764.67933298 --> 00:16:24,504.67933298 You said you need a firm that understands the reporting requirements for a nonprofit. 171 00:16:24,674.68033298 --> 00:16:28,264.67933298 Can you tell us a little bit about those reporting requirements? Sure. 172 00:16:28,364.67933298 --> 00:16:34,634.67933298 So as a nonprofit, the, you have to track three different pieces of information. 173 00:16:34,644.67933298 --> 00:16:49,64.679333 You have to track revenue and expenses by what we like to refer to as who, what, and why, who is pretty simple, you know, who donated to you or who did you pay the expense to the, the, what is. 174 00:16:50,244.679333 --> 00:16:52,884.679333 Well, if it's a donation, it's fundraising revenue. 175 00:16:52,894.679333 --> 00:16:57,494.679333 If it's an expense, you know, it's office supplies or utilities or rent or payroll. 176 00:16:57,944.679333 --> 00:17:03,84.679333 The why is the part of the equation that makes nonprofit accounting unique. 177 00:17:03,384.679333 --> 00:17:07,929.679333 The why is, is this an expense? A mission based program expense. 178 00:17:08,469.679333 --> 00:17:25,539.679333 Is it a management in general administrative expense, or is it a fundraising expense? So proper nonprofit reporting requires that you break out all of your expenses by those three main, what are referred to as functional expense categories, mission based program. 179 00:17:25,879.679333 --> 00:17:32,429.679333 And then support services, which which includes management in general or administration and fundraising. 180 00:17:32,979.679333 --> 00:17:43,759.680333 So any nonprofit who has revenue over 250, 000 a year has to file an annual 990 and there's a report on the 990 for your functional expense report. 181 00:17:44,419.680333 --> 00:17:48,399.680333 So this, so all of your expenses need to be broken down by those three categories. 182 00:17:50,349.680333 --> 00:18:00,629.680333 Yeah, I think that's really good for all of our nonprofits to know, because I think that a lot of times that's the area they're least familiar with when they start the nonprofit. 183 00:18:01,369.680333 --> 00:18:01,629.680333 Yeah. 184 00:18:01,759.680333 --> 00:18:12,29.680333 So again, even though they're, they're not taxable because they are a nonprofit, the IRS requires that they file an annual report that report is a nine 90. 185 00:18:12,629.680333 --> 00:18:18,689.680333 There are different versions of the 990 depending on the size of the nonprofit. 186 00:18:18,719.680333 --> 00:18:24,669.680333 So real small nonprofits with a revenue less than 50, 000, that's an e file online. 187 00:18:24,679.680333 --> 00:18:27,869.579333 You go to irs. 188 00:18:27,869.679333 --> 00:18:31,349.680333 gov and file your 990 electronically online. 189 00:18:31,869.680333 --> 00:18:33,299.680333 There's very little information on that. 190 00:18:33,574.680333 --> 00:18:37,44.680333 Post, they call it a postcard because it used to be a, a mailed in postcard. 191 00:18:37,434.680333 --> 00:18:46,394.680333 Then there's the 990 EZ for revenue between 000 that has a lot more information than the postcard. 192 00:18:46,874.680333 --> 00:18:53,839.681333 But then the final 990, if your revenue is over, 250, 000. 193 00:18:53,849.681333 --> 00:18:56,369.681333 That's where your functional expense report comes. 194 00:18:56,459.681333 --> 00:18:59,479.681333 You have to have that's where you have to complete that reform. 195 00:18:59,879.681333 --> 00:19:01,599.681333 You also have your balance sheet. 196 00:19:01,769.681333 --> 00:19:07,159.680333 There's a lot of supplemental schedules on the 990 regarding your mission. 197 00:19:07,279.680333 --> 00:19:17,789.580333 How much, how many, how much resources were dedicated to the mission, your sources of revenue, information about your board and you know, And your donors. 198 00:19:20,179.580333 --> 00:19:21,149.580333 So good to know. 199 00:19:21,149.580333 --> 00:19:21,659.580333 Good to know. 200 00:19:22,119.580333 --> 00:19:22,569.580333 Now. 201 00:19:22,869.580333 --> 00:19:27,939.580333 So tell me, tell me about the best nonprofit that you work for. 202 00:19:27,949.580333 --> 00:19:29,769.580333 They have all their ducks in a row. 203 00:19:29,799.579333 --> 00:19:34,409.580333 Do you have one of those? Well, I mean, we have a lot, you know, about 1500 worldwide. 204 00:19:34,789.579333 --> 00:19:45,529.580333 It's kind of hard to pick out what I would think is the best, but off the top of my head, there's an organization in Hendersonville, North Carolina called Safe Light Family. 205 00:19:46,89.580333 --> 00:19:50,989.580333 They've been a user of our fast fund system over 20 years. 206 00:19:51,359.580333 --> 00:19:59,959.580333 They have all three pieces of our applications, our full accounting suite, our fundraising suite for donor management, and payroll. 207 00:20:00,729.579333 --> 00:20:07,345.6136663 Unfortunately, they were also, they were just I don't know if this is that this was recently, you know, hit by Hurricane Alene. 208 00:20:07,345.6136663 --> 00:20:09,770.1469996 So they were closed down for a week or so. 209 00:20:09,770.1469996 --> 00:20:14,30.1469996 And, so they went through a difficult time, but fortunately, they're back up and running. 210 00:20:14,380.1469996 --> 00:20:21,250.1459996 But I've been working with the fiscal director and development director, as I said for over 20 years. 211 00:20:21,540.1459996 --> 00:20:23,340.1459996 It's a mother, daughter. 212 00:20:23,585.1459996 --> 00:20:54,825.2454996 Team, the mother was work, and then the daughter took over for the mother, and they provide services for families women who might be undergoing spousal abuse, or, you know, they need a shelter, and so they, they provide services to hundreds of families in, in the Western North Carolina area and You know, many times we hear from them how easy their audits are, you know, with our system, how their, their fundraising database integrates automatically to accounting. 213 00:20:54,825.2454996 --> 00:20:57,305.2459996 So it's really easy to do in their reconciliations. 214 00:20:57,815.2459996 --> 00:21:16,990.2459996 But the most important thing is you know, why I picked them off the top of my head is, you know, the, the length of time we've been working with them, And getting to know them personally, the executive director, the development director, the fiscal director, and knowing the hard work that they that they do to serve their community. 215 00:21:17,10.2449996 --> 00:21:31,660.2449996 And it's really gratifying for us, knowing that the software we're providing to SafeLight is helping them, you know, fulfill their mission and be more sustainable and and helping them just continue to operate. 216 00:21:33,525.2449996 --> 00:21:41,925.2444996 Do they have an excellent way? Like, I love organizations that have a nice way of being transparent to their donors, like how their donations are used. 217 00:21:41,925.2444996 --> 00:21:52,685.2439996 Do they do that? Yeah, they you know, through their fundraising system from a raise, they're able to automatically acknowledge their donors, you know, for gifts that they received. 218 00:21:52,890.2439996 --> 00:21:58,380.2439996 When they have fundraising events, you know, they, they track, you know, the revenue coming in from, from the events. 219 00:21:58,450.2439996 --> 00:22:14,20.2439996 And at the end of the year, they send out year end donor statements, you know, with a summary of what the organization accomplished during the year and how gratifying, you know, they are thankful to their donors, you know, for helping them you know, with their donations during the year. 220 00:22:14,785.2439996 --> 00:22:15,785.2439996 Yeah, that's great. 221 00:22:15,785.2439996 --> 00:22:32,535.2429996 I think it's so important for us to remember to like, close that feedback loop and really give our donors that information about the change that they're making in the world because the donors are, I mean, I feel like the nonprofits are the conduit, but the donors are the ones who really make that happen. 222 00:22:32,655.2429996 --> 00:22:33,305.2439996 Yeah, they do. 223 00:22:33,365.2439996 --> 00:22:37,685.2439996 And there's a lot of competition for donations, you know, as all nonprofits know, so. 224 00:22:38,365.2439996 --> 00:22:54,355.2439996 You need to do something to help you stand out, you know, whether it's a, you know, a thank you note, you can even get a letter of appreciation, even if you know you didn't donate, you know, we, you know, we appreciate your past donations and this is what we've been able to accomplish, you know, through your help. 225 00:22:54,625.2439996 --> 00:23:00,965.2439996 So any kind of acknowledgement, you know, you know, for the to the donors is really helpful. 226 00:23:02,365.2439996 --> 00:23:04,985.2439996 Yeah, because they really do help make it all possible. 227 00:23:05,395.2439996 --> 00:23:22,930.2429996 So, what, what advice would you, like, if, what is, The number one piece of advice that you give leaders or you give non profit leaders when it comes to their fiscal management? Well, number one, they need to make sure that they have the proper tools. 228 00:23:23,40.2429996 --> 00:23:55,180.2429996 If whether it's an inside accountant, bookkeeper, accountant, fiscal director, or if they're outsourcing their accounting, they want to make sure that The accountants doing the job are provided and use proper tools for nonprofit reporting because of the major differences, how nonprofits have to present their financial statements and off the shelf accounting package typically doesn't provide them with proper segregation of their functional expenses of their unrestricted and restricted funds. 229 00:23:55,510.2429996 --> 00:24:00,210.2429996 You know, proper statement of financial positions or balance sheet and proper statement of activities. 230 00:24:00,210.2429996 --> 00:24:17,400.2429996 So if you're not using a nonprofit accounting application, then typically you have to export all your data into Excel to try to formulate your financial statements, which in and of itself could create a internal control deficiencies if your statements don't agree with what's in your accounting. 231 00:24:17,790.2429996 --> 00:24:21,820.2419996 So getting the having the proper tools in place is really important. 232 00:24:22,140.2429996 --> 00:24:27,270.2429996 And having an integrated system where the fundraising and payroll systems. 233 00:24:27,590.2429996 --> 00:24:29,320.2429996 And the accounting all talk to each other. 234 00:24:29,580.2429996 --> 00:24:43,630.2429996 So that way, you know, you don't generate a report from your fundraising system that says we raised 20, 000 in donations this year, this this month, and the accounting system says, Well, we only booked 15, 000. 235 00:24:43,640.2419996 --> 00:25:00,780.2429996 Where's that 5000 discrepancy? And so they go crazy trying to figure out why does fundraising say 20? And why does accounting say 15? And so having a single system that tracks both You know, without exporting and importing and trying to reconcile makes their jobs a lot easier. 236 00:25:01,200.2429996 --> 00:25:09,300.2429996 And it, it, it just eliminates the, the need to try to figure out why there are differences in our systems. 237 00:25:09,340.2429996 --> 00:25:10,410.2419996 Same thing with payroll. 238 00:25:11,440.2429996 --> 00:25:14,630.2419996 You know, you want to make sure that in payroll. 239 00:25:16,455.2429996 --> 00:25:24,645.2429996 The difference in nonprofit payroll and accounting and for profit payroll is typically nonprofits have to allocate individual salaries. 240 00:25:25,125.2429996 --> 00:25:36,345.2419996 So if you have multiple programs or multiple grants and funding sources, you might have an employee that during their payroll cycle, let's say a semi monthly payroll cycle that they work. 241 00:25:36,970.2429996 --> 00:25:39,40.2429996 Part time and the homeless shelter. 242 00:25:39,70.2429996 --> 00:25:41,180.2429996 The other part time they work in food pantry. 243 00:25:41,180.2429996 --> 00:25:42,610.2429996 Sometimes they're there. 244 00:25:42,650.2429996 --> 00:25:49,420.2429996 And the counseling center and those three programs might be funded by three different grants. 245 00:25:49,750.2429996 --> 00:26:01,160.2429996 So, a single salary or paycheck is not just posted to salaries it's posted to salaries to three different line item expenses for those three different programs and or. 246 00:26:01,210.3429996 --> 00:26:02,130.3429996 Funding sources. 247 00:26:02,580.3429996 --> 00:26:13,180.3429996 So, you know, having a system that allows the nonprofit to do that just makes it a lot easier when it comes to budgeting, when it comes to financial reporting grant management and, and grant reporting. 248 00:26:14,190.3419996 --> 00:26:14,760.3419996 Yeah. 249 00:26:14,760.3429996 --> 00:26:16,920.3429996 So I you're singing my language right now. 250 00:26:17,100.3419996 --> 00:26:29,740.3429996 So I, I have been director of human resources for a very large organization and I have done grant management for years and that having, not having systems that communicate with one another does create. 251 00:26:30,245.3429996 --> 00:26:31,585.3429996 It creates extra steps. 252 00:26:31,645.3429996 --> 00:26:35,105.3429996 And so I love that you recommend that they all be integrated. 253 00:26:35,555.3429996 --> 00:27:08,247.8623996 And if, if they're not integrated organizations have to schedule in and plan that time to help create that consistency across all the books, because especially with grant management, which has been a huge focus for my career you know, it's so simple for a item that should be reimbursed from the grant to be to not be linked with the grant, right? Because we may be purchased it in our on our credit card, but it didn't go back with the correct grant. 254 00:27:08,247.8623996 --> 00:27:10,967.8628996 So I know that there are a lot of headaches in that area. 255 00:27:11,187.8628996 --> 00:27:13,647.8618996 So I love that you recommend that. 256 00:27:13,747.8618996 --> 00:27:13,937.8618996 Yeah. 257 00:27:13,937.8628996 --> 00:27:19,347.8628996 And typically, if they are receiving grants, they are subject to an audit. 258 00:27:19,347.8628996 --> 00:27:19,387.8628996 Right. 259 00:27:19,927.8628996 --> 00:27:33,277.8628996 And so having a clean audit trail from their accounting system to their financial statements to their grant reports if everything ties together, it just makes the grant reporting and the audit much easier. 260 00:27:33,677.8628996 --> 00:27:45,687.8628996 You know, the, the, unfortunately during my time as an auditor, the biggest challenge that we had was financial statements that did not tie into the accounting system. 261 00:27:45,737.8628996 --> 00:27:49,937.8628996 You know, there was discrepancies and then you have to go crazy trying to figure out those discrepancies. 262 00:27:51,517.8628996 --> 00:27:51,817.8628996 Yeah. 263 00:27:51,817.8628996 --> 00:27:53,747.8618996 And it can be hours and hours. 264 00:27:54,7.8628996 --> 00:27:55,597.8628996 Sometimes wasted time. 265 00:27:55,677.8628996 --> 00:27:56,237.8628996 Yes. 266 00:27:57,127.8628996 --> 00:27:57,737.8628996 Yes. 267 00:27:57,877.8628996 --> 00:28:00,247.8628996 I've lived that life multiple times. 268 00:28:00,307.8628996 --> 00:28:01,617.8628996 So, yeah. 269 00:28:01,617.8638996 --> 00:28:03,237.8628996 So thank you so much. 270 00:28:03,647.8638996 --> 00:28:08,737.8638996 So can you tell our listeners how they can get in touch with you and learn more about a race? Sure. 271 00:28:08,947.8638996 --> 00:28:09,407.8638996 Sure. 272 00:28:09,447.8628996 --> 00:28:15,707.8628996 Again, it's a raise a R a I Z E so they can go to a raise. 273 00:28:16,57.8628996 --> 00:28:16,537.8628996 com. 274 00:28:16,887.8628996 --> 00:28:19,87.8628996 That lists all of our. 275 00:28:19,372.8628996 --> 00:28:22,832.8628996 Fast fund modules, the accounting, the fundraising and payroll. 276 00:28:23,402.8628996 --> 00:28:29,802.8628996 They could sign up for a a meeting or a demo or download a trial version. 277 00:28:30,112.8618996 --> 00:28:33,212.8608996 They can send an email directly to me if they're interested. 278 00:28:33,242.8618996 --> 00:28:36,42.8618996 That's Joe at a raise. 279 00:28:36,282.8608996 --> 00:28:39,402.8608996 com a R a I Z E. 280 00:28:39,682.8608996 --> 00:28:40,102.8608996 com. 281 00:28:41,502.8608996 --> 00:28:42,42.8608996 Awesome. 282 00:28:42,512.8608996 --> 00:28:49,77.8618996 And do you have any resources available that like, just let Non profits know like what they need to have. 283 00:28:49,357.8618996 --> 00:28:50,37.8618996 Oh, yes. 284 00:28:50,77.8618996 --> 00:29:04,802.8618997 Besides arrays specializing in nonprofit software, we also have a small branch within our company or a different, you know, Department that provides education resources. 285 00:29:05,162.8618997 --> 00:29:07,702.8618997 We have a nonprofit financial management course. 286 00:29:08,322.8618997 --> 00:29:20,842.8598997 We have a YouTube channel that has a series of videos that explains the differences of nonprofit between nonprofit and for profit accounting, you know, how to track. 287 00:29:21,82.8608997 --> 00:29:25,382.8608997 Restricted and unrestricted donations, how to track allocation of expenses. 288 00:29:25,802.8608997 --> 00:29:39,212.8608997 So if you go to YouTube and just search a raise, it'll pop up with our YouTube channel with the educational resources that we provide to, to help people understand, you know, proper nonprofit accounting. 289 00:29:40,167.8608997 --> 00:29:40,757.8608997 Yes. 290 00:29:40,777.8608997 --> 00:29:41,277.8608997 Thank you. 291 00:29:41,397.8608997 --> 00:29:48,807.8608997 Thank you so much for that because it is such a needed educational area, like it for all nonprofits. 292 00:29:48,817.8608997 --> 00:29:50,157.8608997 So I appreciate that. 293 00:29:50,667.8608997 --> 00:29:52,397.8608997 So thank you for joining us. 294 00:29:52,457.8608997 --> 00:30:00,377.8608997 Is there any last piece of advice or last tips or tricks or whatever you'd like to give our listeners before we sign off? Well, Sarah thank you for having me. 295 00:30:00,377.8608997 --> 00:30:03,77.8608997 I really appreciate the time you afforded me. 296 00:30:03,87.8608997 --> 00:30:09,677.8608997 And, you know, hopefully your, your listeners will heed our advice when it comes to proper fiscal management. 297 00:30:10,127.8608997 --> 00:30:18,647.8598997 And I mean, my last piece of advice is continue doing the work that you're doing to serve your communities, regardless of what your mission is. 298 00:30:19,72.8608997 --> 00:30:29,672.8618997 And, you know, we, we, we really value what you add to all of our communities, and we're happy to be able to help some of you out there with proper fiscal management. 299 00:30:30,722.8618997 --> 00:30:31,692.8618997 Ah, thank you. 300 00:30:31,732.8618997 --> 00:30:32,582.8618997 I echo that. 301 00:30:32,592.8608997 --> 00:30:33,842.8608997 That's, that's perfect. 302 00:30:33,842.8608997 --> 00:30:34,112.8608997 Yes. 303 00:30:34,142.8618997 --> 00:30:35,332.8618997 Keep doing what you're doing. 304 00:30:35,342.8608997 --> 00:30:40,112.8618997 So, to all of our listeners, thank you for joining us this week, and Joe, thank you so much. 305 00:30:40,142.8618997 --> 00:30:44,452.8618997 We look forward to being able to have more conversations again in the future. 306 00:30:44,902.8618997 --> 00:30:45,102.8618997 Great. 307 00:30:45,102.9618997 --> 00:30:46,762.5748997 Sarah. 308 00:30:49,0.8618996 --> 00:30:56,360.8618996 Thank you so much for tuning in to this episode of Nonprofit411 I hope you found today's conversation as insightful and inspiring as I did. 309 00:30:56,950.8618996 --> 00:31:00,310.8608996 Remember, building a healthy nonprofit requires a holistic approach. 310 00:31:00,630.8618996 --> 00:31:07,450.7618996 There are many resources available to support your staff and we're dedicated to helping your organization access what it needs to thrive. 311 00:31:08,230.8618996 --> 00:31:12,470.8618996 One key to creating a thriving organization is a diverse fundraising strategy. 312 00:31:13,0.8618996 --> 00:31:16,870.8618996 While grants are an important part of that strategy, they're just one piece of the overall puzzle. 313 00:31:17,690.8608996 --> 00:31:23,110.8608996 If you're looking to strengthen your grant writing skills as part of this bigger picture, I've got a resource to help you get started. 314 00:31:23,660.8618996 --> 00:31:31,960.8618996 Download my free grant writing guide, packed with practical tips and best practices to help you craft proposals that align with your overall fundraising goals. 315 00:31:32,450.8618996 --> 00:31:33,940.8618996 You'll find the link in the show notes. 316 00:31:34,210.8618996 --> 00:31:40,380.8618996 And as always, if you enjoyed today's episode, Please subscribe, leave a review, and share it with your fellow changemakers. 317 00:31:40,980.8618996 --> 00:31:43,580.8618996 Let's work together to build a vibrant nonprofit community. 318 00:31:43,900.8618996 --> 00:31:46,906.1680221 Until next time, keep pushing forward and making a difference.
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