How Nonprofit Organizations Can Grow

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How Nonprofit Organizations Can Grow
Interview with Jennifer Katrulya

Jennifer CoopermanJennifer Katrulya is a Partner at Citrin Cooperman and is considered a pioneer of the outsourced/virtual CFO, advisory, and accounting services space. She has spent the last 20+ years helping clients create and execute the strategic and operational plans needed to scale quickly, secure funding, provide critical reporting and communications to company stakeholders, increase market share, and position for a successful exit. Jennifer helps companies leverage Citrin Cooperman’s rapidly growing BPO services group of exceptional controllers, bookkeepers, and technology specialists. The team at Citrin Cooperman takes on the day-to-day accounting functions for clients, allowing them to focus on growing the company. Jennifer has often been called a “power connector,” based on her proven track record of bringing the right people and companies together to help drive business growth and success, both in specific business deals and in the formation of winning strategic alliances. Her experience ranges from bringing early-stage companies and funding sources together, to connecting C-Level executives in Fortune 500 companies.

 

For more information go to – https://www.citrincooperman.com/

 

Read the Interview

Hugh Ballou: Hello again, it’s Hugh Ballou with The Nonprofit Exchange, where we interview thought leaders and take advantage of their wisdom in their area of expertise. Over the past seven years, even though we have interviewed people with similar backgrounds in similar professions, we learn new things because everyone has their unique body of knowledge and experience.

Our guest today is certainly one of those people. We met through another person, but I know enough about her that she is really on point and will help us go from where we are to reach the potential that we could. None of this next step stuff. Let’s just go to our potential in a very one-step sequenced way. I think I’m not revealing too much.

Jennifer Katrulya, you are the guest today. You’re going to talk about how to grow our nonprofits. Before we go there, I’m sure people would like to know a little bit about who you are, what your background is, and why you are doing this kind of work. Thank you for being here.

Jennifer Katrulya: Thank you so much for having me. I am a partner at Citrin Cooperman, top 25 CPA firm in the country. My background is originally in auditing, helping largely on the nonprofit side with the traditional annual audits and check-ups of organizations. I also come from a big entrepreneurial family background and a family that was into volunteering, of course to give. We have always been such recipients of the companionship and gifts of being a part of a giving community. Certainly our churches as well.

I love in my career for the past 16 years helping with operational challenges, helping scale companies and nonprofits, looking at all the ways that businesses and nonprofits need to function to maximize success, and of course in times like right now, to survive and move forward. I love the opportunity to work with organizations and people who are doing so much for others. If you can remove the roadblocks, the ripple effect is so important. It’s an honor to be a part of that.

Hugh: I’m sure you are an honor to your company. Many times, nonprofits don’t realize there are companies like yours. We need to have more conversations with businesses like yours who are interested in bringing value to everyone. It’s not simply about making money; it’s about bringing value to people. I do have cherished relationships with small accounting firms everywhere I’ve lived; those are very important relationships for me.

Let’s talk about this world of functioning. I have this nonprofit called SynerVision; anything I say about the sector applies to me. I am not without fault, to be clear. We have blind spots as leaders. We need people like you to help reveal those blind spots because we have this big idea of how we can help people, and it takes a lot of juice that maybe we don’t have. We have the vision. We think because we have this nonprofit title, money will come our way, and people will volunteer and help us. There is a systems piece that we need to understand to be able to function. There is a lot of dysfunction in our systems. Why do you think that is? I said to you before we started that the word “nonprofit” is probably negative inspiration. But what are the reasons that nonprofits struggle with the systems that we need to know?  

Jennifer: Largely, it’s because a nonprofit can decide to function differently than a business. Somehow, even in its own mind, the word “nonprofit” and the want to include members of the community and volunteers and all of the things that are such a part of the thread of a nonprofit can cause a gap between that philosophy and that culture and actually working as a business. The reality is, for nonprofits, everyone is competing for donor dollars, everyone is competing for time, and you need to adopt best practices for each of the functional areas of a nonprofit, in very much the same way as a business. Any time you depart from that, you’re at a disadvantage.

Hugh: We are a non-stock C corporation. We have no stock. Our board members don’t get paid; they actually contribute to be an effective board with time, talent, and money, as true philanthropy is. Is it a mindset?

Jennifer: In many respects, it’s a mindset. The majority of it is. That results in not having the resources and structure in place. It begins with the mindset for sure.

Hugh: It does. Part of what we help leaders with is the leadership piece. We have to identify what our skills are. I don’t like strengths and weaknesses; I like skills and gaps. Just because I don’t do something very well doesn’t make me weak, but I know that I need somebody to fill that gap. You do a lot of review work—you mentioned audits and things—for nonprofits. Without revealing any secrets of course, are there some common things that you wish nonprofits knew how to do better with accounting, leadership, other functions? What are some things you hope they would learn to do better?

Jennifer: The first is look at each area at top level. Assess the nonprofit like a business. Make sure that with the mix of talent there is the expertise in place, whether it is sales or marketing, human resources, or technology that much like a company, there is a return on investment of effort and resources every day. What I see are nonprofits who don’t first of all fully understand in some cases the financial statements and the story that those tell, either at the management level or at the board level. But also then not leveraging the right amount of expertise in each area to move the organization forward. A lot of time and money can be wasted chasing either disconnected or underperforming contributions to the efforts of the organization. They aren’t able to meet their goals, so they fall behind and struggle.

Hugh: Very succinctly put. There are a lot of factors. Not understanding the financials. That jumped out at me. We have a treasurer who is supposed to present those in a way the board can understand them and vote to accept them. I don’t find very many boards know what questions to ask of many treasurers, some of whom may be bookkeepers, some may be accountants, some may be other disciplines. What skillset does a treasurer need to be able to properly present the financials so the board can know where we are and how to function in a different way because of those financials?

Jennifer: The treasurer really should have experience, whether it’s as a higher-level controller or CFO, in looking at the financials and making sure they actually do make sense rather than take them for granted because they received them from a bookkeeper or accounting firm or whomever.

First, making sure they really do represent the organization accurately and challenging any questions they may have before getting to that board meeting. The second is being able to present the financials in a way that educates everyone else who may not be accounting professionals in the group, creating ideally a summary or flash report of what is important about those financials in a non-biased way, and helping to talk about how those are important today in the organization and what that may mean for the weeks and months ahead as far as planning to go forward.

I think that’s so critical because being able to do that in a very black and white way and an accounting metrics and goal-driven way can help give important information before frankly politics and other things can get involved, which often can take the attention away from what the numbers tell.

Hugh: Numbers tell a story if you know how to listen and how to tell the story. We get distracted from this. I find that some nonprofits even want to go away from thinking in business terms when really that is what gives us financial security and strength to impact people’s lives. What would you say to people who say, “Thinking about business doesn’t apply to me?”

Jennifer: That’s become such a conversation, especially in the past year, but it’s true any time. Whether it’s thinking about the Payroll Protection Program or the stimulus packages over the course of the last year, there are a lot of conversations that said, “We aren’t going to take this certain approach to how we are going to see our way through COVID because we are not like every other business or organization.” In some ways, I have seen that potentially put organizations in harm’s way because they had opinions that stood in the way of what now might be needed for cash survival.

Other departures would be as far as how you are going to reach and retain multiple forms of revenue inflow, whether it’s donors or events or other things that are important to the lifeline of the organization, rather than follow the model that any for-profit business would need to follow to make sure that those are shored up and revenue is still coming in. The moments of saying we are going to be different or find a different path to follow through, others who are competing for dollars and talent, frankly, if they are following a path first that gets them those resources, then being creative can unfortunately lead to missing out.

Hugh: I was on a webinar for some nonprofit leaders in another country recently. One of the other presenters represented a well-known foundation from a food company and was in charge of managing the donations to this country. He said, “We have money. We want to give it to people who are doing a good job. We won’t give it to organizations who are marginal or need rescuing.” That stood out to me as being important. It occurs to me that having really good solid financials is probably gonna inspire someone who has money- Someone with money who probably has a business head is going to want to see a good business model, and then they will be comfortable giving you money. Your 990 is public information. All of your numbers are public information anyway. We need to have something that represents good stewardship of the dollars. Talk about the synergy between having good financials. What should people be looking for in order to attract the right donors?

Jennifer: First of all, I think it’s natural to want to contribute time, effort, money into something that looks like it has longevity. If something looks like it is profitable, successful, well-managed, it spreads that sense of confidence that this organization has its act together and is going to be a good steward of my money, my time, and my investment; carry this forward in the right way; and contribute the maximum possible amount to a mission rather than have any administrative waste or waste in other areas of the organization. Everybody, because there is such a personal attachment to the places that you involve yourself, you want to be proud of how that’s run and feel like that represents your values and standards as well. That polished look is so much more than simply an organization being run; it’s also a sales piece as far as getting and retaining that loyalty. The reality is actually being able to execute on that and the organization being able to sustain and be long-performing. Back to the statement before: The financials tell the picture. It is the scorecard. It is both an actual reflection of how you’re performing as well  as a sales tool to attract more of that going forward.

Hugh: It shows that you’re being good stewards of their money.

Jennifer: Yes.

Hugh: There is a myth about overhead. Let’s use our foundation as an example, SynerVision. This is my volunteer work. There is not a salary for me. I donate as everyone else does money, time, and talent, way more than I should. But it is a passion for me to help other people. We have no cost of goods sold. It’s just web delivery. We could say that 100% of our money goes to overhead. We could say 0% of our money goes to overhead because all the money goes to benefit education of nonprofits. I know on QuickBooks, there is different terms for what we say in business, an income statement or balance sheet. There is a statement of financial position. Do they look different? How do we talk about this thing of overhead? We don’t want to be paying fat salaries and big cars for our donors. How do we talk about overhead and represent it in a fair and accurate way?

Jennifer: I’m not sure. There is different terminology for a nonprofit versus for-profit. But the financials themselves function the same way. I always like to paint it that way. You mentioned QuickBooks. They took the same software and saved it five times with different industry labels, but they didn’t change the technology behind it. The nonprofit version is the same as the construction version with some different report names. That is really important.

Cost of goods sold and direct costs in general you can align with events and internal programs. You can align I spent X dollars on X effort or mission. Then you will have revenue and costs you can associate. There may be costs like web meeting software or things you may use for different purposes, rent that you pay, things that the organization may spend, but you can’t really align to any one thing and it’s broader reaching, or salaries for team members who are part of the organization not on a volunteer basis. Certainly overhead for a wide range of things.

Overhead is anything that gets you through running the organization. It is part of the expenses. Anything that doesn’t have a direct relationship to the money you brought in, that you can’t tag that way, becomes overhead. I will take it a step further and say that there is fixed overhead, something you are bound to month after month, like a lease agreement, versus variable. That is important because as things change, and as an organization needs to pull back in certain areas, the more that you can focus on variable costs that can be adjusted over time versus fixed things you are bound to, becomes really important.

Hugh: Those are factors we use in doing a breakeven analysis. Suppose we are doing an event. Many times we do fundraising events to lose money. Doing a breakeven analysis, you have your fixed costs and your variable costs. Meals can be a variable cost. Fixed costs would be facilities.

What are the drivers for important statements? I’ve led organizations from inside. I teach from external. I worked in mega-churches for 40 years and learned systems there and learned what didn’t work. I can say I’m an expert because I know what doesn’t work. I made all the mistakes at least once. I have to use the tools that I teach people and fine-tune them. We need to pivot now in the way we lead nonprofits because we are never going back to what it was like before. It’s a radical shift in what we need to do. It’s going to weed out those who aren’t willing to step up.

We do this income statement and this statement of financial position, this profit and loss thing. I know you can export a cash flow analysis, which is like brake lights. What I find is a normal weakness is we get a lump sum, a donation, a grant we have to specify for a certain program. We get a large sum of money. We don’t know how to do a cash flow forecast. When is it going to run out? What is our burn rate? How do we generate more revenue? Oops, it’s gone. How do we look at those paradigms in a responsible financial planning way?

Jennifer: Certainly cash flow forecasting. Cash is the life blood of anything. That’s as important as the long-range budget, which I will mention is an important planning tool. Having that ongoing 18, 24, further out ideally, budget and plan for the organization is critical. We are in the month of March right now, so any organization that isn’t running a budget for the year or the next couple years, now is a great time to shore that up. That 13-week rolling cash flow forecast, even if the budget overall looks like things are going to be okay, any week or month you have run out of money and aren’t going to be able to cover payroll costs or rent or whatever else, you are essentially out of business. I will use for-profit terms. There needs to be a plan in place. It drives those asks for funds that are outstanding if they are and the plea and the emotional draw if needed on bringing in money in weeks where it is necessary to cover those obligations.

You mentioned mega organizations. I’ll put this in QuickBooks terminology, but it translates anywhere. The by class or by division or by area, in reporting for grants, it is common to look at where money came in versus how it was spent, which is often required. Other key areas of the organization, making sure that you are looking at the money that has come in, how it’s being spent, and looking for leaks. Where did we overspend? Where can we pull back? That is not being hidden or buried in the financials as a whole.

Hugh: Sometimes there is a summary presentation where the board doesn’t see those. I want to highlight to people that the board has financial responsibility for the organization. If you are the leader, it’s important that you present them accurate information because there is a liability piece. They can assess your financial position. If you are leading it and are embarrassed by something you did, you need to tell them so they can help. We are too bashful about that, right?

Jennifer: Especially when it comes to boards. There is this odd relationship where you are meant to rely so heavily on them, yet you have this feeling that you have to make sure what goes to the board is only best in show.

Hugh: That’s a key point. We are not just doing the show part of show and tell. It’s a relationship that is a trusted relationship. For better or worse, we are married. For better or worse, we need to look at all the facts. The numbers are there. They’re black and white. If we are not accurately categorizing them, I have read financials in organizations I have led where I think that doesn’t make sense. In programs like QuickBooks, you can get down to what’s underneath that number, where it was posted and if it was accurately assigned. A lot of this is not intended to be a cover-up. It’s knowledge where people are hurrying.

I have worked in organizations where we have a paid bookkeeper who is not part of the board. They are paid hourly to be the bean counter. We have had a volunteer treasurer who is a CPA or banker, someone who knows how to read financials. We have a CPA firm who does the tax returns. That is how to have accountability with different people and making sure the board understands the financials. What do you recommend people ask a prospective board member who could be a treasurer? I was going to talk about safeguards. Are there any other safeguards we need in our financials? Then a follow-up question is: What are questions we need to ask a person before we put them on the board as the treasurer?

Jennifer: An accounting background is important, depending on the size of the organization and technology. There are accounting positions that can be a piece of a larger company but not necessarily looking at the financials of the company as a whole. Finding a treasurer who is used to getting a balance sheet, a statement of financial position, etc., and reviewing them line by line is critical. Someone who is used to looking at a general ledger for a set of financials and the codings. At the end of the day, data in, data out, however that bookkeeper entered things, if they were put in the right category. Then at least for the most part, that is going to give you the financial information you need. It gets layered with things like depreciation and other monthly entries that are not cash basis necessary. Someone who is used to reviewing those numbers and has a process for doing so.

They will also make sure the organization is closing the books on schedule and getting the missing pieces in place. Oftentimes, financials will be produced and shared with the board that are missing things. They are misleading because there is information omitted. They’re not just complete. Someone who has all of the knowledge in place to make sure they are complete, accurate, and being delivered.

I am an advocate for teaching a board how to go through a basic general ledger. Even if you know nothing about accounting, the accounts listed are fairly transparent. If this is a donor section, if this is utilities, you shouldn’t see anything in that section that isn’t appropriately categorized. At the treasurer level, that skillset is very important.

At the board meetings, one of the most important things is dedicating the time to talk about the financials. That is when eyes around the table will be on them, everyone who has a sense of how the organization is supposed to run. If you are looking at analytics of month over month compared to last year, the year to date, this month over a year, you will notice if a box is empty or if the number stands out as not being correct. Assuming it does all look right, what story does that tell? Working with a treasurer who is experienced in creating a flash report, summarizing everything for everyone. The more thought you have to give those financials and the storytelling, the more it will usually show if something is not making sense.

Hugh: Thank you for flowing with my questions. You know your stuff, as I’m sure you would, so I felt comfortable doing that. Talk about the timing. You mentioned a 13-week cash flow. We work in 13 weeks because that is a full quarter. One time, I had a business as a Kodak dealership. They didn’t do accounting by month. They did it by 13 periods in a year, four weeks at a time. George Eastman couldn’t get the government to go along with that.

It’s important to have enough time to close the books for a month so that we can have all of the data there. We can run information. When I was chairman of the board, I liked to give the board a week. Here are the financials. We will review these in the board meeting next week. It was the second or third Monday of the month we met. We had time to close the books. If you keep up with it, it’s not a big deal. Time to share them with the board. Time in the meeting for people to ask questions. You could really tell who studied the budget and the financials because they would raise their hand and say, “I want to ask about this item.” How does that timing work so that we can make a fair and accurate representation, and that the board has time to digest it and ask questions?

Jennifer: First of all, that one-week timetable for everyone to take a look at it is really helpful. For that reason, I strongly suggest scheduling meetings for the third or fourth week of the month. If you were to say for example that the fifth calendar day of the month after the month has ended is when the books are locked, that gives five days for anyone to gather what bills are still outstanding, ask about revenue that should have come in, make sure that all those missing credit cards are settled, etc. All of that information gets into the books. Then it allows another five business days, if you go to the tenth business day of the month, for not only the bookkeeper or the accountant to finish the close, but also to go back to the treasurer to review it and ask questions and look at the story they are telling, get a sense of the books that are closed and create a summary report to share with the board. It is an organized close. You can accelerate that, but we will use that as an example.

Versus trying to schedule that board meeting right in the first weekend of the month or even the second. You run the risk of being incomplete or run into situations where the board will say, “Let’s just use the financials from the month before.” We will always be a rolling month behind. It gets in the way of being able to get that whole story and have that complete conversation. That can be tweaked a bit, but that is a calendar we feel works well.

Hugh: It’s just a leadership prerogative to think about needing a reasonable time frame so we can give you accurate information. To that fact, we are looking at the financials three weeks or four weeks after the month closed. We uncover some information. It’s too late to change the previous month and too late to change the current month. We are 60 days behind in alerts. I want to ask you about how to create some sort of systems balance scorecard or metrics, so we know, because of the work we are doing as a byproduct, we know ahead of the financial statement if we are doing well or not. In sales, we have so many sales we have to make.

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Jennifer, we want to make sure we share the right story so the board knows the right story. I threw a thing out before about how we have some mechanics on our functioning so we have a good idea of whether we are making the grade or not when we see the financials before it’s too late.

Jennifer: Especially now, with available technology and being able to get much more to your reporting dashboards, depending on the size of the organization and resources, there is a cost benefit to how granular you get. Setting some basic metrics that are reported out weekly, like cash status. How are you tracking cash flow for the month, especially based on when your receivable dates are, when you expected money to come in? How are you tracking as far as expenses? One thing that can be difficult to monitor is credit card expenditures throughout the month. Back to that 13-week cash flow. How are we actually tracking? Are things happening as anticipated? Has something come up that has thrown things off? That is a very easy weekly reporting out.

Certainly right now, there has been a big shift to digital and social selling and a virtual presence that maybe wasn’t as significant for the organization before. If you’re focused on web traffic, what are visits each week? How are things tracking toward the cost of acquisition of a new donor or bringing in new money for the organization? It varies based on organization size, structure. Setting up that initial scorecard and being able to report out those metrics weekly and measure against them and manage in real time is critical. So much of that can be automated now.  

Hugh: Jennifer, where can people go to find out more about this organization that you so capably represent?

Jennifer: Very kind of you. The website is CitrinCooperman.com. I love to connect with people on LinkedIn as well. Feel free to reach out to me there.

Hugh: How can nonprofits find the efficiency leaks? Let’s talk more about the leaks you mentioned earlier. We talked about the nuts and bolts of accounting. Generally speaking, what are some leaks we need to look at?

Jennifer: This is an area that I will say I know organizations have to be so careful about how and when they spend their money. This is a moment where getting a couple of hours with an advisor and getting some outside objective help can be important. There are a number of ways to accomplish that. That is because a person who works with a range of organizations can sit down and walk through how you should look at the process of bringing in money, your outreach process, your campaigns, your donor efforts, your events, whatever is appropriate for the organization historically and what the market is doing right now to bring in money.  What worked over past years isn’t going to work moving forward. We can see a lot of money wasted in researching new opportunities and spending money on things that no longer work.

As far as technology, right now, with hybrid work models or work from home models, we can see a lot of money being wasted on applications people signed up for trials for and are running month over month but nobody is using. Or multiples of things. Cybersecurity or virus protection or things like that that aren’t right for the organization, and there is five of them that have been purchased over time. Somebody able to handle the cost assessment for the organization, but also human resources. Having volunteers is so critical. Is the organization compliant? With that slight incremental spend on that area, would they save money in a number of areas of the organization or drive more income coming in?

A third would be technology. Are there ways to automate things? Could a different web presence increase social attention or the ability to make it easier for donors to give you money and drive additional traffic to understanding your mission and being supportive?

When you are looking at service delivery, whatever it is you are giving to the community, could you be doing more? Are there web programs now? I spoke with a number of churches and other organizations who were struggling to reach people they used to see in person. They really found virtual ways to start to connect and monetize that.

Looking at individuals who can help you both assess cost reduction, cost management, but also business development and how to move things forward, those skillsets are important right now. Methodically going through each area of the organization is the path to getting there.

Hugh: Now is a good time to revisit all of those, isn’t it?

Jennifer: It’s a really important time to do that, yes.

Hugh: We are really finding out which meetings we could have had on Zoom all along.

Jennifer: Yes, that’s true. I think that will stay for a long time.

Hugh: I think we are becoming more efficient. Out of every crisis, we can find some things to help us.

I want to talk about the correlation in the strategy for a company, the development plan, and how that fits in the budget. What we teach in SynerVision is there are eight streams of revenue: donations; grants; sponsorships; planned giving; events; in-kind, which saves money, but you could get a part-time employee, space, food, printing; and partner money. You mentioned churches and service clubs, which give small amounts of money for specific purposes. They don’t feed people or house people or do free clinics, but they support them. They partner with organizations that deliver the services. That’s not really a donation or a grant; it’s for a specific function. I isolate it as partner money. And then earned income. At SynerVision, people belong to our community. That is revenue that is mission-related so the IRS doesn’t classify it as unrelated business income. It’s mission-related income. We have two team members who used to be revenue agents.

So it’s important to look at all of our money through the eyes of how are we in compliance with our guidelines as a tax-exempt organization? We ought to be having all of those as various streams of income.

Jennifer: As a list, that is impressive. Because we are talking about getting back to basics, looking at the core of that list is a great set of eight to begin with. Depending on the organization, some other things may crop up. This is a perfect place to start. There is a lot to be done there. I would start through that list and go with a before and after. If this assessment has not been done for a while, it’s likely that a number of those revenue sources and the path to getting them is outdated.

Hugh: Yes. A gentleman who is one of our advisors is a CFRE with the Association of Fundraising Professionals, he would love if more organizations would do this. A person like that really needs good financials so they can feel adequate when making a presentation.

I am a conductor. When we get together with an orchestra or choir, we have to have a score so everyone knows what to sing and when. The correlation in a board is you got to have the strategic plan. It’s an engagement tool. People know where we’re going and how to quantify those results. The fundraising professional can do a funding plan based on those targets. These are going to cost this much money, so we need to generate that revenue. How does the financial reporting equip that person to go out with confidence and talk to donors? It’s all public information. If people want to know, how do we have that conversation with people about our financials?

Jennifer: Having accurate financials, realizing again they are public information once the tax returns are done, shows that the organization is polished and has information that a donor can rely on. Also, this now carves out a section of the financials related to business development efforts.

I will pivot on what you asked slightly. Having sales or business development people or representation for the organization that is selling as a salesperson would in a for-profit company know who they are targeting, know what the reasonable spend is to get a donation in because if you are spending exponentially more than what you are bringing in, that is not the path you want to be on. In that presentation moment, building ideally that one-raise opportunity and also establishing relationships with repeat donors makes it important to have a sales deck. Being able to represent the organization in both as far as the mission and purpose of the organization and why it financially makes sense compared to alternatives.

Back to that financial stability, something someone can be proud to associate their name and reputation with and can feel confident that you are going to be good stewards of their money. It all comes down to that moment you have to make an impression personally and also for the organization. Being able to track it both in pockets of how money is coming in in those eight areas and sub-divide that by mission. All of that is now looking as you would at a sales department and their performance. Is it driving increased value scale of the organization? Or at least allowing it to run successfully.

Hugh: That’s a word nonprofits hate: sales. Development of sales. I have a good comment from Jeffrey. Jennifer, you talked about audits early on and staying in touch. Jeffrey, do you have a comment?

Jeffrey Fulgham: First of all, I really appreciate everything that you’re saying, and I wish everyone would listen to this and understand how important it is. This morning, we were even talking about some of the aspects of these, positioning for success and making sure that everything is lined up well so that funders can look and have that level of confidence.

The one thing I put in the chat was about the relationship between the auditor and in my case either the development person or the CEO of using them as a resource as opposed to a person who is doing the audit. I always have treated my audit people as advisors to the organization and would often communicate with them sometimes even more than our CPA because I knew they would be the ones looking at this down the road. I want to know the answers now. I don’t want to know them when we are sitting in the audit and they start asking me questions about this, that, and the other thing. I would always get their advice, especially if we were making a major financial decision, on the information and get their opinion on it. Or I would have the CPA and the auditor on a meeting together to look at things so that we were all on the same page before we would move forward with something.

Hugh: What do you think of that?

Jennifer: Jeff, thank you. Pleasure to meet you over the air here. Yes, communicating with the auditor throughout the year is your opportunity to leverage their expertise to help you before it’s too late. That is part of what shepherded me out of audit in seeing the after the fact information. If I could have helped during the year, we could have made such a difference to move things forward to better protect the organization. But I also think that it leads to a discussion about-

In our firm, I am one of the leadership individuals in our outsourcing division. As organizations are thinking about how they get their work done throughout the year, auditors are somewhat limited because of independence in how deeply they can help you. This is one of those times where, back to the sources of revenue and overall governance and strategy for the organization, you may think about how you leverage internal team members versus outsourcing opportunities and working with professionals who do bookkeeping, accounting, closings as a complement to your audit firm and seeing what is happening across different organizations as well and can carry that expertise in. Jeffrey, your point is so important. Your accountants and advisors want to help you through the year. Budgeting for that so there are no surprises. Planning for it and getting that expertise can make a huge difference.

Jeffrey: I have been really blessed that the organization I am the board chair of now, our treasurer is a retired CPA. He has a firm he owned and has now sold. That firm and their CPA also are under contract with us. We have multiple relationships. The organizations I’ve worked for, virtually every one of them, our treasurer was a CPA, and we almost always had a CPA firm that was also doing things. Of course, a separate audit firm. We had all these layers making sure there were all these checks and balances and that so many people were looking at it.

I really appreciated how you mentioned people having the right credentials looking at all of this. It sure looks good when a funder sees that caliber of focus on financials and that so many people are paying attention who are credentialed. I just think it makes a big difference, especially with big funders who know what to look for as well as foundations and corporate sponsors who are dealing with this kind of stuff every day. Going back to what you said before, if they look at this nonprofit as an organization that is functioning as a business first and a nonprofit second, it bodes well for them.

Jennifer: Absolutely. Everyone wants to be a part of an organization that is well-run. Nobody wants to be part of something that makes the evening news for the wrong reasons.

Jeffrey: Right, exactly.

Hugh: Jeffrey, thank you so much. He is one of our advisors at SynerVision. We have the best of course.

Jennifer, any more on that? It occurs to me, why do we not want to talk about money? What’s with that?

Jennifer: It’s like our own personal money. It feels private. It feels uncomfortable at the organizational level because you want to be focused on the mission of the organization and giving. The nuts-and-bolts conversations about money somehow seems to cross over into an area where you are asking someone A) to disclose their capability to give but also B) their willingness. It gets personal. Many times, for an organization, the people put in the sales seat are not salespeople. They believe in the mission of the organization so they are out fundraising, but they may not be professionally sales individuals. It’s shifting the thought about what is being done with that money? What is the end goal? Versus that feeling on either side that there is a hard push or hard sell. Experience doing it but also focusing on what is the goal can help make that more comfortable.

Hugh: Absolutely. Having confidence and understanding of the financials gives the whole leadership the ability to speak not only with authority but with confidence.

We talked a little bit about technology. We’re in a new era. There are some good things about technology. How do we take advantage of the wealth of technology without overdoing it?

Jennifer: This is an area where an assessment can be really helpful and necessary. First, core disaster protection. Organizations are all over the grid as far as everybody still using tapes of old to make backups of data, and keeping everything internal versus leveraging cloud security and hosting services and online solutions like QuickBooks Online versus hosted.

Getting a small amount of outside expertise to run through the technology setup- Let’s remove the remote shift for a second. I used to spend $20,000 on a server for 11 people with backup tapes for something you can now pay $30 a month for and accomplish. Because there is this want to hold on to things we are used to, sometimes we can be overspending to get protection that isn’t adequate anymore and have a structure that isn’t protected against weather, storms, a power outage. It doesn’t offer us the ability to work from anywhere, which obviously became important.

Also, when we remember there are unfortunately individuals working every day to compromise our data, to gain access to our systems, to hold things ransom, it is necessary to make sure that we are staying current enough, that we are protected. Making sure that we are looking at cybersecurity. And data security because we are not only having employees but also volunteers work in office or remotely. What is happening to our data as we are gathering donor information and payment information? Is it being housed in a way that is compliant, safe, and stays with the organization and is protected? Do we have situations where we are reaching people in their homes in a way that is secure? Depending on how you are sharing data. Or if they are logging into your website, what is the security of your website?

Technology overall, getting an assessment. That includes your accounting software, your donor management software, your ways of collecting money. All of those things with an assessment can be ways to save dollars, get better results, and stay safe.

Hugh: Wow. That’s not considering user error.

Jennifer: Yes, that’s before we get there.

Hugh: Sometimes we try systems, and then the systems go bazonk. If you had everything on your laptop and your laptop dies, you are hard up. I don’t know how many people store their backups on the same place they have their main data. That is a profound point that we don’t even think about sometimes until it’s too late.

Jennifer: Right. It’s still quite common and can be easily resolved.

Hugh: This hour has just flown by. You have so much helpful data. I will say it’s required viewing for my membership. I can’t require anything. We think as a boss we can tell people to do things. We want to inspire people to step up. What you have done is inspire me to step up my own systems. None of us are exempt from looking at our own systems and skills and improving them. We always need to be doing that.

We are hopefully going to come out to a post-COVID world, and there are some new considerations that we need to think about. I said to you earlier I don’t think we are going to have normal again. We are going to need a radical shift to a new standard. What are some things people ought to consider in rethinking leadership and systems going forward?

Jennifer: First of all, we need to realize that your community as you’ve known it when you step back outside won’t look the same. There is the likelihood that people will stay remote for some portion of the time and not go back full-time to an office or not live in the same place. One thing that is going to be important is a lot of your support system may have relocated. You want to think about the fact that we likely won’t leave digital. It is important to continue to expand and nurture this digital world and use it as a disaster planning point so this becomes an area of expertise that you can gravitate back to at any time and still live in because it will be where there is so much attention going forward.

I do think that as everybody ventures back out, events have been such a large part of organization planning and funding for so long. How do you look at that in a way that remains successful but flexible? That keeps people safe because we may be in masks for a long time. I know that is geographic and may vary. Back to that fixed expense versus variable. Looking at keeping the organization nimble and agile for a long time is going to be important.

From a leadership standpoint, and this is true of the board, of the organization leadership internally, is do you have the right skillsets and functions and work assignments? You mentioned before having a working board. Is everybody not only willing, but do they have the expertise needed to contribute the skills that the organization is going to need to be successful in this new normal? If not, where are they going to source it?

Hugh: Absolutely. Those are wise words. We need to be prepared for anything. My wife is clergy and works for the Methodist district. In the days of pre-COVID, we sometimes had snow and got a Sunday that we were snowed out of church. In the old days, we didn’t go to church. Now, it doesn’t matter. We just do the virtual thing. There are some ways we have developed that are beneficial that we can then repurpose. Having the bookkeeping online is such good advice.

*Sponsored by SynerVision’s online community*

Jennifer, you have added a wealth of information to me and others today. What do you want to leave people with?

Jennifer: Whether it’s a nonprofit or an organization, there is never a choice to stay the same. Something is either moving forward or backward. This competitive environment calls on us to be resourceful, collaborative, and aggressive about pursuing and welcoming change. However someone takes the next steps, it’s important to keep moving.

Hugh: Thank you for being our guest today. It was priceless information.

Jennifer: Thank you.  

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