January 30, 2025 • 44 mins
Understanding the realities of nonprofits is crucial for current and future leaders in the sector. In this episode, Spring Richardson Perry and Shawntinique Shepherd discuss key distinctions between non-profit and for-profit organizations. They tackle misconceptions about ownership and emphasize the importance of compliance and financial transparency.
Key Takeaways:
• Differences between nonprofits and for-profits in governance and purpose
• Misbelief about ownership and the true nature of nonprofit profits
• Importance of internal controls and financial compliance
• New regulations introduced under Uniform Grants Guidance
• Insights on indirect costs related to federal grants
• Need for collaboration with existing nonprofits in the community
• Challenges in obtaining funding and maintaining nonprofit viability
• Overview of audit requirements and financial transparency for nonprofits
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Spring Richardson Perry (00:03):
Hey, nonprofit friends, welcome to
the Spring Forward podcast,where we talk about all things
nonprofit, from board discord togrant writing and strategic
planning tips.
If you're an executive director, nonprofit board member or just
someone heavily involved in thenonprofit sector, then this is
the podcast for you.
Let's spring forward intoexcellence, and this is the
(00:28):
podcast for you.
Let's spring forward intoexcellence.
Welcome, welcome everybody, toanother wonderful episode of the
Spring Forward podcast.
I am your host, springRichardson Perry, and today we
have a wonderful show for youand I'm so excited to bring it
to y'all.
We are going to be talkingabout nonprofits, what they are
and what they aren't, and whatthese new regulations are
(00:51):
looking like for nonprofits fromthe Uniform Grants Guidance,
the revisions that came out inOctober of 2024.
And so I have with me heretoday Ms Ms Shantanique Shepard,
who is yet another consultantin the nonprofit world, and she
can impart her expertise on thisas well.
(01:14):
And when I tell y'all we got agreat show lined up for you
today because we got somestories for y'all.
So get your popcorn, get yourdrink and let's get started.
Shawntinique Shepherd (01:26):
What's up , Shantamika how?
Spring Richardson Perry (01:27):
are you ?
Shawntinique Shepherd (01:29):
I am fine , how are you?
Spring Richardson Perry (01:31):
I'm doing good.
Tell the people what you do.
First of all, let's start there.
What is your claim to fame?
Shawntinique Shepherd (01:39):
Okay, so what I do is I am the founder of
CFO and Associates.
It is a virtual accounting firm.
We do bookkeeping, we do youknow tax, and our main client is
nonprofits.
Spring Richardson Perry (01:57):
I love it and this is why I have her on
here today for y'all Because weare in the midst of tax season,
so y'all can get some reallygreat tips.
But also we want to keep y'allout of jail, because some of the
things that I've been hearingwith nonprofits and what they're
(02:18):
doing it raises some seriousred flags, and so I want to
really jump right into this andand get started.
We're going to start with thebasic shantanu talk to us about
what is a non-profit and how itdiffers from a for-profit
business okay.
Shawntinique Shepherd (02:36):
So a non-profit is like an
organization and it exists toserve a purpose rather than
generate profits.
Nonprofits don't really haveowners.
They have shareholders.
For-profit have owners for themost part.
Spring Richardson Perry (02:55):
Run that back.
Sean Tanique, Would you say itagain Nonprofits don't have
owners and for-profits haveowners.
Shawntinique Shepherd (03:05):
Boom, y'all heard that have owners
boom.
Spring Richardson Perry (03:06):
Y'all heard that.
I want y'all to listen to that.
Let that marinate in your brainfor a minute, because a lot of
people talk about this is mynon-profit.
While you may be the founder ofthe non-profit, you may be one
of the founding members of it,right?
You don't own it.
Nobody owns a nonprofit.
(03:29):
So so keep going.
I'm sorry I interrupted you, sokeep talking about some of the
differences so, um, some of thedifferences.
Shawntinique Shepherd (03:42):
Like we said, like the owners, the
founders for nonprofits, ownersfor for profits, with nonprofits
, they are governed by a boardof directors.
Now, some for profits, they dohave a board of directors if
they are a corporation, but whenthey're not, they just have
(04:06):
members.
You know, owners as you want tocall it, but non-profits have
board of directors and they arelegally required to use their
revenue to further their mission.
Versus, you know, with afor-profit I can take this money
home, it's mine or whatever youknow, but with non-profits you
(04:28):
can't do that.
It's stricter rules when itcomes to non-profits and their
finances.
They need more internalcontrols.
So you can't just be like, okay, I want to use this money for
myself, you know.
Or I want to take the money outthe the business bank account
and, you know, pay my house rentwith.
(04:50):
You can't do that.
Spring Richardson Perry (04:51):
I mean, you can't do that, right,
you're supposed to, you'resupposed to separate your
business expenses from yourpersonal expenses in a
for-profit business, but a lotof times people don't and and
there are ways for you toaccount for it separately
without having a separateaccount, and so there are ways
to do that.
But in a nonprofit, you cannotgo, take money out.
(05:12):
Talking about going and make itrain in Magic City, right, you
know what I mean and think thatthat's okay.
We're not doing that, you'renot allowed to do that, and so I
really wanted to shed light onthis, because there are a lot of
nonprofits that are starting up, but people are claiming
(05:32):
ownership over them and, likeshe said, no one owns a
nonprofit.
It is for the community, it isfor the people.
As a matter of fact, in yourbylaws, you have to state what
happens to the money should theorganization dissolve, and the
money has to go to it can't goto a specific person.
(05:55):
You have to designate anorganization, so you can
specifically say, hey, if thisorganization dissolves, we want
our money to go to United Way.
Or you can say, if thisorganization dissolves, we want
our money to go to United Way.
Or you can say, if thisorganization dissolves, we want
all the money to go to a similarorganization.
And so you have to have, likeshe said, some sort of internal
control over this.
You can't just be out here justwilly-nilly doing things and
(06:19):
there are government regulationsaround this, and so that's one
of the common you know, that'sone of the common misconceptions
that I think people have isthat you know, you feel like you
have ownership over thisorganization and while you may
have been the founder, one ofthe first people to start it up,
you don't own it, because noone owns a nonprofit excuse
(06:43):
nonprofit.
Everything in the nonprofit,when you make a profit, has to
be reinvested back into theorganization.
But go ahead.
I'm sorry, I was interrupting.
Shawntinique Shepherd (06:56):
No, you're fine.
But no, that is definitely true.
They don't realize that,depending on how your bylaws are
set up, if you're the so-calledowner um, you can get voted out
absolutely, so absolutely youvoted out and that's.
Spring Richardson Perry (07:19):
I think that's another thing people
don't realize too.
With non-profits you have, youare mandated to have a board,
and your board has to be, Ithink, at least three people, if
I'm not mistaken yep, threeunrelated people.
Shawntinique Shepherd (07:32):
So it can be you, your husband and your
daughter or something.
Can't be those three.
No, exactly you on the board,if it's more than you know, of
course.
But it can't be majority familyand you know everybody else,
because they're going to be likeokay, y'all just doing this so
y'all can make some money.
Spring Richardson Perry (07:54):
Yeah, and that's true of all.
I will say if you're thinkingabout starting a nonprofit,
think long and hard, because ittakes a lot to start and
maintain one, because you arelimited and restricted in the
ways that you can make moneybecause you're not paying taxes.
(08:15):
So the government's like, look,if we're not getting a piece of
this pie, it's only certainthings that you can do, period.
You can do period.
So you gotta be, you gotta, yougotta be, really, really, um.
Do your due diligence in termsof, yeah, uh, what's already,
what already exists, what's outthere, what is the true need in
the community, before youactually go and start one.
(08:37):
Because once you start one, um,and you get it off the ground,
you're gonna constantly beumumbling for money.
You're always going to belooking for ways to bring in
revenue to support that mission,and it's not as easy as running
a for-profit business.
So I just wanted to put thatout there.
(09:00):
So I want to talk about theprofit part of it, though, um,
and so can non-profits actuallymake a profit?
Shawntinique Shepherd (09:11):
so technically they can, but it
can't be a lot um, because someyears you might have like an
overflow, but as long as you endup reinvesting it.
So it's technically not reallya profit, but as long as you are
reinvesting it is, it's fine um, and it gotta go towards your
(09:32):
mission um.
Another thing people uh thinkthat nonprofits can't do is make
money so you can have likegenerating revenue.
You can do that um, as long asit's it aligns with your mission
.
It has to align with yourmission.
You can't be like OK, I want toopen this bar and the bar has
(09:55):
nothing to do with yournonprofit one of the biggest
examples I always like to giveis the NCAA and the NFL.
Spring Richardson Perry (10:12):
Both are nonprofit organizations,
billion dollar nonprofitorganizations, right and so just
because it says nonprofit, itdoes not mean that you're not
profitable.
It just means that the moneythat you're making is constantly
being reinvested into theorganization, just like shawton
said.
So for the ncaa they are thenational um college association
(10:36):
of athletes.
I think it is right so theirmission is to support student
athletes Simple right.
So, the simpler your mission is,the easier it is for you to
justify reinvesting.
So all the money that they'remaking, if they're putting it
(10:56):
back into the schools to givethe student athletes a stipend,
that's support for them.
If they're putting it back intothe schools to upgrade the
workout facilities or thetraining facilities, that's
supporting the student-athletes.
There's so many different waysthat they can reinvest that
money, even if they're payingbonuses to their coaches, right,
(11:22):
they're supporting the studentstudent athletes, because if you
don't have a coach, you don'thave a team, you don't have
athletes.
So that's reinvesting the moneyinto the organization, but
people have a misunderstandingof what that looks like and how
to do that.
And just because, again, you'rea billion dollar organization,
(11:44):
it doesn't mean that you'remaking a profit right, and you
could still be making a profit,but you're also reinvesting that
into your organization tocontinue to further your mission
, to build out your programs andto support the community of
people that you said you weregoing to support.
So I think that's another thingthat I really want to jump into
(12:07):
really quickly.
It's to talk about what aprofit is and what it is not,
because you and I, kind ofoffline, had this conversation
about a salary, right, yeah.
So talk to us about that,chantaleee, because what is a
profit, what is it not?
(12:29):
And salaries versus profits andoperational costs and all those
things.
Talk to us about that.
Shawntinique Shepherd (12:38):
Okay, so we know a profit relates to
business.
Spring Richardson Perry (12:45):
It's not related to a person or
anything.
Shawntinique Shepherd (12:48):
It relates strictly to business.
Spring Richardson Perry (12:50):
The bottom line of the business,
exactly.
Shawntinique Shepherd (12:55):
A profit is after expenses.
Spring Richardson Perry (13:02):
After expenses, after the payroll has
been run, after you pay thelight bill and the rent for
where your organization is at.
Shawntinique Shepherd (13:13):
It's, after all, that that is the
profit, that is the profit.
Spring Richardson Perry (13:19):
So if you have money left over after
you paid all your bills, thenyou can say okay, I have $50,000
extra and I want to take this$50,000 and I want to go and
beef up this program.
I want to go buy some new booksfor this program.
Or I want to go and put on aworkshop for my community.
(13:42):
I need to go find a facilitatorfor this workshop, so we need
to pay for the space to mycommunity.
I need to go find a facilitatorfor this workshop, so we need
to pay for the space to have it.
We need to pay for thefacilitator.
We're gonna have some food,some vendors out there.
We need to pay all of thismoney and at the end of the day
you end up spending, say,$40,000.
So when you at the end of theyear on your tax return, you
have extra $10,000 left over.
Shawntinique Shepherd (14:07):
Nope, you're not going to get in
trouble.
Spring Richardson Perry (14:09):
You just have to pay taxes on it.
That's it.
And I'm telling y'all thisbecause, again, there's so many
people that's out here that'swanting to start nonprofit
organizations and y'all arereally misunderstanding what a
nonprofit is.
(14:30):
Right, I know that you want tohelp the community.
I know that you want to be sortof this beacon of hope for
whatever population of peoplethat you want to serve, and
that's all well and good, butsometimes there's already an
organization out there doing itand they need your support.
I'm telling you where I live.
(14:52):
There's so many nonprofitsdoing good work here.
The problem that we run into isthat we don't have enough
volunteers who are available tohelp carry out the mission.
So that's another way that youcan be involved.
Don't go start your own thing.
Go get involved and help withsomething that already exists so
(15:14):
that you can help them reallyfurther their mission, because
you may find that what you'retrying to start up is some is a
program that they wanted to add,and you may be the person to
implement the whole program.
They just didn't have thecapacity to do it.
So I'm urging y'all to reallytake a step back before you
(15:38):
decide to just start a nonprofit, really look in your community
and see what is already thereand then see what it is that you
can do to add to what's alreadybeing done, instead of trying
to go out and do somethingdifferent, because that puts a
strain on resources.
That puts that puts you in notnecessarily in competition, but
(16:02):
sort of in competition withother people who may be going
for the same type of fundingthat you're going for.
Yeah, so, like y'all gotta Ihope y'all listening today I
feel like I feel like I'm in apulpit today, girl, like I'm
just giving a word, a testimony,because I'm like I just see so
(16:23):
many people wanting to.
I want to start a nonprofitbecause I really want to do this
, I really want to do that andthe first thing I say is well,
what's already been done?
Like who's already doing thisexactly?
And they have about three, two,three organizations that they
can name in their communitythat's already doing this.
So why you want to do, what'sthe point are you starting it?
Shawntinique Shepherd (16:44):
why you can't go help them and that's
what I tell people to um, lookand see who's already doing
something, because they thinklife is easier because they're
starting a nonprofit.
They think it's like a I canget rich type of thing and you
can't.
It takes time for a nonprofitto even generate money.
(17:06):
Like that.
It's hard to get grants.
I think you just get a grantbecause you got a nonprofit.
That's not how it's verycompetitive and a lot of people
don't even have it set upproperly to even apply for
grants.
Talk to us about that.
You gotta have your program setup.
So what?
What are you doing?
What?
How many people can be a partof this program?
(17:28):
How much money is going to taketo get this program off the
ground?
You know who you got to pay,what supplies you need and how
long is this program.
They, they need to knoweverything.
They don't even know thatthere's so many people that
wanted to start or even havenon-profits.
You know they want to go getthere for a 501c3 and which is?
Spring Richardson Perry (17:50):
275 dollars, by the way, just to
start.
If you're doing the easy formright, go all the way up to over
600.
Yes, if you're, if you'recomplicated in a sense, exactly
so, it ain't free.
Just so y'all know.
Shawntinique Shepherd (18:05):
And they think that's free too.
I'm like no, because you stillgot to incorporate, depending on
your state, that that price isdifferent.
You still, you still got to doa lot of things.
It's not.
It's not as easy as peoplethink.
It costs money.
Um, you probably gonna beputting majority of your money
into it just like a for profit.
Uh, just to get it off theground it.
(18:27):
It takes longer.
You really got to put infootwork.
There's so many groups onfacebook where people are in the
groups like how do I get along?
I need to apply for a grant oryou know something, and they
they keep getting denied becausefinancials not right.
A lot of grants like okay, whathave you been doing and how has
(18:48):
it been working before we giveyou this money?
Yeah, a lot of people.
Well, we've been following 990in for the past five, six years.
You know 990 in is below fiftythousand dollars most of them
haven't even reached fiftythousand dollars a year.
So you gotta go outside andwork like a for-profit.
(19:12):
They just think the money justcome because it's a non-profit.
No, you have to go out andpitch to these businesses
locally and get your non-profitname out there well and it's
even more than that, because ina for-profit business you can
potentially see a return on yourinvestment.
Spring Richardson Perry (19:31):
You can see actual money that will
return if you invest into thefor-profit business With the
nonprofit business.
I'm really just giving moneyaway.
I'm not going to see a returnon my investment, not a tangible
return in terms of money itself.
The return on your investmentis the service's, the program
budget.
Like what y'all, what y'allneed to run the program.
(20:16):
Like how much it takes to runit.
Oh, it takes 50 000 to run it.
Okay, what is my 5 000 gonna do?
Can you tell me that?
What's the metrics of thisprogram?
How are you measuring success?
What would a success look likefrom this program?
You know, once they, once theydo this, what's next?
Ok, after that, are theyfinished or they got to do
(20:36):
something else?
Like, what are you doing?
And is this is part of my fivethousand dollars going to
somebody's salary, because Idon't mind that, right?
Also, what I want to know isokay, well, what qualifies this
person to get my $5,000 in thisposition?
What qualifications do theyhave to carry out your mission?
(20:58):
I got a lot of questions, but Ihave to give the money to you
and so you can't be mad whensomebody is asking you all these
questions, when you asking themfor money.
If they're going to write acheck for $20,000, $30,000,
which is a lot of people'sexpectations.
They just think, oh, because Ihave this great idea.
Shawntinique Shepherd (21:19):
And they think everybody else is going to
think it's great and yes, Ithink it's wonderful, that's
great.
Spring Richardson Perry (21:25):
Okay, so how are you funding it?
Because I'm not going to helpyou, because I don't see nothing
that you're doing right nowthat deserves my money, right?
So how are you going toconvince people that what you're
doing is worth investing in?
Because, essentially, again,while it might be a tax write
off which will help me, before Ijust hand you this money, I
(21:48):
could find a lot of differentthings.
I could find five thousandthings different things.
I could find 5,000 things to dowith $5,000.
You know so, this is my gripey'all, and, as you can see, I'm
just, I'm really passionateabout this because I am.
Somebody said in a meeting I wasin last week.
They said this is MissCommunity, right here, y'all.
(22:10):
She is Miss Community, she,y'all.
She is Ms Community, she is inthe community, she is doing the
work, and so I'm all about beingand working for the community.
However, I understand it takesmoney to put these programs on,
but I'm also going to show youhow, where your money is going
to provide the most impact andhow this is going to be
(22:32):
beneficial to everybody if youinvest in this.
And that's one thing thatpeople can't show, and they also
can't show a well-structuredorganization.
Yeah, really, give you somemoney to carry out these, these
(22:53):
programs.
What does a well-structuredorganization look like?
Shawntinique Shepherd (22:58):
so that is a good question.
Um, it's real, it's, it's a lotum, even on the financial end.
Um because non-profits, they gothrough extensive uh audits,
right um we've been veryexpensive too.
(23:20):
They are very expensive.
Um, some of my clients likeaudits because we don't do um
external audits.
But it's good that we don'tbecause we actually handle the
books and stuff.
You know, with external auditsthey can't have nothing to do
with your organization.
Spring Richardson Perry (23:40):
Right, right.
So if you're doing an externalaudit and you're handling the
books, that's going to lookfishy because it's like, oh,
they're using the book.
Shawntinique Shepherd (23:48):
Exactly so.
When my clients get theiraudits done, um, depending on
who they go to, um I didn't seenrecently one of them had to pay
like 46 000.
Spring Richardson Perry (23:59):
I was like, oh I'm having a lot of
time over here, y'all I havenever seen an audit be that
expensive.
What was their budget, though?
What were they?
What was the budget that theywere auditing?
Shawntinique Shepherd (24:14):
They were .
I think this one was a $5million organization.
They were $5 million.
Another one, I'm trying tothink how much was theirs.
Theirs was around like $30 someand theirs was like a $7
million.
So it depends on, you know, theCPA.
Oh lord it.
It's a lot that goes into itbecause, like I said, the turtle
(24:38):
controls is the questions.
They ask like okay, um, youbought this, but what was it for
?
What grant are you applying itto?
Or what funder, you know, areyou applying this money to?
You just taking money out theaccount?
But we need to know thesedetails.
Um, so what we do to make it alittle easier is, when we set up
(25:01):
there and turn on controls, um,we do it where they have to
request money.
You know, you got a requestpayment like, okay, I want to
pay comcast.
For example, we're going to usecomcast, I want to pay comcast,
got this comcast bill coming orwhatever it's for the internet.
(25:22):
We know it's the internet thing.
Um, then we asked like okay,who is funding this?
You know, is it one of thedonors that just gave $5,000?
Is it one of the grants?
Or you know what's going on?
Who is this coming from?
So, on a form they have to putin hey, this is a payment
(25:46):
request to Comcast.
It's for the internet, thefunder or the grant.
If it's two different peopleSome grants have.
Well, some funders have multiplegrants.
They got to put what the grantis for and all that good stuff
and how much it is.
(26:07):
They have to submit it forapproval.
They got to have at least twopeople to approve this just so
we can be safe.
We're not.
Nobody can just be like, okay,I'm gonna just buy this.
No, two people have to approvethese payments.
So that way we havedocumentation.
Because when you get an audit,they want documentation.
(26:28):
They want to see why you'redoing this and what.
What is this for?
They ask all the time like,okay, what was this for?
and if you can't answer, it'slike okay, you're about to fail
this audit and now you're gonnapay them for more money, like oh
my gosh, like you got to getthis corrected, because if you
don't, now you're wasting moremoney, because you're taking
(26:50):
more time and taking up theirtime.
They trying to get this, makesure everything match.
So it's a lot when it comes tothat, like you really have to be
on it.
Spring Richardson Perry (27:01):
You cannot just, oh, this is my
money, I'm about to take it it'snot how it works and I'm yeah,
let me tell y'all everythingShantanita is telling y'all is a
thousand percent true.
I sit on two nonprofit boards.
One of them, I am the treasurerof the board.
I am very much in control ofthe finances and when we set
(27:24):
everything up, we have internalcontrols where there are two
signatures that are required foranything that is over, I think,
$500 or something like that forrequest, and so anytime we need
to make major financialdecisions, it has to go through
the whole, it has to go throughthe board meeting, everybody has
(27:45):
to vote on it, and then boththe treasurer and the president
right now are typically presentwith something like that needs
to go down.
So there's, there's a lot ofthings, guys, especially
especially when you're thinkingabout getting in line for a
grant, because grants nowadays,a lot of them are asking for
(28:10):
audited financial yes, yes, andso you may not necessarily your
nonprofit may not be required tohave an audit.
Some states require theirnonprofits to be audited at a
certain amount.
The federal level has a certainamount where you have to be
(28:30):
audited at at a certain amount.
The federal level has a certainamount where you have to be
audited at.
So it would behoove you to,even though you don't have to go
through an audit, to set upyour financials in a way that if
you are audited you'll pass itwith flying colors, because if
there's any question about whatyou're using the money for in a
nonprofit organization, theregoes your credibility.
(28:52):
I mean, I look at the BlackLives Matter organization that
went through all of that stuffwith their funds and you know it
was the findings where theywere using the money to pay the
mortgage they had taken and allthat other stuff, and so
(29:14):
justifying spending those fundswas extremely difficult for them
.
Yeah, so you know the movementsort of lost credibility because
of that.
Yeah, and there are still other,so there are still chapters of
it now, but I don't know thatthe original one, I think, which
(29:36):
was out of California somewhere, I don't.
I don't know if they stillexist or not, but I know that
they went under a lot ofscrutiny because they were
mixing personal finances withthe nonprofit finances.
I think they had a lot offamily member board members, if
I'm not mistaken.
(29:56):
And so you know, like we saidearlier, you can have family
members on your board, but thatcannot be the majority.
So if you have five boardmembers and it's always good to
have an odd number of board-members have an odd number of
board members.
If you have five board members,only two of them can be family
(30:17):
members at the most, and that'spushing, you know.
So you really want to takethese things into consideration.
But I want to jump back tothese audits and these
regulations, because this bringsme to the new regulations with
the uniform grants guidance thatcame out back in October.
You know there were severalthings that were changed, but I
(30:40):
think one of the most, one ofthe most that stood out to me,
was the audit requirements.
The audit requirements, right,and so it changed from $750,000
to a million, right?
Is that correct?
Shawntinique Shepherd (30:57):
Yeah, I don't know why they pushed it up
.
You would think they would golower.
Spring Richardson Perry (31:06):
Well, it makes so.
To me it makes sense to push itup because they're so costly.
Right, they are, and you'realready struggling to to keep
the lights on and to keep yourbuilding together for your
program itself, right, right.
So if you're spending forty,six thousand dollars, I know, on
an audit, you know that's,that's a salary, that could be
(31:28):
somebody's salary, so I canunderstand them pushing it up.
But again, just because it'sthe threshold is not at a
million, that doesn't mean thatyou can't be audit ready at five
hundred thousand or at fiftythousand.
Like, yeah, you need to alwaysbe ready if somebody because
(31:51):
that's another part ofnonprofits is financial
transparency, yes, if somebodycomes to you and they say, open
your books, you got to open yourbooks Point blank, period is,
and if your books are not inorder, and again there's the
credibility of your program andyou may not get any more funders
(32:16):
the way that you need to.
So that that was, that was oneof them, and the other one that
really stood out to me was thede minimis rate.
Are you familiar with that?
No, that I'm not.
So that one is when you'regoing for federal grants and
they have an indirect, you canput a line in there for indirect
(32:39):
costs, right?
So some anybody who's notdirectly related to the grant
itself.
So you may have, like, theprogram director who is going to
direct the program, and thenthe program coordinators, the
executive director, of course,who's over it, but that human
resource person, right, they'rean indirect cost of the program
(33:00):
because without that person theorganization wouldn't exist to
carry out the mission orwhatever that is.
So there was a, I thinkoriginally it was set at 10
percent and so now it is up to15 percent.
So you don't have to if youdon't have like a set rate that
(33:26):
they've already given to you,because you can apply to the
federal government to get like aset indirect cost rate so that
whenever you apply it, just youautomatically get that amount.
Um, so now you don't evenreally need that, it's.
It's 15%.
Um, if you feel like you needmore than you might need to
apply to get a higher rate.
(33:48):
But I doubt that at this pointthey'll really approve anything
more, unless it's a reallyreally special circumstance, a
really unique situation.
But I think 15 percent isgenerous for for federal
government grants, becauseyou're already looking at
getting several hundredsthousands, millions of dollars,
(34:11):
like most of the federal grantsare at least half a million
dollars um for your program.
Shawntinique Shepherd (34:18):
So 15 percent of it is pretty good
yeah, I would say that is goodfor um indirect expenses because
you know you want to havemajority direct expenses to.
You know the programs, um, andI think a lot of people when
they come to their budgets theydon't know how to have majority
direct expenses to the programsand I think a lot of people when
they come to their budgets theydon't know how to allocate the
funds because what they do, soin the financial industry, for
(34:49):
the accounting and stuff,there's a certain percentage
when it comes to being in aprogram, a certain percentage of
grants and expenses, whatever.
It's a certain percentagethat's supposed to do everything
.
They go to management.
But a lot of people theirbook's not set up right, uh,
(35:13):
their books not set up right.
Like I didn't see over theyears.
I didn't see a lot of wildstuff I bet you have.
Spring Richardson Perry (35:25):
I've seen some crazy stuff too, in a
way that people deal with theirmoney, in a way that I work with
non-profits too when I'm tryingto get them back into
compliance, and I'm looking likey'all, how long y'all been
doing this and y'all been this,how y'all been operating.
I'm just looking like inamazement because I'm like how
have y'all stayed in businesslike this?
You know, because because, eventhough you're a nonprofit
(35:46):
organization, there's still abusiness side to things exactly,
and it's just been wild yes,yes.
So I'm always in awe as to howthey're operating and the things
that they're doing, because, umit, you know, when I, when I
come in, essentially it's a direneed at that point, and so I'm
(36:10):
always looking like this is whaty'all been doing, like how
y'all still in existence, likehow the IRS ain't come shut
y'all down yet, like I promiseyou.
Shawntinique Shepherd (36:22):
I ran into somebody that didn't have
their books done in over threeyears.
Spring Richardson Perry (36:27):
Yeah, Like how and that's another
thing, guys is that if you don'tfile as a nonprofit, if you
don't file your taxes for threeconsecutive years, they can
revoke your 501c3 status.
So if you go for a grant andyou give them the paperwork it
says, oh yeah, we're a 501c3,but your status has been revoked
(36:48):
, that can be a major problembecause when they come back and
they want to see, they want tosee you know, audits, paperwork,
tax returns, all these things,and you don't have that to show,
you're gonna have to hustle toget it done, and hustling to get
it done is expensive veryexpensive very and a lot of
(37:10):
times they don't want to pay themoney and it's like, okay, very
.
Shawntinique Shepherd (37:14):
And a lot of times they don't want to pay
the money and it's like, okay,you're gonna have to pay taxes
on this money because you ain'tgot no tax exempt status no more
exactly.
Spring Richardson Perry (37:20):
So you know it it really becomes a
really major issue.
Um, when non-profits don'tdon't do what they need to do to
stay in compliance.
And just because you know, justbecause you are tax exempt does
not mean you don't do what theyneed to do to stay in
compliance.
And just because you know, justbecause you are tax exempt,
does not mean you don't filetaxes.
That's another thing that Ihave to tell people.
Like, just because you're taxexempt, it doesn't mean that you
(37:45):
don't file taxes, that you'reexempt from filing taxes.
It just means that on the moneythat you generate for the
organization, you are notrequired to pay taxes on it,
unless you make some sort ofsignificant profit, like
Shantani and I were talkingabout earlier.
But otherwise you need toaccount for your money.
You need to show where all ofthis money went to, how much you
(38:07):
made in total, total.
And then, at the end of all ofthat, right, if I made a million
dollars, I paid 750,000 insalaries, I paid another, say,
200,000 to programs, and thenthere was $50,000 left over.
Well then, if that isconsidered a significant amount,
(38:28):
would that be consideredsignificant to pay taxes on?
Or would that just mean thatI'm going to take that, carry it
over and reinvest it?
You can carry it over you cancarry it over.
Shawntinique Shepherd (38:38):
You can carry it over as long as it's
getting reinvested.
If you're not putting back intoyour programs or your mission
or anything, you might as welljust be like oh, I got to pay
taxes on this.
Spring Richardson Perry (38:51):
Let me just go ahead and give y'all
this little money right quick,because I'm telling y'all it's
way worse on the back end thanif you just do it on the front
end.
So you want to make sure thatyou are are doing what you need
to do.
Um, I, if I can, if, if I canwrap this up and sum this up for
y'all.
You know, key takeaways fromthis is number one nonprofits
(39:14):
have a mission and they have aboard.
The board is typically unpaidthat's something we didn't talk
about but the board is not paidon a nonprofit board, whereas if
you have a board of directorsand you're for profit, they can
be compensated.
So, that's another keydifference.
Shawntinique Shepherd (39:29):
So with that too, if you do pay your
board, because you knowexecutive directors, they can be
paid.
But if you do pay your boardOutside of that, you have to Let
people know that, yeah, itcannot be no secret.
It can't be like.
Their salary information has tobe, you know, public.
(39:52):
It's public information at thatpoint.
And their salary informationhas to be public.
There's public information atthat point.
And as far as them, it has tomake sense.
It has to make sense.
The salaries will have to,because people like to oh, I'm
this, I'm about to pay me amillion dollars.
No, no, it got to be like theaverage salary that that
(40:14):
position would pay.
Spring Richardson Perry (40:16):
Exactly it has to go.
It has to be in line witheither the national average or
the state average or theregional average.
There has to be some sort ofjustification for that
particular salary and, likeShantanee said, it has to be
accounted for.
So on your on the tax form, itwill show where your executive
director made X amount ofdollars.
If your president or yourchairman has a salary, it will
(40:39):
show what they do X amount ofdollars and you have to list
their weekly hours that theydedicate to the organization.
That has to be listed on thereand there's some check boxes on
there as to what it is exactlythat they do.
So I'm telling y'all, startinga nonprofit is not as easy as
(41:00):
you think, and especially whenit comes to maintaining it.
It takes some work and it's notimpossible.
But so many people just have amisconception of what a
nonprofit is and what it isn'tright.
And so, like I said, some ofthose key takeaways are number
one.
In a nonprofit, you can makeisn't right.
And so, like I said, some ofthose key takeaways are number
one in a nonprofit, you can makea profit, but it has to be
(41:20):
reinvested into your business,whereas in a for-profit, you can
take that money and you can gomake it rain in Magic City.
If that's what you want to do,it don't matter, that's your
profit, you do what you want todo with it, right?
And then, when it comes tomaking a profit or really
running your organization, anymoney that you make has to be in
(41:41):
line with the mission of theorganization.
So, like Shantanu said earlier,if you want to just open a bar
under the nonprofit, but you'resupposed to be a health and
human services division, like,make that make sense like what
you, who, what are you doing?
Like this is very unhealthy,with all the smoking or drinking
(42:02):
like you trying to create moreclients for your non-profit.
That's a total conflict ofinterest.
So, again, you have to makesure that the things that you're
doing, the programs that youhave, are aligning with the
mission of the organization.
And, lastly, you want to thinkabout the regulations, the new
rules that have just come outand I will talk more about this
(42:25):
in a later episode where wereally dig deep into what these
regulations are but the main oneis to have an audit.
If you're going to get afederal grant, you have to have
an audit of when yourorganization makes a million
dollars or more and when you'redoing these grants for the
(42:46):
federal government.
When you're going for federalgrants, you automatically now
get a 15% indirect cost rate asopposed to a 10% indirect cost
rate.
So that's a little bit morehelpful in order to make your
organization more sustainable.
But, I have truly enjoyedtalking to you, Chantelaine.
Thank you so much for coming on.
(43:07):
I'm so excited for this.
If people want to get in touchwith you, especially if they
need to get their touch with you, especially if they need To get
their lives together duringthis Tech season for the
Nonprofits that they're runningor that they're a part of, how
can they get in touch with you?
Shawntinique Shepherd (43:23):
They can go to my business website,
wwwbestcfoacom, so that'sB-E-S-T, c-f-o-acom, and you
know you can go on there, lookaround, look at some stuff and
you can book your Consultationfrom there.
You can find me on FacebookWith my name, shantanique
(43:46):
Shepard.
You can find the business NameCFO and Associates.
You can find me anywhere.
You can find me on google I'mjust about you will find me and
you'll be able to book aconsultation and you know we can
help you figure things out ifyou know you're having issues
with the back end.
(44:06):
You know we want you to begreat out here.
We don't want you out hereabout to go to jail.
We don't want you to lose your511c3 status, none of that.
Spring Richardson Perry (44:17):
Yes, we don't want you out here,
raggedy we want you out heredoing things the right way and
yes, it takes some sort offinancial investment to do it
the right way, but it is wellworth it in the end Because,
again, if you are caught on theback end and you have to pay to
fix it, it is much moreexpensive usually three times
more expensive than if you wouldhave just handled it correctly
(44:40):
in the first place.
So thank you so much,shonkanique.
I appreciate you.
You're welcome.
Thanks for listening, guys, and, as always, until next time on
the Spring Forward Podcast.
Bye guys, bye.
Hey, nonprofit friends, welcome to
the Spring Forward podcast,where we talk about all things
nonprofit, from board discord togrant writing and strategic
planning tips.
If you're an executive director, nonprofit board member or just
someone heavily involved in thenonprofit sector, then this is
the podcast for you.
Let's spring forward intoexcellence, and this is the
(00:28):
podcast for you.
Let's spring forward intoexcellence.
Welcome, welcome everybody, toanother wonderful episode of the
Spring Forward podcast.
I am your host, springRichardson Perry, and today we
have a wonderful show for youand I'm so excited to bring it
to y'all.
We are going to be talkingabout nonprofits, what they are
and what they aren't, and whatthese new regulations are
(00:51):
looking like for nonprofits fromthe Uniform Grants Guidance,
the revisions that came out inOctober of 2024.
And so I have with me heretoday Ms Ms Shantanique Shepard,
who is yet another consultantin the nonprofit world, and she
can impart her expertise on thisas well.
(01:14):
And when I tell y'all we got agreat show lined up for you
today because we got somestories for y'all.
So get your popcorn, get yourdrink and let's get started.
Shawntinique Shepherd (01:26):
What's up , Shantamika how?
Spring Richardson Perry (01:27):
are you ?
Shawntinique Shepherd (01:29):
I am fine , how are you?
Spring Richardson Perry (01:31):
I'm doing good.
Tell the people what you do.
First of all, let's start there.
What is your claim to fame?
Shawntinique Shepherd (01:39):
Okay, so what I do is I am the founder of
CFO and Associates.
It is a virtual accounting firm.
We do bookkeeping, we do youknow tax, and our main client is
nonprofits.
Spring Richardson Perry (01:57):
I love it and this is why I have her on
here today for y'all Because weare in the midst of tax season,
so y'all can get some reallygreat tips.
But also we want to keep y'allout of jail, because some of the
things that I've been hearingwith nonprofits and what they're
(02:18):
doing it raises some seriousred flags, and so I want to
really jump right into this andand get started.
We're going to start with thebasic shantanu talk to us about
what is a non-profit and how itdiffers from a for-profit
business okay.
Shawntinique Shepherd (02:36):
So a non-profit is like an
organization and it exists toserve a purpose rather than
generate profits.
Nonprofits don't really haveowners.
They have shareholders.
For-profit have owners for themost part.
Spring Richardson Perry (02:55):
Run that back.
Sean Tanique, Would you say itagain Nonprofits don't have
owners and for-profits haveowners.
Shawntinique Shepherd (03:05):
Boom, y'all heard that have owners
boom.
Spring Richardson Perry (03:06):
Y'all heard that.
I want y'all to listen to that.
Let that marinate in your brainfor a minute, because a lot of
people talk about this is mynon-profit.
While you may be the founder ofthe non-profit, you may be one
of the founding members of it,right?
You don't own it.
Nobody owns a nonprofit.
(03:29):
So so keep going.
I'm sorry I interrupted you, sokeep talking about some of the
differences so, um, some of thedifferences.
Shawntinique Shepherd (03:42):
Like we said, like the owners, the
founders for nonprofits, ownersfor for profits, with nonprofits
, they are governed by a boardof directors.
Now, some for profits, they dohave a board of directors if
they are a corporation, but whenthey're not, they just have
(04:06):
members.
You know, owners as you want tocall it, but non-profits have
board of directors and they arelegally required to use their
revenue to further their mission.
Versus, you know, with afor-profit I can take this money
home, it's mine or whatever youknow, but with non-profits you
(04:28):
can't do that.
It's stricter rules when itcomes to non-profits and their
finances.
They need more internalcontrols.
So you can't just be like, okay, I want to use this money for
myself, you know.
Or I want to take the money outthe the business bank account
and, you know, pay my house rentwith.
(04:50):
You can't do that.
Spring Richardson Perry (04:51):
I mean, you can't do that, right,
you're supposed to, you'resupposed to separate your
business expenses from yourpersonal expenses in a
for-profit business, but a lotof times people don't and and
there are ways for you toaccount for it separately
without having a separateaccount, and so there are ways
to do that.
But in a nonprofit, you cannotgo, take money out.
(05:12):
Talking about going and make itrain in Magic City, right, you
know what I mean and think thatthat's okay.
We're not doing that, you'renot allowed to do that, and so I
really wanted to shed light onthis, because there are a lot of
nonprofits that are starting up, but people are claiming
(05:32):
ownership over them and, likeshe said, no one owns a
nonprofit.
It is for the community, it isfor the people.
As a matter of fact, in yourbylaws, you have to state what
happens to the money should theorganization dissolve, and the
money has to go to it can't goto a specific person.
(05:55):
You have to designate anorganization, so you can
specifically say, hey, if thisorganization dissolves, we want
our money to go to United Way.
Or you can say, if thisorganization dissolves, we want
our money to go to United Way.
Or you can say, if thisorganization dissolves, we want
all the money to go to a similarorganization.
And so you have to have, likeshe said, some sort of internal
control over this.
You can't just be out here justwilly-nilly doing things and
(06:19):
there are government regulationsaround this, and so that's one
of the common you know, that'sone of the common misconceptions
that I think people have isthat you know, you feel like you
have ownership over thisorganization and while you may
have been the founder, one ofthe first people to start it up,
you don't own it, because noone owns a nonprofit excuse
(06:43):
nonprofit.
Everything in the nonprofit,when you make a profit, has to
be reinvested back into theorganization.
But go ahead.
I'm sorry, I was interrupting.
Shawntinique Shepherd (06:56):
No, you're fine.
But no, that is definitely true.
They don't realize that,depending on how your bylaws are
set up, if you're the so-calledowner um, you can get voted out
absolutely, so absolutely youvoted out and that's.
Spring Richardson Perry (07:19):
I think that's another thing people
don't realize too.
With non-profits you have, youare mandated to have a board,
and your board has to be, Ithink, at least three people, if
I'm not mistaken yep, threeunrelated people.
Shawntinique Shepherd (07:32):
So it can be you, your husband and your
daughter or something.
Can't be those three.
No, exactly you on the board,if it's more than you know, of
course.
But it can't be majority familyand you know everybody else,
because they're going to be likeokay, y'all just doing this so
y'all can make some money.
Spring Richardson Perry (07:54):
Yeah, and that's true of all.
I will say if you're thinkingabout starting a nonprofit,
think long and hard, because ittakes a lot to start and
maintain one, because you arelimited and restricted in the
ways that you can make moneybecause you're not paying taxes.
(08:15):
So the government's like, look,if we're not getting a piece of
this pie, it's only certainthings that you can do, period.
You can do period.
So you gotta be, you gotta, yougotta be, really, really, um.
Do your due diligence in termsof, yeah, uh, what's already,
what already exists, what's outthere, what is the true need in
the community, before youactually go and start one.
(08:37):
Because once you start one, um,and you get it off the ground,
you're gonna constantly beumumbling for money.
You're always going to belooking for ways to bring in
revenue to support that mission,and it's not as easy as running
a for-profit business.
So I just wanted to put thatout there.
(09:00):
So I want to talk about theprofit part of it, though, um,
and so can non-profits actuallymake a profit?
Shawntinique Shepherd (09:11):
so technically they can, but it
can't be a lot um, because someyears you might have like an
overflow, but as long as you endup reinvesting it.
So it's technically not reallya profit, but as long as you are
reinvesting it is, it's fine um, and it gotta go towards your
(09:32):
mission um.
Another thing people uh thinkthat nonprofits can't do is make
money so you can have likegenerating revenue.
You can do that um, as long asit's it aligns with your mission
.
It has to align with yourmission.
You can't be like OK, I want toopen this bar and the bar has
(09:55):
nothing to do with yournonprofit one of the biggest
examples I always like to giveis the NCAA and the NFL.
Spring Richardson Perry (10:12):
Both are nonprofit organizations,
billion dollar nonprofitorganizations, right and so just
because it says nonprofit, itdoes not mean that you're not
profitable.
It just means that the moneythat you're making is constantly
being reinvested into theorganization, just like shawton
said.
So for the ncaa they are thenational um college association
(10:36):
of athletes.
I think it is right so theirmission is to support student
athletes Simple right.
So, the simpler your mission is,the easier it is for you to
justify reinvesting.
So all the money that they'remaking, if they're putting it
(10:56):
back into the schools to givethe student athletes a stipend,
that's support for them.
If they're putting it back intothe schools to upgrade the
workout facilities or thetraining facilities, that's
supporting the student-athletes.
There's so many different waysthat they can reinvest that
money, even if they're payingbonuses to their coaches, right,
(11:22):
they're supporting the studentstudent athletes, because if you
don't have a coach, you don'thave a team, you don't have
athletes.
So that's reinvesting the moneyinto the organization, but
people have a misunderstandingof what that looks like and how
to do that.
And just because, again, you'rea billion dollar organization,
(11:44):
it doesn't mean that you'remaking a profit right, and you
could still be making a profit,but you're also reinvesting that
into your organization tocontinue to further your mission
, to build out your programs andto support the community of
people that you said you weregoing to support.
So I think that's another thingthat I really want to jump into
(12:07):
really quickly.
It's to talk about what aprofit is and what it is not,
because you and I, kind ofoffline, had this conversation
about a salary, right, yeah.
So talk to us about that,chantaleee, because what is a
profit, what is it not?
(12:29):
And salaries versus profits andoperational costs and all those
things.
Talk to us about that.
Shawntinique Shepherd (12:38):
Okay, so we know a profit relates to
business.
Spring Richardson Perry (12:45):
It's not related to a person or
anything.
Shawntinique Shepherd (12:48):
It relates strictly to business.
Spring Richardson Perry (12:50):
The bottom line of the business,
exactly.
Shawntinique Shepherd (12:55):
A profit is after expenses.
Spring Richardson Perry (13:02):
After expenses, after the payroll has
been run, after you pay thelight bill and the rent for
where your organization is at.
Shawntinique Shepherd (13:13):
It's, after all, that that is the
profit, that is the profit.
Spring Richardson Perry (13:19):
So if you have money left over after
you paid all your bills, thenyou can say okay, I have $50,000
extra and I want to take this$50,000 and I want to go and
beef up this program.
I want to go buy some new booksfor this program.
Or I want to go and put on aworkshop for my community.
(13:42):
I need to go find a facilitatorfor this workshop, so we need
to pay for the space to mycommunity.
I need to go find a facilitatorfor this workshop, so we need
to pay for the space to have it.
We need to pay for thefacilitator.
We're gonna have some food,some vendors out there.
We need to pay all of thismoney and at the end of the day
you end up spending, say,$40,000.
So when you at the end of theyear on your tax return, you
have extra $10,000 left over.
Shawntinique Shepherd (14:07):
Nope, you're not going to get in
trouble.
Spring Richardson Perry (14:09):
You just have to pay taxes on it.
That's it.
And I'm telling y'all thisbecause, again, there's so many
people that's out here that'swanting to start nonprofit
organizations and y'all arereally misunderstanding what a
nonprofit is.
(14:30):
Right, I know that you want tohelp the community.
I know that you want to be sortof this beacon of hope for
whatever population of peoplethat you want to serve, and
that's all well and good, butsometimes there's already an
organization out there doing itand they need your support.
I'm telling you where I live.
(14:52):
There's so many nonprofitsdoing good work here.
The problem that we run into isthat we don't have enough
volunteers who are available tohelp carry out the mission.
So that's another way that youcan be involved.
Don't go start your own thing.
Go get involved and help withsomething that already exists so
(15:14):
that you can help them reallyfurther their mission, because
you may find that what you'retrying to start up is some is a
program that they wanted to add,and you may be the person to
implement the whole program.
They just didn't have thecapacity to do it.
So I'm urging y'all to reallytake a step back before you
(15:38):
decide to just start a nonprofit, really look in your community
and see what is already thereand then see what it is that you
can do to add to what's alreadybeing done, instead of trying
to go out and do somethingdifferent, because that puts a
strain on resources.
That puts that puts you in notnecessarily in competition, but
(16:02):
sort of in competition withother people who may be going
for the same type of fundingthat you're going for.
Yeah, so, like y'all gotta Ihope y'all listening today I
feel like I feel like I'm in apulpit today, girl, like I'm
just giving a word, a testimony,because I'm like I just see so
(16:23):
many people wanting to.
I want to start a nonprofitbecause I really want to do this
, I really want to do that andthe first thing I say is well,
what's already been done?
Like who's already doing thisexactly?
And they have about three, two,three organizations that they
can name in their communitythat's already doing this.
So why you want to do, what'sthe point are you starting it?
Shawntinique Shepherd (16:44):
why you can't go help them and that's
what I tell people to um, lookand see who's already doing
something, because they thinklife is easier because they're
starting a nonprofit.
They think it's like a I canget rich type of thing and you
can't.
It takes time for a nonprofitto even generate money.
(17:06):
Like that.
It's hard to get grants.
I think you just get a grantbecause you got a nonprofit.
That's not how it's verycompetitive and a lot of people
don't even have it set upproperly to even apply for
grants.
Talk to us about that.
You gotta have your program setup.
So what?
What are you doing?
What?
How many people can be a partof this program?
(17:28):
How much money is going to taketo get this program off the
ground?
You know who you got to pay,what supplies you need and how
long is this program.
They, they need to knoweverything.
They don't even know thatthere's so many people that
wanted to start or even havenon-profits.
You know they want to go getthere for a 501c3 and which is?
Spring Richardson Perry (17:50):
275 dollars, by the way, just to
start.
If you're doing the easy formright, go all the way up to over
600.
Yes, if you're, if you'recomplicated in a sense, exactly
so, it ain't free.
Just so y'all know.
Shawntinique Shepherd (18:05):
And they think that's free too.
I'm like no, because you stillgot to incorporate, depending on
your state, that that price isdifferent.
You still, you still got to doa lot of things.
It's not.
It's not as easy as peoplethink.
It costs money.
Um, you probably gonna beputting majority of your money
into it just like a for profit.
Uh, just to get it off theground it.
(18:27):
It takes longer.
You really got to put infootwork.
There's so many groups onfacebook where people are in the
groups like how do I get along?
I need to apply for a grant oryou know something, and they
they keep getting denied becausefinancials not right.
A lot of grants like okay, whathave you been doing and how has
(18:48):
it been working before we giveyou this money?
Yeah, a lot of people.
Well, we've been following 990in for the past five, six years.
You know 990 in is below fiftythousand dollars most of them
haven't even reached fiftythousand dollars a year.
So you gotta go outside andwork like a for-profit.
(19:12):
They just think the money justcome because it's a non-profit.
No, you have to go out andpitch to these businesses
locally and get your non-profitname out there well and it's
even more than that, because ina for-profit business you can
potentially see a return on yourinvestment.
Spring Richardson Perry (19:31):
You can see actual money that will
return if you invest into thefor-profit business With the
nonprofit business.
I'm really just giving moneyaway.
I'm not going to see a returnon my investment, not a tangible
return in terms of money itself.
The return on your investmentis the service's, the program
budget.
Like what y'all, what y'allneed to run the program.
(20:16):
Like how much it takes to runit.
Oh, it takes 50 000 to run it.
Okay, what is my 5 000 gonna do?
Can you tell me that?
What's the metrics of thisprogram?
How are you measuring success?
What would a success look likefrom this program?
You know, once they, once theydo this, what's next?
Ok, after that, are theyfinished or they got to do
(20:36):
something else?
Like, what are you doing?
And is this is part of my fivethousand dollars going to
somebody's salary, because Idon't mind that, right?
Also, what I want to know isokay, well, what qualifies this
person to get my $5,000 in thisposition?
What qualifications do theyhave to carry out your mission?
(20:58):
I got a lot of questions, but Ihave to give the money to you
and so you can't be mad whensomebody is asking you all these
questions, when you asking themfor money.
If they're going to write acheck for $20,000, $30,000,
which is a lot of people'sexpectations.
They just think, oh, because Ihave this great idea.
Shawntinique Shepherd (21:19):
And they think everybody else is going to
think it's great and yes, Ithink it's wonderful, that's
great.
Spring Richardson Perry (21:25):
Okay, so how are you funding it?
Because I'm not going to helpyou, because I don't see nothing
that you're doing right nowthat deserves my money, right?
So how are you going toconvince people that what you're
doing is worth investing in?
Because, essentially, again,while it might be a tax write
off which will help me, before Ijust hand you this money, I
(21:48):
could find a lot of differentthings.
I could find five thousandthings different things.
I could find 5,000 things to dowith $5,000.
You know so, this is my gripey'all, and, as you can see, I'm
just, I'm really passionateabout this because I am.
Somebody said in a meeting I wasin last week.
They said this is MissCommunity, right here, y'all.
(22:10):
She is Miss Community, she,y'all.
She is Ms Community, she is inthe community, she is doing the
work, and so I'm all about beingand working for the community.
However, I understand it takesmoney to put these programs on,
but I'm also going to show youhow, where your money is going
to provide the most impact andhow this is going to be
(22:32):
beneficial to everybody if youinvest in this.
And that's one thing thatpeople can't show, and they also
can't show a well-structuredorganization.
Yeah, really, give you somemoney to carry out these, these
(22:53):
programs.
What does a well-structuredorganization look like?
Shawntinique Shepherd (22:58):
so that is a good question.
Um, it's real, it's, it's a lotum, even on the financial end.
Um because non-profits, they gothrough extensive uh audits,
right um we've been veryexpensive too.
(23:20):
They are very expensive.
Um, some of my clients likeaudits because we don't do um
external audits.
But it's good that we don'tbecause we actually handle the
books and stuff.
You know, with external auditsthey can't have nothing to do
with your organization.
Spring Richardson Perry (23:40):
Right, right.
So if you're doing an externalaudit and you're handling the
books, that's going to lookfishy because it's like, oh,
they're using the book.
Shawntinique Shepherd (23:48):
Exactly so.
When my clients get theiraudits done, um, depending on
who they go to, um I didn't seenrecently one of them had to pay
like 46 000.
Spring Richardson Perry (23:59):
I was like, oh I'm having a lot of
time over here, y'all I havenever seen an audit be that
expensive.
What was their budget, though?
What were they?
What was the budget that theywere auditing?
Shawntinique Shepherd (24:14):
They were .
I think this one was a $5million organization.
They were $5 million.
Another one, I'm trying tothink how much was theirs.
Theirs was around like $30 someand theirs was like a $7
million.
So it depends on, you know, theCPA.
Oh lord it.
It's a lot that goes into itbecause, like I said, the turtle
(24:38):
controls is the questions.
They ask like okay, um, youbought this, but what was it for
?
What grant are you applying itto?
Or what funder, you know, areyou applying this money to?
You just taking money out theaccount?
But we need to know thesedetails.
Um, so what we do to make it alittle easier is, when we set up
(25:01):
there and turn on controls, um,we do it where they have to
request money.
You know, you got a requestpayment like, okay, I want to
pay comcast.
For example, we're going to usecomcast, I want to pay comcast,
got this comcast bill coming orwhatever it's for the internet.
(25:22):
We know it's the internet thing.
Um, then we asked like okay,who is funding this?
You know, is it one of thedonors that just gave $5,000?
Is it one of the grants?
Or you know what's going on?
Who is this coming from?
So, on a form they have to putin hey, this is a payment
(25:46):
request to Comcast.
It's for the internet, thefunder or the grant.
If it's two different peopleSome grants have.
Well, some funders have multiplegrants.
They got to put what the grantis for and all that good stuff
and how much it is.
(26:07):
They have to submit it forapproval.
They got to have at least twopeople to approve this just so
we can be safe.
We're not.
Nobody can just be like, okay,I'm gonna just buy this.
No, two people have to approvethese payments.
So that way we havedocumentation.
Because when you get an audit,they want documentation.
(26:28):
They want to see why you'redoing this and what.
What is this for?
They ask all the time like,okay, what was this for?
and if you can't answer, it'slike okay, you're about to fail
this audit and now you're gonnapay them for more money, like oh
my gosh, like you got to getthis corrected, because if you
don't, now you're wasting moremoney, because you're taking
(26:50):
more time and taking up theirtime.
They trying to get this, makesure everything match.
So it's a lot when it comes tothat, like you really have to be
on it.
Spring Richardson Perry (27:01):
You cannot just, oh, this is my
money, I'm about to take it it'snot how it works and I'm yeah,
let me tell y'all everythingShantanita is telling y'all is a
thousand percent true.
I sit on two nonprofit boards.
One of them, I am the treasurerof the board.
I am very much in control ofthe finances and when we set
(27:24):
everything up, we have internalcontrols where there are two
signatures that are required foranything that is over, I think,
$500 or something like that forrequest, and so anytime we need
to make major financialdecisions, it has to go through
the whole, it has to go throughthe board meeting, everybody has
(27:45):
to vote on it, and then boththe treasurer and the president
right now are typically presentwith something like that needs
to go down.
So there's, there's a lot ofthings, guys, especially
especially when you're thinkingabout getting in line for a
grant, because grants nowadays,a lot of them are asking for
(28:10):
audited financial yes, yes, andso you may not necessarily your
nonprofit may not be required tohave an audit.
Some states require theirnonprofits to be audited at a
certain amount.
The federal level has a certainamount where you have to be
(28:30):
audited at at a certain amount.
The federal level has a certainamount where you have to be
audited at.
So it would behoove you to,even though you don't have to go
through an audit, to set upyour financials in a way that if
you are audited you'll pass itwith flying colors, because if
there's any question about whatyou're using the money for in a
nonprofit organization, theregoes your credibility.
(28:52):
I mean, I look at the BlackLives Matter organization that
went through all of that stuffwith their funds and you know it
was the findings where theywere using the money to pay the
mortgage they had taken and allthat other stuff, and so
(29:14):
justifying spending those fundswas extremely difficult for them
.
Yeah, so you know the movementsort of lost credibility because
of that.
Yeah, and there are still other,so there are still chapters of
it now, but I don't know thatthe original one, I think, which
(29:36):
was out of California somewhere, I don't.
I don't know if they stillexist or not, but I know that
they went under a lot ofscrutiny because they were
mixing personal finances withthe nonprofit finances.
I think they had a lot offamily member board members, if
I'm not mistaken.
(29:56):
And so you know, like we saidearlier, you can have family
members on your board, but thatcannot be the majority.
So if you have five boardmembers and it's always good to
have an odd number of board-members have an odd number of
board members.
If you have five board members,only two of them can be family
(30:17):
members at the most, and that'spushing, you know.
So you really want to takethese things into consideration.
But I want to jump back tothese audits and these
regulations, because this bringsme to the new regulations with
the uniform grants guidance thatcame out back in October.
You know there were severalthings that were changed, but I
(30:40):
think one of the most, one ofthe most that stood out to me,
was the audit requirements.
The audit requirements, right,and so it changed from $750,000
to a million, right?
Is that correct?
Shawntinique Shepherd (30:57):
Yeah, I don't know why they pushed it up
.
You would think they would golower.
Spring Richardson Perry (31:06):
Well, it makes so.
To me it makes sense to push itup because they're so costly.
Right, they are, and you'realready struggling to to keep
the lights on and to keep yourbuilding together for your
program itself, right, right.
So if you're spending forty,six thousand dollars, I know, on
an audit, you know that's,that's a salary, that could be
(31:28):
somebody's salary, so I canunderstand them pushing it up.
But again, just because it'sthe threshold is not at a
million, that doesn't mean thatyou can't be audit ready at five
hundred thousand or at fiftythousand.
Like, yeah, you need to alwaysbe ready if somebody because
(31:51):
that's another part ofnonprofits is financial
transparency, yes, if somebodycomes to you and they say, open
your books, you got to open yourbooks Point blank, period is,
and if your books are not inorder, and again there's the
credibility of your program andyou may not get any more funders
(32:16):
the way that you need to.
So that that was, that was oneof them, and the other one that
really stood out to me was thede minimis rate.
Are you familiar with that?
No, that I'm not.
So that one is when you'regoing for federal grants and
they have an indirect, you canput a line in there for indirect
(32:39):
costs, right?
So some anybody who's notdirectly related to the grant
itself.
So you may have, like, theprogram director who is going to
direct the program, and thenthe program coordinators, the
executive director, of course,who's over it, but that human
resource person, right, they'rean indirect cost of the program
(33:00):
because without that person theorganization wouldn't exist to
carry out the mission orwhatever that is.
So there was a, I thinkoriginally it was set at 10
percent and so now it is up to15 percent.
So you don't have to if youdon't have like a set rate that
(33:26):
they've already given to you,because you can apply to the
federal government to get like aset indirect cost rate so that
whenever you apply it, just youautomatically get that amount.
Um, so now you don't evenreally need that, it's.
It's 15%.
Um, if you feel like you needmore than you might need to
apply to get a higher rate.
(33:48):
But I doubt that at this pointthey'll really approve anything
more, unless it's a reallyreally special circumstance, a
really unique situation.
But I think 15 percent isgenerous for for federal
government grants, becauseyou're already looking at
getting several hundredsthousands, millions of dollars,
(34:11):
like most of the federal grantsare at least half a million
dollars um for your program.
Shawntinique Shepherd (34:18):
So 15 percent of it is pretty good
yeah, I would say that is goodfor um indirect expenses because
you know you want to havemajority direct expenses to.
You know the programs, um, andI think a lot of people when
they come to their budgets theydon't know how to have majority
direct expenses to the programsand I think a lot of people when
they come to their budgets theydon't know how to allocate the
funds because what they do, soin the financial industry, for
(34:49):
the accounting and stuff,there's a certain percentage
when it comes to being in aprogram, a certain percentage of
grants and expenses, whatever.
It's a certain percentagethat's supposed to do everything
.
They go to management.
But a lot of people theirbook's not set up right, uh,
(35:13):
their books not set up right.
Like I didn't see over theyears.
I didn't see a lot of wildstuff I bet you have.
Spring Richardson Perry (35:25):
I've seen some crazy stuff too, in a
way that people deal with theirmoney, in a way that I work with
non-profits too when I'm tryingto get them back into
compliance, and I'm looking likey'all, how long y'all been
doing this and y'all been this,how y'all been operating.
I'm just looking like inamazement because I'm like how
have y'all stayed in businesslike this?
You know, because because, eventhough you're a nonprofit
(35:46):
organization, there's still abusiness side to things exactly,
and it's just been wild yes,yes.
So I'm always in awe as to howthey're operating and the things
that they're doing, because, umit, you know, when I, when I
come in, essentially it's a direneed at that point, and so I'm
(36:10):
always looking like this is whaty'all been doing, like how
y'all still in existence, likehow the IRS ain't come shut
y'all down yet, like I promiseyou.
Shawntinique Shepherd (36:22):
I ran into somebody that didn't have
their books done in over threeyears.
Spring Richardson Perry (36:27):
Yeah, Like how and that's another
thing, guys is that if you don'tfile as a nonprofit, if you
don't file your taxes for threeconsecutive years, they can
revoke your 501c3 status.
So if you go for a grant andyou give them the paperwork it
says, oh yeah, we're a 501c3,but your status has been revoked
(36:48):
, that can be a major problembecause when they come back and
they want to see, they want tosee you know, audits, paperwork,
tax returns, all these things,and you don't have that to show,
you're gonna have to hustle toget it done, and hustling to get
it done is expensive veryexpensive very and a lot of
(37:10):
times they don't want to pay themoney and it's like, okay, very
.
Shawntinique Shepherd (37:14):
And a lot of times they don't want to pay
the money and it's like, okay,you're gonna have to pay taxes
on this money because you ain'tgot no tax exempt status no more
exactly.
Spring Richardson Perry (37:20):
So you know it it really becomes a
really major issue.
Um, when non-profits don'tdon't do what they need to do to
stay in compliance.
And just because you know, justbecause you are tax exempt does
not mean you don't do what theyneed to do to stay in
compliance.
And just because you know, justbecause you are tax exempt,
does not mean you don't filetaxes.
That's another thing that Ihave to tell people.
Like, just because you're taxexempt, it doesn't mean that you
(37:45):
don't file taxes, that you'reexempt from filing taxes.
It just means that on the moneythat you generate for the
organization, you are notrequired to pay taxes on it,
unless you make some sort ofsignificant profit, like
Shantani and I were talkingabout earlier.
But otherwise you need toaccount for your money.
You need to show where all ofthis money went to, how much you
(38:07):
made in total, total.
And then, at the end of all ofthat, right, if I made a million
dollars, I paid 750,000 insalaries, I paid another, say,
200,000 to programs, and thenthere was $50,000 left over.
Well then, if that isconsidered a significant amount,
(38:28):
would that be consideredsignificant to pay taxes on?
Or would that just mean thatI'm going to take that, carry it
over and reinvest it?
You can carry it over you cancarry it over.
Shawntinique Shepherd (38:38):
You can carry it over as long as it's
getting reinvested.
If you're not putting back intoyour programs or your mission
or anything, you might as welljust be like oh, I got to pay
taxes on this.
Spring Richardson Perry (38:51):
Let me just go ahead and give y'all
this little money right quick,because I'm telling y'all it's
way worse on the back end thanif you just do it on the front
end.
So you want to make sure thatyou are are doing what you need
to do.
Um, I, if I can, if, if I canwrap this up and sum this up for
y'all.
You know, key takeaways fromthis is number one nonprofits
(39:14):
have a mission and they have aboard.
The board is typically unpaidthat's something we didn't talk
about but the board is not paidon a nonprofit board, whereas if
you have a board of directorsand you're for profit, they can
be compensated.
So, that's another keydifference.
Shawntinique Shepherd (39:29):
So with that too, if you do pay your
board, because you knowexecutive directors, they can be
paid.
But if you do pay your boardOutside of that, you have to Let
people know that, yeah, itcannot be no secret.
It can't be like.
Their salary information has tobe, you know, public.
(39:52):
It's public information at thatpoint.
And their salary informationhas to be public.
There's public information atthat point.
And as far as them, it has tomake sense.
It has to make sense.
The salaries will have to,because people like to oh, I'm
this, I'm about to pay me amillion dollars.
No, no, it got to be like theaverage salary that that
(40:14):
position would pay.
Spring Richardson Perry (40:16):
Exactly it has to go.
It has to be in line witheither the national average or
the state average or theregional average.
There has to be some sort ofjustification for that
particular salary and, likeShantanee said, it has to be
accounted for.
So on your on the tax form, itwill show where your executive
director made X amount ofdollars.
If your president or yourchairman has a salary, it will
(40:39):
show what they do X amount ofdollars and you have to list
their weekly hours that theydedicate to the organization.
That has to be listed on thereand there's some check boxes on
there as to what it is exactlythat they do.
So I'm telling y'all, startinga nonprofit is not as easy as
(41:00):
you think, and especially whenit comes to maintaining it.
It takes some work and it's notimpossible.
But so many people just have amisconception of what a
nonprofit is and what it isn'tright.
And so, like I said, some ofthose key takeaways are number
one.
In a nonprofit, you can makeisn't right.
And so, like I said, some ofthose key takeaways are number
one in a nonprofit, you can makea profit, but it has to be
(41:20):
reinvested into your business,whereas in a for-profit, you can
take that money and you can gomake it rain in Magic City.
If that's what you want to do,it don't matter, that's your
profit, you do what you want todo with it, right?
And then, when it comes tomaking a profit or really
running your organization, anymoney that you make has to be in
(41:41):
line with the mission of theorganization.
So, like Shantanu said earlier,if you want to just open a bar
under the nonprofit, but you'resupposed to be a health and
human services division, like,make that make sense like what
you, who, what are you doing?
Like this is very unhealthy,with all the smoking or drinking
(42:02):
like you trying to create moreclients for your non-profit.
That's a total conflict ofinterest.
So, again, you have to makesure that the things that you're
doing, the programs that youhave, are aligning with the
mission of the organization.
And, lastly, you want to thinkabout the regulations, the new
rules that have just come outand I will talk more about this
(42:25):
in a later episode where wereally dig deep into what these
regulations are but the main oneis to have an audit.
If you're going to get afederal grant, you have to have
an audit of when yourorganization makes a million
dollars or more and when you'redoing these grants for the
(42:46):
federal government.
When you're going for federalgrants, you automatically now
get a 15% indirect cost rate asopposed to a 10% indirect cost
rate.
So that's a little bit morehelpful in order to make your
organization more sustainable.
But, I have truly enjoyedtalking to you, Chantelaine.
Thank you so much for coming on.
(43:07):
I'm so excited for this.
If people want to get in touchwith you, especially if they
need to get their touch with you, especially if they need To get
their lives together duringthis Tech season for the
Nonprofits that they're runningor that they're a part of, how
can they get in touch with you?
Shawntinique Shepherd (43:23):
They can go to my business website,
wwwbestcfoacom, so that'sB-E-S-T, c-f-o-acom, and you
know you can go on there, lookaround, look at some stuff and
you can book your Consultationfrom there.
You can find me on FacebookWith my name, shantanique
(43:46):
Shepard.
You can find the business NameCFO and Associates.
You can find me anywhere.
You can find me on google I'mjust about you will find me and
you'll be able to book aconsultation and you know we can
help you figure things out ifyou know you're having issues
with the back end.
(44:06):
You know we want you to begreat out here.
We don't want you out hereabout to go to jail.
We don't want you to lose your511c3 status, none of that.
Spring Richardson Perry (44:17):
Yes, we don't want you out here,
raggedy we want you out heredoing things the right way and
yes, it takes some sort offinancial investment to do it
the right way, but it is wellworth it in the end Because,
again, if you are caught on theback end and you have to pay to
fix it, it is much moreexpensive usually three times
more expensive than if you wouldhave just handled it correctly
(44:40):
in the first place.
So thank you so much,shonkanique.
I appreciate you.
You're welcome.
Thanks for listening, guys, and, as always, until next time on
the Spring Forward Podcast.
Bye guys, bye.
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