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Nonprofit Radio for March 30, 2018: Financial Management Software

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Karen Graham & Andy Wolber: The Donor Journey

Nonprofit Radio is never boring. Even talking about financial management software. Listen as Idealware publicly releases their guide to selecting the right software for your nonprofit. It’s important! Trust me, Karen Graham and Andy Wolber will convince you.






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Hello and welcome to tony martignetti non-profit radio big non-profit ideas for the other ninety five percent on your aptly named host oh, i’m glad you’re with me, i’d be thrown into assaf ago dahna if you made me speak the words you missed today’s show financial management software don’t leave you do need this non-profit radio is never boring even talking about financial management software. Listen as idealware publicly releases their guide to selecting the right software for your non-profit it’s important, trust me, karen graham and andy wolber will convince you i’m tony steak, too. You will join this club we’re sponsored by pursuant full service fund-raising data driven and technology enabled tony dahna slash pursuant radio by wagner cpas guiding you beyond the numbers wagner, cps dot com bye tell us turning credit card processing into your passive revenue stream. Tony dahna may slash tony tell us i’m excited because we got an announcement here with public announcement, but s so i’m gonna introduce the people we’re going to be making. The announcement first is karen graham. She is a sought after speaker, trainer, writer and consultant with expertise in technology, leadership and innovation non-profit software and digital strategy. As ideal wears executive director she leads a team of researchers, presenters and writers who create technology. Information. Resource is that helped non-profits put their visions into action. She’s at karin t graham idealware is at idealware and idealware dot or ge. Andy wolber he’s, a technology consultant to non-profits. He teaches a course on non-profit and government technology for grand valley state university, and writes about google in the enterprise for tech republic. He’s at a wolber and wolber works. Dotcom welcome count graham and andy wolber. Thanks, tony. Somebody talk, please. Okay, okay, you’re welcome. My pleasure. I’m glad to have you thankyou for, ah, reserving your public announcement. Karen graham of this report for non-profit radio. What is the report? You don’t need to be back on the show and have a chance to talk about something brand new. Awesome, yes, i can hear the excitement in your voice. You might try to kick it up a little level a little notch, but i hear it, i hear it. What is the report, what we publicly announcing? This one is a guide to financial management software for nonprofit organizations, and i would say this is particularly suited for small and medium sized organizations, and i know that your audience, too so that’s great, absolutely and and for anybody who is thinking that maybe their current accounting software or financial management system is not meeting all of their needs, and they want to explore other options. Okay, we’re going to talk about cem ways you might you might know that some symptoms of that and, uh, we’ll go through the report and all let’s see let’s ah, quaint people remind, i love idealware i love the mission of idealware, but you will articulate it better than i i don’t know if you’ll be as enthusiastic as i am. I hope you will be remind people what does idealware all about? Well, i am the executive director, so you would hope that i would have enthusiasm. I am hopeful my fingers across. Yes. You know, tony, i thought it was it was kind of funny to me that you said the show was never boring even when we’re talking about financial management software. Because when you invited me, i was thinking like, i’m excited to be on the show, but you probably picked me to be on the most boring show of the whole year, so let’s, try not to make it that way. I’m excited about all of the work that idealware does even when we’re talking about a topic like this, which is maybe not the most sexy topic, i guess hyre i’m excited about all of our work because it helps people solve real problems and helps them operate there non-profit organization better and make good decisions without as much stress and uncertainty. We exist to help those people who work in non-profits who are responsible for technology decisions, but they don’t necessarily have a technology background, and so they need resource is they’re smart people, they need knowledge resource is to help them think through their decisions and help them understand trends and best practices. And so we do impartial research on technology topics, and then we publish guides and workbooks software reviews, and we also do a lot of online training and in person workshop to help people to make those kinds of decisions with confidence. Now i have ah first became aware of idealware years ago, before i knew there was a karen t graham affiliated with it because people used to recommend what the the the fund-raising data but was fund-raising database report was it was the c r m or was it? Fund-raising nancy now, with so many years ago, i can’t remember, but but it had to be good. Do you remember the official title of the one i think you’re talking about? The official title is the consumer’s guide to low cost donor-centric sustainers okay. And it’s now in a fourth edition, i believe, and that’s been one of our most downloaded publications ever. We used to yeah, people would refer it to refer me to it. Oh, and andy wolber don’t worry, we’re gonna get to you. I don’t want you not forgotten, andy, you’re there. I just want to get through some important info about idealware yeah, people used to just mention it to me. Like i said before, i even knew what idealware was, and so i went and looked at this report, and this is an analogy i make sometimes sometimes you don’t seem thrilled with this analogy that i make to consumers union, but to me, you’re the consumers union, their consumer reports that consumers union is the non-profit that creates consume reports of non-profit technology, you did these unbiased reports, we’re going to talk about how you make sure they’re unbiased and you now in that one, you had the that’s colorful side by side chart with features and, you know, dots for which features existed in different ones, and to me it was the consumer reports of non-profit software, i loved it, and we were i’ve been talking about idealware on non-profit radio on and off, and even before i like i said before, i knew there was a guarantee. Graham so, um, i don’t know how do you feel about that? Consumer reports analogy, i some people have compared us to consumers union, others have compared idealware to gartner or forest are sabat that doesn’t really bother me on a good okay. What? Okay, yeah, i think that all of those organisations are well respected and trusted. No resource is. And in a way, i’m proud that idealware would be in that same category. Yeah. Okay. Excellent. I that’s why i put you there an objective objective research. Okay, we have just like a minute and a half before break. Oh, andy, we’re going to bring you in after this first break. Karen, how do you assure us in a minute and a half that this report is unbiased? Objective, not sponsor driven, etcetera. I’m glad you asked about that. We have a very strict firewall between our editorial process and our funding process. And so on this report, i actually worked on securing funding through sponsorships. And the student reader might notice that the sponsors have products that are covered in this guide. But let me ask andy. Andy, did you know who the sponsors were? While you were working on the research? I had no clue. Better say no. Good. Okay, now, karen did karen, did he have an important thing? Did he ever ask? Did he ask? No. Okay, i want make sure he’s honestly could have one of our partners on the report. And important partner was fm a, and they contributed a lot of expertise to this report. And at one point there executive director asked me who the sponsors were and i said, you know ill that i can’t tell you who they are because i don’t want to buy us the research. So that’s something that we take very seriously. We we don’t let any of the people involved in the research team know who the sponsors were until the report is ready to publish. And it’s it’s, not a pay to play situation. Our sponsors are all very dedicated, teo. Advance. Acknowledge in the sector to helping people make better software choices, whether they choose their software or somebody else’s, they want to get fit. And so they committed teo funding this and letting us publish something that they got no approval over. All right. And he got to say two words before this break. He said no and know so thank you for that big contribution, andy. You’re done now know that’s not true, but we do have to take the next. Okay. Yes, we got to take a break. Pursuant. The current paper is demystifying the donor journey. You heard me last week talking to taylor shanklin about this. You heard it. So why do you need this thinking paper? You don’t. But for someone who did not hear the show, their life is incomplete. I might i would go. So far as to say, even inadequate without it, send them to the paper, then send them to last week’s show for more detail. Their life will be complete. You will be a hero. It’s demystifying the donor journey it’s at tony dot m a slash pursuant radio. Now back to financial management software guide. Okay, andy wolber let’s bring you in your research around this thing. What what was the research process? How’d you go about creating this guide for us? Well, we looked at the start of the existing i’ve worked with la non-profits so i brought a lot of personal expertise to talk to some folks, various organizations that i’ve worked with over the years that deal with various financial packages and also spoke a little with some of the effort make insulting who are working with of wide variety non-profits and systems as well. So we looked at the landscape. What is this fm a karen mentioned it also does that stand for something anymore? Or are they like aarp? That doesn’t want to be the association american, retired persons or nail that doesn’t no longer wants to be the national abortion rights action league, are they? Just an fm a or do they stand for something? Yeah, karen, i’ll defer the u n if that’s an acronym or not, do they stand for anything? I mean, i know the stand for things, but what do their letters stand for anything or now? Yeah, i think it started as a financial management, so see it? I don’t want to say the wrong big radio, though, but they just go buy fm now and it’s an organization, a nonprofit organization that provides consulting and outsource services for accounting and financial management for other non-profit okay. And what was their role in this guide? Andy, do you want to talk about that? Sure. Well, what was interesting is so they don’t have had initial ideas and an initial list. Sorry. Hey, hear the systems we see and use a lot. I looked at that and said, well, you know, what about these? And so we widen that search and scope a little bit. Andi also did some tweaking updating of some of the so our features and focus. So we brought into the look a little, uh, based on just serve other packages that are also used in the field there’s a wide variety of solutions, there’s several things that vendors have moved systems from, you know, being client server only to cloud. And so that there’s been a lot of movement in this in this sector in this industry, so we started with some of their their ideas and their list way expanded added to it, andy i well, since, since karen says she doesn’t exactly mind my analogy to consumers, union consumers report which not exactly overwhelming endorsement, but i’ll take it from her. I analogize this to their toe a buyer’s guide. It looks like a buyer’s reads like a buyer’s guide to me. Um, now, um, let’s, let’s define a little deeper. What what it is we’re buying. What? What characterizes a financial management system? What, what? What pieces doesn’t have that that we’re thinking about possibly changing if we’re reading this buyer’s guide? Sure. Well, at the core of this is a system that helps you, you know, understand helps a non-profit major, typically an executive director and other leadership, both staff in volunteer understand where the organization is financially and so in a small organization, that sort of thing typically sits at a no it’s core it’s the, you know, accounting system. So you’re just you’re really trying to understand what you’re where your financial position is, okay in the twenty, thirty years ago term aarp enterprise resource planning no, sir. Came in tow scope. Um, and those sorts of systems started to heimans allow an organisation to track financial for on the financial implications ations of both products and people activities throughout the organization. So as you get bigger, your financial system starts saying compass mohr system and i saw a sort of a spectrum of you may even mention this in the report. Maybe that’s that’s where i got the idea from spectrum. So there was simple. And then there was a little more sophisticated in the middle. And then there was the aarp. These enterprise resource planning systems eyes that affair. Is that a fair assessment of what the spectrum looks like? Yeah. And and what that is and what’s interesting about it is that unlike in some organizations where you start and delineate by the size of an organization, you know, a small organization has a small system in the financial management world. It’s a little different. It’s more. Related to how complex or how many things you need to track. So a small organisation with a large number of funders and a large number of programs actually has a pretty complex accounting and financial management, so they may actually need amore complex system than a organization has a very large budget but really has only two or three programs and two or three funders, okay, makes a lot of sense. All right. Um, uh, charity graham let’s bring you back. We were going to say this several times throughout the show, but where can people get this report? Oh, great question if you if you’re listening to the show live, if you go teo idealware dot or ge it’s right on our home page, it won’t stay there forever. So if you’re somebody listening to the podcast later in time, you could just go on idealware dot or ge and there’s a search box on the home page. If you just type in the word financial, you’ll get right to it. And then you can enter your name and email it just to register and then it’s a free download. You’ll get a pdf document. Okay, thank you. For not asking. Name, address, organization, title budget size, annual revenue, zip code. You know, etcetera. Thank you, it’s. Very. You know, i bristle at those things. So it’s. Well, we personally asked a few of those things, but they’re optional. And that just helps us to make sure that what we’re sending two people is relevant in the future. If they option to receive our e mails. But that’s also optional. Okay, i guess when i saw the form, i realized they were optional. Okay, very good. Thank you for that. Um okay, let’s. Stay with you. Karen, how might we know? What is some symptoms now? The report goes through, like six or six things or something. That’s not just touch on what some symptoms might be for needing a new financial system like, you know, just two or three. And these people are gonna get the reporter. I mean, it’s free for god’s sake. So they’re going to get it so that’s, just touch on a couple, right? I’ll try not to overwhelm me with too much detail here. One thing that stood out to me here is when people are manually entering data into two different systems that could be a sign that maybe their current accounting system is not really meeting their needs, or maybe maybe it actually could meet their needs if they invested in some kind of integration. Now what’s an example of that together, like what kind of what kind of data would you be putting in two different systems? Give me a concrete example, the thing that i see most often, and maybe andy wants to chime in on this, too, but i think i see most often is donordigital so it used to be that before there were good donor-centric was tracked in the organization’s accounting system, and so they would enter individual donors and the date that they gave and the amount that they gave, and it was any kind of restricted gift, you know, they’d have information about that, and so that have it has stuck with a lot of organizations, and now they’re entering it both in their donor-centric and there financial management system. Now you could argue that that’s not actually necessary at all tohave the data in both places, at least that level of detail but but if you do want to still have that data in both places. Now, there are ways, depending on what system you choose and what kind of integration you have to automate that a little bit more, so that you’re not manually king in all those details in two different places. Ok, ok, give us another common symptom. You see, um, and if you want to chime in on that sure. Well, i mean just it. And answer a little of what you said. The payrolls, another area that you people manually receiving data. But another symptom is things like a lot of spreadsheets. It’s, an organization is using a spreadsheet to track the status of all their different grant. That is often a sign that they could benefit potentially from a different financial management system is actually designed toe help them, uh, track their spending. And for all of those distinct grant that’s one of things that the organizations really struggle with when they work with a system that can only handle a couple of coding fields that really can’t scale teo do sort of comprehensive fund accounting to track the the grand program number of grant programs that they actually have. So that’s another for the another sign that the symptom is, you see lots of spread sheets on the side being used to say, ok, and program a we’ve spent this much program would be sametz spent this much in that has it can be hard to tease out from actual financial statement s oh, man that’s good indicator. So you mean so for each different program? Or fund? They have a different spreadsheet. Is that what you’re describing? Yep. Yeah. Okay. Okay. We used to hear about that from from one of our sponsors. Um, which is mentioned in aa? It’s just mentioned you mentioned apple o’s in aa a sidebar. They used to make that point about that being not so that they’re not being efficient. Okay, the guide also talks about access from from certain devices. Like if you have to go to a dedicated computer thio dua certain task right? To say a little more about that, andy sure, that that’s really the root of a lot of organizations that used to see they’re still working with insults or a client server or single system software? Um, yeah, that that’s still out there still widely used, but that can be difficult for folks to actually get access to information. They have to be on site on the local network to get information. Or they have to do the shenanigans of a remote log in or remote desktop and looking at a screen through ah, some sort of ritual display system or in their face so that many systems have transitions from needing to. Be on site thai there being hosted or being in the clouds. Some of the newer systems are sort of cloud natives and work really well and some older systems to our club native. But work really well, either within in a browser and also some of them support apse on mobile devices. So that’s, another sign is if you really do need more multiple people to access data easily from different locations. You start toe look in a new system, karen. A few years ago, it ntcdinosaur i captured an excellent panel interview. That was, in fact, it had someone who i think is an advisor to robert winer. Is he c an advisor for you on some? Yes, he has. He has been a subject matter expert for some of our research in this. Okay. And he’s also been a speaker on some of our webinars. Okay, excellent. Yeah. I thought i remembered an affiliation, so he was one of three or four on the panel and the this is what i love about ntc. I mean, the panel was devoted to this niche topic of maybe you’re blaming technology when people and or processes are the problem. So with that leading, you know, there might be a problem other than your financial management system in your non-profit can you can you talk about that? Yeah, absolutely. But i might rephrase that to say almost certainly you’re blaming technology when people in processes are at least part of the problem. So yeah, let’s not overlook that. One thing that i know we found in the research was that option. Somebody will think that she needs a new financial management after a package when really, what she needs is to revise her chart of account. And so what? The chart of accounts is for people who thank you for keeping him. Thank you for keeping yourself out of jargon. Jail. Yeah, yeah. That’s, that’s just the kind of the master list of categories of revenue and expenses. So you use that in financial reporting, you use that to connect every transaction that you enter in your accounting system, teo, to the overall categories. And so is you. Find yourself explaining coding to your board of directors when you’re presenting the financial reports to them. If you find dafs miscoding things when they’re you know, writing down what something should be charged, too on their expense report or their recedes, then that’s probably a sign that you need to review your chart of accounts and think about revising that first before you start looking dafs software change, okay, can you give us another example? I know that could be hundreds of things, but another there’s another example, come to mind of where the person or the processes that there were people there, the processes are the are the trouble anything else? Well, another example that i see all the time, which is not limited financial management software, there are all sorts of technology is user adoption issues, and, you know, sometimes people aren’t really getting the full value out of the software because they haven’t done the training, they haven’t customised the settings to fit their needs, things like that so that’s important, too. Okay, and you work with a lot of non-profits and karen didn’t ask you to chime in this time. By the way, karen, if you say the word chime again, i’m cutting off your mic. So you got to find another word. You said it twice, china’s twice. Now that’s enough! So if you you have to find another word, you have to find another word to invite andy, i’ll goto with the saurus or something while i’m talking. Andy, another word to invite andi, teo contribute, but you can’t use that either, because i just did to something that you may have said or add on, you can’t use that either a andy, you work with a lot of non-profits do you see? What were some symptoms? You see where people, about your you’re in a difficult position of having to say it’s, not really technology it’s you. But you know what are some other symptoms? You see where people are blaming technology erroneously? Well, i think i found the sea. It was people were repeating a process that air doing a process in a way that is no longer optimal it’s sort of a habit that folks have gotten into that can be done more efficiently. So i think of things way report we mentioned something like expensive fi, which helps people track expenses, and so the you were tools. Now, it’s an app on your phone to take a photo of an expense report you can start to capture data that way the older way, you know, taking the stuffing the receipt into a folder or into your bag, and then digging it out once a month and going through the grueling process of no king in the details is a process that doesn’t have to happen. So for my perspective, i see people missing that chance to take advantage of some of the newer tools that left the more differently. And since many folks they’re carrying around, you know a phone that has a camera on it. Let’s, let’s, use that camera in a useful way to save the taiping time. Yeah, people just don’t know. So that’s. Why this buyer’s guide, my phrase, is it’s my show so that’s it that’s, the explanation that’s. Why this buyer’s guide is so valuable because it opens you up to things, you know, you see things that you’re doing manually, that you don’t need to anymore, you can be questioned, your processes that that’s important, right? Yeah, i did, and i think that’s actually hoping way. Think, yeah, has folks get a new system and explore what system will work for them? That’s a prime time to look, look at your processes, do some process mapping, which i find a fun exercise of, you know, working on a a dry erase board with lots of markers and post it notes and things to sort of figure out who’s doing what win in this process. How can we redesign this so that we’re doing less work, and we’re getting the information we need quicker. Okay, that’s, an excellent leading to what i actually want to talk about next, which was how to get into selecting a new system. Um, who’s, uh, because because workflows, you know, mapping your workflows is a part of that. Who wants to speak to that? Most eloquently, i’ll let you decide amongst yourself. Okay. That’s. That’s. Good. So i’m gonna point. Parenti graham okay. Congratulations. With democracy of two eyes is frozen. Frances. No wonder we have trouble united states. Fifty million. Okay, that gets it in the report that there may be drilled down on one or two that i think are important way. Ok? Yeah, we’ll stay. We’re not goingto yeah, we’re not gonna talk about all the way can’t do that. I tell you what, i’ll let you let you think about thea the couple i’ll walk through the first one or two and then you can mention one or two that are important to you. And you can give some thought to that while we take this break bradunas cps, they’ve got an archive webinar that may pique your interest. Prepare your nine ninety for success. If you are one of the fortunate organizations that delights in completing the full nine ninety. Not that sissy easy or the end postcard, but the full then you want to listen to wagner’s advice? The webinar includes common mistakes and most damaging mistakes. Obviously the ones you mostly want to avoid. It’s all at wagner cpas dot com click resource is than webinars now time for tony’s. Take two. You will join this club. I joined about six months ago. It’s the, uh, it’s the dead parents club. And i have found that people who have lost parents, i know it. This is there’s a bond there’s an empathy and an understanding that i did not have before i lost my mom last october. And now when i talk to people who are in the club, um, i feel it, you know, and i realized that i just never really understood the magnitude of it. Of course, you know, you heal over time and you learn to accommodate and accept over time. But i just it’s become apparent to me over these five months. So november, december, jerry fremery much, five, six months that the people who have lost a parent, they just get it at a level that all the rest don’t. And yeah, i just became very clear to me while i was having a chat with a friend who had lost a father three years ago. So you’ll join the club and i hope it’s many years before you do my video on this. Is that tony martignetti dot? Com now let us return teo karen graham and andy wolber for idealware is release of when i called buyer’s guide selecting financial management software for your for your non-profit karin t graham is executive director of idealware and andy wolber is a technology consultant to non-profits ok, karen, you did your homework for ah, for that time. Okay, cool. Thank you. So talk about all this. We’re not doing all that now. I told you, we’re not doing what we’re not doing, all these people going to get the report and it’s important to put this in context. So we have thirty steps that happened before you even start looking at potential solutions. Okay, that is step for the first three are about getting the right people at the table and making sure that you understand your current situation you needs and requirements before you start looking at software options. Okay? And then there was the work of a mistake that i think a lot of people make they jump right into looking at the products, and then they become very oriented toward which product has the coolest bells and whistles. And they’re not thinking about which product is. The best fit for our needs? Yes, they’re not aligning, right, right. That is critical. So you’ve got to do your research up front before you start looking at packages and getting demos and, you know, being wooed by sales people. Um, andy, that was a very good overview. Thank you, karen. Okay, and you’re gonna get people are gonna get the report for god’s sake. They’re gonna goto idealware dot or ge it’s either gonna be on the home page or they’re going to go to go the search box and search the word financial it’s free for pizza. Just get it, andy let’s, go back to the workflows how does how does mapping workflows relate to your your search for a new financial management system? Well, i think it really is about that time both the folks who need operational data and the folks needs or decision making data and looking at how information’s getting into your system and then coming out on a recording size. So on the input side, things like you’re tracking expenses, you know, if we can simplify that process that’s fantastic if we can simplify payroll so we’re not recoding that each time. I go in and be properly allocated. That’s. Fantastic. If we can pull donordigital into the system in appropriate ways appropriate permission that’s useful. And then on the reporting side can the program majors the staff get the information they need? The board have the ability to look at information. How rapidly does that cycle time occurred? You are bored still dealing with princessa reports air they logging in and looking how our systems, howard decisions about financial matters being tracked and recorded or discuss um that’s where process mapping comes into play and that’s why it’s so important to get all the people who touched the different aspects of that process involved in the selection. And then? And then, as you’re mapping what happens, you see gaps where technology can fill in or what? How does it contribute to the the well with the report identifies as the next step which is starting to look at software solutions. How does mapping relate to the software you identify? Pain point. Okay. Okay. So process mapping is is what are we spending a ton of time on that? Yeah. It’s really painful. So things like we’re spending x amount of time. You know, every month, every year, doing program allocations were spending way too much time trying to understand or put together a report for a donor, our thunder, in order to appropriately say, here’s, how we spent your dollars sort, that sort of fiduciary responsibility grant recipient has so it’s it’s that piece where you’re saying, you know, we’re burning a lot of staff time and effort on this. How do we start to fix that? And looking at then what? You know, what does that make? What if we were to alleviate that peace? If we automate payroll, if we automate expense tracking, if we automate or streamline different processes? Um what? What benefit have what does that free up that let’s? Just start to think about other things. Aunt checker, tackle other challenges. You okay? So i i understand now. Thank you. You see, this workflows on the on the board and you nine people are involved in it, and it takes weeks to produce. And you know that that kind of a pain point. Exactly. Okay. Okay. Cool. Alright, now. Something interesting? No, no. Shutter mike off. No, you cannot. I said you cannot use that word. Again, i don’t want to hear it. Yes, you can. You can you can mention something related. Please, please do i will another way. That process mapping can be helpful is to prevent you from replicating a bad process in a new system. So as an example, let’s say you map out this process and you get to a step where mary makes a photocopy of the expense report and filed it in a certain place in the basement, right? And when you’re doing the process mapping, you can ask the question, why did she do that? Why is that necessary? And you might find out that there’s really no reason to do that anymore. Maybe there was five years ago, but now it’s not anymore necessary. So then you won’t look for software package that makes that process easier. You’re just goingto eliminate that. Ok, ok, i’m giving you a time out because you use the word chime when i admonished you. Not too. So i’m going to andy. I was going to ask you this question i was going to, but now i’m not you’re in time out. Um okay, andy a cz you’re considering these systems and something new and how it relates to what you were existing systems are. The report makes clear that they don’t always all play well together. And yeah, and you’re not going to talk to me because i put karen in time out, so you’re not going to speak to me. Is that what is that? What i’m hearing? You know, you can hear me. All right? I hear you. Fine. Yeah. Ok. You’re not punishing me because i will just shut the show down. It’s, over it’s over. Okay, i’ll just start reading. I’ll just read. I’ll just read the guy that people don’t have to download. I’ll just start reading. We’ll put people to sleep. Okay, theo audiobook that’s, right? Ah, produced your notebook. Yeah. Then i’ll have. Then i’ve licensing troubles with either way. I don’t get involved with those people on illegal and in a legal battle anyway. All right, so you need to think about compatibility, right? Yeah. You need to look at what? What other system needs to speak to? So there’s a couple things that when you’re looking for a new system that may naturally walk you down a particular path, and sometimes it is simplest to stick with with with a vendor that makes him the adjacent product. So something that already is designed to track your donor? Management, maybe they also make a financial package, right? Like blackbaud damn well blackbaud sounds force is one of the classics are examples of this with things like razor’s edge, which is the donor management system covered in the other guide you mentioned, and then financial edge next-gen which is designed to work well with its other tools. So if you’re in a circumstance where you have ah, don’t particular donorsearch system it naturally lends itself to work well with another that’s that’s a particular case, thie other is some systems that you may be dealing with, where you’re dealing with a system installed on server many vendors that used to offer those now offer a posted or cloudy alternative, so it may be that you can stick with the system from the same the same similar software you’re familiar with, but a different package or solution from that vendor that gives you a little more flexibility and ability to access data. But you i think that the report says you just want this to be one factor, right? You don’t want to go, okay? We have sales force for constituent relationship management, so we’re going to do sales force. For financial management, and we’re not going to look at anything else. You don’t want that to you. I want to go that way either, right, right. It should be a just simply be a factor that as a system for consideration to your list, okay, you really have to consider a much broader range of things, okay, i understand. All right, i just, you know, you don’t just automatically go now. What about help with financial enough, with the transition once we’ve selected, ah, vendor, can we reasonably ask for help with the data migration? Is that a fair game? That will depend to some extent on the coolest the system you’re moving toward most of the as you basically is. You get larger in scale and the price point the ladder. Um, you do have the ability to get vendors. They are familiar and can help you move data from one system to another. In other cases that you know what you’re you’re a very small sort of grassroots agency, and you’re just using your going from track and stuff and excel or just your bank account statements to something, you’re less likely to be able to get that help. But often you can turn to a you know, turning your accountant turn to a professional firm that can help you with that transition is you get a little larger. Okay. Okay, karen, you’re you’re aah! All right, you’re out. Um, let’s, talk about the so the this transition, the when is the good time to make the transition? What this this whole transition process is going to look like from from our existing to our new financial management system. Most of the people that we talk to as experts for this report suggested that it’s best to do it at the beginning of a new fiscal year. And but that also might mean that you will be running the new system in the old system and parallel for a little while as a way of testing to make sure that everything’s working correctly. And they also suggested that an organization should plan maybe three to six months lead time before they’re cut over date for the transition time period. So it’s going to take awhile to train the users, make sure that everything is configured correctly and test everything running parallel. That that sounds like that’s. A pretty time intensive deal is running two systems parallel. Well, it is, but your financial data is pretty important that it’s accurate. So many organizations will decide that it’s worthwhile to do the extra effort of double entry to have the confidence that it’s absolutely accurate. Okay, okay, i see, and how long would you do that? I think that varies. You’d have to evaluate, you know, how important is it to do a really thorough test? How much work is it for me? You know, if i was to do this, that idealware i would probably do it for a couple of days. Honestly, they’re pretty simple. And the stakes are fairly low for us. But if i were, say, the humane society of the united states, i might plan a little more than a few days. Okay. Yeah, you were alright. So all right, just gonna value on complexity. Which andy is a point that andy made earlier too. Okay, we have ah, fair amount of time left. I feel like we should get to the gate to the landscape of of systems, can you? Karen, can you? Ah found now i’m feeling bad that i put in time out. I never i don’t think i’ve done that before. I get to first, but so i’m now i’m feeling bad about it. So i’m sorry i made i made do it may do it again. I’m not sorry enough to not never do it again but so don’t transgress. But are you can you talk? About sort of an overview of the of the marketplace before we get to a couple of specifics. Sure, there are a number of systems that we covered that have all of the core functionality that you would expect in a financial management system, including the general ledger like, which is just tracking all the transactions in and out expenses, and, um, and income and things like that. It will also generate the three most important standard report that people use for financial management, the balance sheets, the income statements and the cash flow statement of cash flow or cash flow projection. And so you know, those all those systems that are in the first section of system listings in the guide i’ll have that basic functionality. Some of them also have some additional features that are a little more advanced, like payroll management, yeah, budget planning, more advanced reporting and coding and allocations. And and then there also is a group of tools that we thought was worth covering, even though they’re not specifically for nonprofit organizations and those are either low cost or even free services that are fairly simple, and they’re designed more for like freelancers entrepreneurs. Small businesses, but some non-profits have actually found them to be a good fit for their needs, too. We’re going, we’re going to move to a break, andy, while while we take this short break, i’m going to ask you, teo, reflect upon what karen just said and see if there’s anything additional you’d like to add. Gotta take a break, tell us credit card payment processing this’s, a long tale of passive revenue for you, you encourage local businesses that are already supporting you. Most likely they take credit cards. Will they move their payment processing over? To tell those tell us, of course, will look at their existing payment structure and give them a proposal with most likely lower fees. When they make the change to tell us you the non-profit earned fifty percent of telesis revenue for every single transaction indefinitely. Check out the video it’s at tony dot m a slash tony. Tell us for this long tale of passive revenue. Now let’s, go back to financial management software, the financial management software show with cannon andy, andy, anything that your reflection leads you to want teo add into what karen said. Sure, the thing that most notable for me in that first category of of system is that there’s a whole set of things that have moved from being client server to now hosted or or clouds those very clear distinctions answer how their systems are being offered. The he think in all of the systems to also keep an eye out for is the cloud. They are more advanced, incapable of supporting any sort of eyes, eyes. Something to look for. An fbi application programming interface for flandez programme and solution exchange information with programs and applications from other vendors. Okay, so a key thing to look for it, you know, what is this the vendor list that the system’s integrate with? Some of them have taken the step of having things like a sore. Where you concerned? Browsing looked for all the integration. So i’m looking for a payroll system. Hey, guess what? It works with the payroll vendor we used so that’s that so that sort of thing is, this is a first big step in that in that larger service system solution category. Ok. Thank you. Um, so let’s in our in our closing several minutes or so, let’s, let’s, talk about some of the individual ones. Now, karen, i do want to ask you how come in this report, uh, buyer’s guide. There isn’t. There isn’t one of those colorful charts like i was describing for the c r m that first brought me to idealware four, five years ago. How come, how come not not in this report? This is the first time that idealware has really covered this topic in death, and so we wanted to start by just looking at the landscape and helping people understand what their choices are and what the major points of differentiation might be that’s not to say that we won’t do something more in depth at some point. If there turns out to be a demand for that, then we well could. But this actually does use a little different methodology than a consumer report where we’re doing demonstrations of all the tools were working with the vendors to verify that all the information we write about them is factually accurate. That sort of thing is a little more involved process that we didn’t undertake at this first past looking at financial management system. So so the argast so this is the inaugural financial management system report, and you chose to publicly release it on non-profit radio. This is this is a double a double big deal. It’s your first one. No. Yeah. Listen to that enthusiasm, boy. Oh, knocking me over. Oh, my god. All right. Um ok. I get enough enthusiasm for all three of us. So that’s all right? I’m amusing myself. Um, okay. Eso are we comfortable naming a couple of these? You got you got abila financial edge. And you mentioned that one financial force fundez easy. How should we what’s the best way? I mean, i didn’t. I guess i didn’t really want to go. I item by item one of the features of this feature that you know, but how should we, uh, andy, i’ll defer to you, you’re you deal with a lot of zsystems what’s the best way to get people acquainted with the, uh, the landscape across these that we haven’t already done. Yeah, well, you know, actually using approach it took when it first started trying to sort some of this out. Okay, i think there’s some logical appearing now say that they can’t be used with other systems. Um, i think the system i’m most likely to see organizations use is some variant of quickbooks, right, that’s, that’s widely used. So i think you set that aside, start to look at them. You zsystems probably naturally lend themselves working well with partner systems. So things like financial force, which would pair very well with sales force because built on the same core platform, microsoft dynamics, which would be very strong if you’re working in that saying microsoft, cr, m, world and zsystems and then in financial edge obviously pairs well with blackbaud so those those sorts of solutions, you know, and then you start to move more towards a range of other things, you know, things like sage intact, which is many people will be familiar with because of it. That’s one of the solutions that epa dot com has endorsed on dh support so things like like that’s, our cloud solution would be familiar to many accountants across the country that would be likely helping organization. And then you move to the smaller set of all the smaller, more start up sorry they’re beyond start up in a blanket, but they’re still in there not not as wide market traction necessarily as those others and what gets interesting. They’re sort of the small business models pricing model, very significantly pricing it’s, less expensive. Well, it’s, just it gets interesting. So you look at things like freshbooks which is structured in charging by the number of clients you were tracking in the system. Kiss you, which is adding bundling for a fee of software plus access to a bookkeeper on a monthly basis. Uh, wave which is free, but charges based on a percentage of your financial transaction xero which is cloud native and really focused on building out a lot of connection. Tow hundred, the different system. So those types of zoho books which is more of a part of a bundle there, wanting to sell your old bundle of things that make your needs what’s interesting to meet is how the larger, more established, typical systems are embracing cloud and starting trying to evolve to add connections. And the smaller one are tryingto rapidly iterated in order to serve, to provide more robust services and more built out systems. So that’s for me that’s. What makes this landscape interesting? Yeah. Okay, so the bigger ones are trying to collaborate more. And the smaller ones are trying to get be more robust in and more comprehensive. Exactly. And the rate at which each does does those things is really fascinating. There’s a there’s. A sidebar. I think it is on on pricing. Some. Some are very upfront. And the prices are clear on the on their site. And you can get started immediately with a credit card and then others. They’re not transparent about pricing. Yeah, this is something i find very interesting, i think. It’s symptomatic of a little bit of serve. What? I reference just just now, the traditional vendors have been able to do the survey, you know, call us, you know, sort of the please inquire if you’re interested. If you have to ask about price, you’re not really, you know, it’s, you know, you need to be large enough to be able to have that conversation. Um, the more forward thinking cloud native systems and some are evolving rapidly are more transparent about providing price. There is a bit of irony and some of this i find that some of these vendors will you look at their sight and you say, oh, you know, buy-in pricing financial information is very important, and then you look for pricing and you can’t find it, which seems to be a very critical piece of priceless information to me. Yeah, all right. So some just they want to have a conference. They want to have a conversation with a sales person, in some cases in others it’s also about making sure the system system and really meet your needs so it can be for useful and constructive purposes. Not completely unreasonable, but but absolutely but it’s, very interesting, metoo to the vendors. They’re cheating the public pricing and that’s that, well, they still need to have that conversation right. We just have about two minutes left. Karen, how do you feel about systems that are specifically designed for non-profits versus systems that are not like a quick books? You have an opinion on those on that one versus the other. If i were just to be randomly assigned it non-profit and i had to advise them on which three products they should take a look at, um, i might say without knowing anything about them, i made say, let’s, look at three that are built for nonprofit organizations, but but that’s not to say that the ones that are built for kind of general purpose can’t be a good fit. So in some cases, especially where they need, they’re pretty simple. Those can actually be a very affordable and practical option. Okay, okay. Um, let’s see, we just have, like, a minute or so left. Andy, you want to you want to give me a closing thought, andy in ah, in about thirty seconds. We’re lucky to have a lot of options. Understand your need. Oh, and, uh, be open, tio, rethinking how you work and making sure that your financial system is working for you and that you’re not just putting data into the system to create reports. Yes, thank you. I love especially be be willing to rethink that’s. Andy wolber, technology consultant to non-profits he’s at a wolber and wolber works dotcom guarantee. Graham, would you like tio wrap up in about twenty seconds since andy covered that i want to go in a little different direction and say that, you know, every non-profit leader is expected to understand the basics of financial management, like they need to know how to interpret a balance sheet. Um, but there’s not as much of an expectation that they know how to select software and how to get the most out of their software investment, i think that’s something that needs to change, and i hope that by reading this guide that non-profit leaders will be able to acquire some of those skills. All right, get the report for god’s sake idealware dot or ge on the home page or search for the word financial and those closing words from karin t graham, executive director of idealware she’s at guarantee graham idealware is at idealware dot or ge, thanks to you both. Thank you, my pleasure. Next week, a conversation with adam braun, founder of pencils of promise. If you missed any part of today’s show, i beseech you, find it on tony martignetti dot com were supported by pursuant online tools for small and midsize non-profits data driven and technology enabled tony dahna, slash pursuant to radio weinger cpas, guiding you beyond the numbers when you’re cps, dot com and tell those credit card payment processing your passive revenue stream. Tony dahna slash tony tell us. Ah, creative producers claire meyerhoff, sam liebowitz is here is the line producer shows social media is by susan chavez. On our music is by scott stein of brooklyn. With me next week for non-profit radio. Big non-profit ideas for the other ninety five percent. Go out and be great. You’re listening to the talking alternative network to get into thinking. Dahna good duitz are you stuck in a rut? Negative thoughts, feelings and conversations got you down. Hi. I’m nor ing. Sometimes the potentially ater tune in every tuesday line to ten eastern time and listen for new ideas on my show. Beyond potential live life your way on talk radio dot n y c. Are you feeling unhappy with your body, shape or size? Ever feel out of control with food? I’m elizabeth from nourish the soul, and on the show, you’ll uncover the route to these imbalances and discover a permanent solution. Latto having a healthy relationship to food and your body. Join us every thursday morning at eleven a, m eastern time on talk radio dot. Hey, all you crazy listeners looking to boost your business? Why not advertise on talking alternative with very reasonable rates? 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Nonprofit Radio for March 2, 2012: BFD: Board Financials Dilemma

Big Nonprofit Ideas for the Other 95%

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My Guests:Andy Robinson and Nancy Wasserman: BFD: Board Financials Dilemma

Andy Robinson
Nancy Wasserman
What do you do for board members who can’t read your balance sheet? The authors of “The Board Member’s Easier Than You Think Guide To Nonprofit Finances” can answer that. Andy Robinson and Nancy Wasserman explain why understanding finances is critical so board members preserve your good work and protect themselves. Do their eyes glaze over when the numbers come out? We’ll help your board achieve financial literacy.

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Dahna hello and welcome to tony martignetti non-profit radio big non-profit ideas for the other ninety five percent, i’m your aptly named host and its march second, two thousand twelve well, i hope you were with me last week because there were some excellent interviews last week like this one take on teens aria finger she was that she is the ceo of do something dot or ge, and she had ideas for motivating teens and getting their passion points, finding their passion points to get them engaged in your work. Also pursue your hero’s journey. His journey took him across the u s in a vw microbus, inviting two hundred of the country’s most famous and powerful to coffee. Eric sapper stine is chief creative officer at living wonder, and he shared some of his amazing lessons. Both of those were pre recorded at last year’s next-gen charity conference, then last week also had going greater into google search. Maria simple, the prospect finder and our regular prospect research contributor, dug deeper into google search how do you search results different when you’re logged in or not logged in? Plus advanced search tips? It was a short course on search to help your prospect research this week b f d board financials dilemma of course that’s what b f d means what do you do for board members who can’t read your balance sheet? The authors of board members easier than you think god to non-profit finances, i can answer that. Andy robinson and nancy wasserman explain why understanding finances is critical to board members so that they preserve your good work and protect themselves to their eyes glaze over when the numbers come out, we’ll help your board achieve financial literacy also, roughly thirty two minutes into the hour on tony’s take to my block this week is our irs is helping you. They’ve got some helpful web content on a new site for non-profits i’ll talk a little about that we’re live tweeting the show this week as we do every week. Join the conversation, use hashtag non-profit radio if you have questions for our guests, send them bye twitter using that hashtag this show is supported by g grace corporate real estate services and i’m very grateful for their support even though i just flubbed that sentence, i really am grateful for their support now we take a break. And when we return, b f d board. Financials dilemma. Stay with me. Yeah, you’re listening to the talking alternative network. Durney are you suffering from aches and pains? Has traditional medicine let you down? Are you tired of taking toxic medications, then come to the double diamond wellness center and learn how our natural methods can help you, too? He’ll call us now at to one to seven to one eight, one eight, three that’s two one two, seven to one eight, one eight, three or find us on the web at www dot double diamond wellness dot com. We look forward to serving you. Is your marriage in trouble? Are you considering divorce? Hello, i’m lawrence bloom, a family law attorney in new york and new jersey. No one is happier than the day their divorce is final. My firm can help bilich we take the nasty out of the divorce process and make people happy. Police call a set to one, two, nine six four three five zero two for a free consultation. That’s lawrence h bloom two, one two, nine, six, four, three five zero two. We make people happy. Hyre oppcoll. Hey, all you crazy listeners looking to boost your business? Why not advertise on talking alternative with very reasonable rates? Interested simply email at info at talking alternative dot com. Metoo welcome back, it’s, b, f d board, financials dilemma andy robinson provides training and consulting for non-profits in fund-raising board development, marketing and earned income. He specializes in the needs of groups working for human rights, social justice, environmental conservation, historic preservation and community development. Nancy wasserman has over twenty five years of experience in community finance and social enterprise development her particular skill is working with clients on projects that must satisfy both financial and social or community goals. They worked together to co author of the book the board members, easier than you think i’d to fund to non-profit finances published by emerson and church, and i’m very glad that their collaboration brings them both to the show. Andy nancy, welcome. Thank you. Thankyou. Tony. Pleasure to have you about both. Andy. Pleasure to have you back. Good talk with you again. Thank you, nancy. Why is this important for board members to care about the financial condition of a charity? Because that’s, really? What? Your charges as a boardmember. You have the responsibility to make sure the organization is achieving its mission. And the way the best way to do that is to make sure it. Has the resource is it needs to do it, and the financial statements and the finance non-profit finances how, you know, pretty quickly, what’s going on, especially if you’ve you’ve got that information. You also have some responsibilities to the community to deliver non-profit and that does achieve its mission and does it in a responsible and raducioiu fiduciary appropriate way so boardmember czar have a fiduciary duty to the charity, right? Absolutely. To the charity and to the public at large. Okay, s so why do you say the public at large? What? Because the in the u s the internal revenue service typically gives charity’s a ah non-profit designation, which allows them to receive contributions and issue tax deductible receipts and because they us is forgoing that tax, um, on knows on those dollars and giving the public a public benefit, the irs exercises oversight of non-profit charities and make sure that they really are delivering on their charitable purpose. So there is some public money in here it’s foregone before gone tax revenue at at a bare minimum, often there’s also direct public money from government grants or government contracts. And how about financial problems that can occur within the within the within the charity, like you bring out an example in your book of people not getting their salaries paid things like that, you know you there. Is that that oversight potential here you you are running a small business on dh. You want to make sure that your employees they’re well cared for, that you’re achieving your mission in the world at large sometimes in charities will see folks, you know, giving up salary on dh or deferring payment out of the goal of achieving the mission of the organization in the long term that seriously hurts the organization because people are really watching what’s happening with the money. Where is it coming in? Where is it going? Out? And andy isn’t their potential personal liability for board members when when their problems like this. Like nancy’s describing? Well, let me first cubine disclaimer here, which is that neither nancy nor i or attorneys then we can’t give people legal advice. Okay, well, there’s, no way haven’t nobody’s given you. The listeners have not given you a retainer fee, so you know, okay, i won’t play this. Um, if there is nonpayment of payroll taxes for example, of accusation goes into debt, doesn’t pay the irs or state taxing agencies boardmember czar individually liable for that? Um, most expenses boardmember czar protected from being personally liable on, but there are some exceptions, so i don’t know that that’s what drives this conversation? I mean, four members are simply looking at the balance sheet as a way of making sure that they’re not personally liable. That’s one level on this conversation, but there’s a whole lot more levels having to do with stuff that nancy was talking about. You are we being efficient? We meeting our mission? Are we tracking our work so that we know we’re being effective and that’s really what financial management is about? Indeed, okay, there’s certainly a whole spectrum of reasons why boardmember should care. I just wanted to bring out the last one, which is there is the potential of personal liability. Um, let’s see, wei have just about a minute before a break, and i’m hoping, nancy, why don’t you introduce the idea of the the financial dashboard? And then we’ll talk a lot more about it right after this break? Sure, the financial dashboard is something we introduced. That really gives you a one page sense of how’s, the organization doing what what i’ve found happens with a lot of non-profits is that they, um, they give their boards just reams of paper. And all of a sudden you get the budget and the the performance in the balance sheet and there’s, fifteen pages of financial statements and most boardmember zeev unwanted, who do know how to read. Financials don’t plow their way through it. And so the dashboard is is essentially a one page opportunity to get a sense of how are you operating financially? Are you being efficient, and are you having an impact and let you do it in a fairly simple way? And we’ll talk a lot about that one pager right after this break, i hope you stay with us. E-giving ending duitz e-giving ding, ding, ding, ding. You’re listening to the talking alternate network e-giving. E-giving good. Are you stuck in your business or career, trying to take your business to the next level, and it keeps hitting a wall? This is sam liebowitz, the conscious consultant. I will help you get to the root cause of your abundance issues and help move you forward in your life. Call me now and let’s. Create the future you dream of. Two, one, two, seven, two, one, eight, one, eight, three, that’s to one, two, seven, two, one, eight one eight three. The conscious consultant helping conscious people be better business people. Hi, this is psychic medium. Betsy cohen, host of the show. The power of intuition. Join me at talking alternative dot com mondays at eleven a. M call in for a free psychic reading learned how to tune into your intuition to feel better and to create your optimum life. I’m here to guide you and to assist you in creating life that you deserve. Listen. Every monday at eleven a, m on talking alternative dot com. Are you feeling overwhelmed in the current chaos of our changing times? A deeper understanding of authentic astrology can uncover solutions in every area of life. After all, metaphysics is just quantum physics, politically expressed, i and montgomery taylor and i offer lectures, seminars and private consultations. For more information, contact me at monte m o nt y at r l j media. Dot com talking alternative radio twenty four hours a day. Welcome back for b f d board, financials dilemma my guests or andy robinson and nancy wasserman, co authors of the board members easier than you think guide to non-profit finances and well, we’re live tweeting the show and we have a guest live tweeted this week. She is mazarene treyz is from austin, texas. Mazarene hello, thank you for doing the live tweeting today you can follow mazarene her ideas at wild woman fund on twitter and you conjoined, of course, the conversation right now using the hashtag non-profit radio and andy, i want to throw a question to you quickly. We got a question on twitter from mazarene what if an executive director was found stealing one of the things nancy and i were talking about that kind of fraud issues earlier? Would you give them a second chance? Oh boy, well, i’d be curious to hear nancy’s answer to this. My initial response no, followed by it depends and, um actually was on the board of an organisation where we found the opposite problem, which was the board of executive director was pouring money into the organization. He emptied out his retirement account, but it wasn’t telling. Anybody? He did this because thie grants weren’t coming through, and he was too embarrassed. So that’s a that’s, a that’s, a problem of being over generous, though it is paying for it himself. Yeah, we ended up filing the guy. Yeah, and the reason was he wasn’t disclosing to the board with the board needed do its job, right? Right. And i would say the issue in that case isn’t so much as, uh, misdirection lying. So i am. I am, you know, obviously kept is a bad thing, but the board needs full disclosure from the executive director to be able to do their job. Well. And i know that’s really where i would go on that. How about you, nancy? Andi was curious to hear your answer. I know. I would say again, like andy, it depends probably depending on the amount of severity and this situation. You know, if if the executive director was borrowing twenty dollars, from the petty cash when they forgot to bring their wallet toe work one day um, clearly that’s not not egregious enoughto fire somebody. But if they’re helping themselves to the to the checking account and redirecting grants into their own bank account? Yeah. Probably caused tio tio fire them even if they pay it back, right? That really? Because they pay back with interest, that really doesn’t matter, does it? I mean, the thing about non-profits is, you know, they’re not your own private fiefdom or your own private business there. Is there a community engagement where the reason you know you have? Ah, board of directors that are the final legal responsibility for the organization. So you really shouldn’t be operating it like your own private business. Let’s, talk a little about the dashboard now, nancy, the financial dashboard we introduced earlier it’s a one pager which i think will be a relief to people that they’re not getting a sheath of financial forms and balance sheets. But what? What do you think? What key parts that should be in this financial dashboard that sort of streamline the overview for board members. I would say that that there’s really three parts to it there’s a financial part where you’re looking at, you know, sort of what’s our total budget. Um, you know, every board member of every organisation should be able to very quickly say whether the organization is a three hundred thousand dollars a year organization or five million dollars a year. Organization. That’s sort of a basic sense of scale. Um, are we making money or not? Do we have net income? Hyre, uh, do we have cash on hand? Those kinds of questions do we, uh, do we have network? So we you know, if everything had to be liquidated today, um, would there be any, any money leftover or any value left? Geever um, that that was tangible value? Not just, uh, goodwill? Um, we also want to be looking at at how efficient the organization is and efficiency changes, depending on what the organization does it it’s really sense of being able to measure you you against yourself or against industry standards and it’s, you know, the level of what it costs to deliver services, for example, to severely challenged populations versus what it takes to deliver services toe highly educated people in an urban area where they’re all easily able to get to something. The costs levels are going to be different, and and we’re not saying that they should be the same, but to know what it costs for you. To serve your clients, what it costs to have volunteers and then the impact and i don’t know, andy, if you want to talk a little bit about that impact, how you measure whether you’re meeting your mission or not, and they’re often knew miracle measures that you can think about, you know, if you’re a land trust, how many acres air you preserving? If you do mentoring with children, how many adult children matches do you have? I sometimes this is long term tracking, which is hard for a grassroots organizations to do, but in most field there are ways of measuring your impact in terms of the number of clients you’re serving, or the number of audience members who are involved and hopefully there’s some measures that you can come up with that act, the quality of your work as well. Okay, so people here is we could get this all on one page. He would have data from two years ago. You’d have data from last year. You’d have data from the current year. He could lay them out and see what the trends are. All right, that’s, the financial dashboard i love how you guys have this little dance worked out where nancy talks about the financial and efficiency parts, but then she throws it over to her co author, andy for impact, and you have it all worked out, sort of sort of taking the show over, but okay, it’s, in a good way, which which leads me to a question i said, i have to ask when two of when you co author a book, how do you decide whose name comes first? Did you just do alphabetical order? Did you flip a coin or i see i’m too narcissistic to co author with anybody but but how did you guys work that out? How did you decide that? Andy andy’s alphabetically? First on first names on last names on the honest truth is he did a lot of the writing work where as i did helped him with content, so it was very easy for andy to go. All right, so if i had come in, you wouldn’t have looked only at martignetti you would have lost her, looked at toni, and then i’d have fallen maybe to the bottom, which is probably what i would have had much to contribute to this. So you’re wise not to take you anywhere, even though i pitched you. Otherwise, you name is well known in a certain community. We might have put you first on the your publisher would never have approved that one of the questions that we ask before the show that relates to what we’re talking about now is, do you believe all your board members have at least a general understanding of your financial position? And seventy percent said yes, thirty percent said no, so that’s, pretty good, seventy percent, but the thirty percent. They’re not really very confident, right genera, and that was just a for general understanding. Okay, so the, uh, that’s the dashboard. Andy, should these things be devoted only to you the authority of the finance committee? No. I mean, i think a really good use of the finance committee is, well, stuff down. Rest of the board can understand. It provides thing and support to the rest of the board. Serve as mentors and back-up for the people on staff. We’re doing this. This book is not about house staff. Members need to do financial management mohr effectively. But the reality is a lot of people who are executive directors or even finance directors need help. And one of the goals of finance committee is to give them that help when they need it. So away to think about this is excuse me. If the board is operating at a high altitude and the staff is down on the ground slashing through the week, the finance committee is sort of in the middle there, providing a bridge between those two groups of people. And so that means that financial dashboard is for the whole board to review, right? Yes, absolutely. Was that a heck? Yes. Was that you could say? Hell, yes. Okay. Okay. Wei have another question on from twitter. Reminding listeners you can join the conversation on twitter using hashtag non-profit. Radio board members need to look at the impact of the organization. Andy, i guess this is for you since you talked about impact, how do you measure if you’re meeting your mission or not? I guess she’s looking for a little more detail. Okay, well, obviously depends what your mission is. There are some standard benchmarks for how you’re doing. Uh, if you work with substance abuse, there are networks that do that that can talk about ways of tracking your impact. For example, how many people come through a program, get clean and stay ugly if you are a food bank and you’re delivering food to the community? There’s a number of metrics there that come out of arika america’s harvest, i forget the name of the national network, but they’ll tell you how much money you should be spending more or less based on the population that you’re serving and how much when he pounds of food you can put out into the community pretty much every non-profit, um, subset has symmetric that irrelevant, and the trick is to learn the ones that are relevant. Your type of organization and then trying to adapt them to your particular need. And that would be important for the executive director toby recognizing certainly, and then right. And then conveying that too. Lord. Yes. And in some cases, depending on the size of the organization, there is some board work to help find those numbers. I mean, i work a lot with really small organizations who has a staffer overwhelmed and it be great to say to a finance committee on a volunteer basis, i’m trying to figure out what the relevant metrics are for i type art type of organization who would be willing to do some research and bring that back to us. Doesn’t aboard metoo. But, you know, in the larger organization, yeah, that’s gonna fall staff one of the other questions we asked pre show was, does your board have a committee devoted to financial issues? About eighty percent said yes and the remainder roughly twenty percent said no, nancy does there? Does there have to be a finance committee? There does not have to be a finance committee. I think it really depends on the size of the organization. The level of support. That the director might need you know, how complex the organization is and a zoo also how savvy the board is. If most of the board understands financials and feels quite comfortable with it in a small organization, you could get away without a finance committee. I’d say you want one in any organization that’s about to undertake any kind of major financial growth or change or, uh, new initiative in a larger organization. It just is a great way to assist either the finance manager or the executive director and developing budgets and exercising oversight, because things don’t happen exactly as people planned them with me today. Or andy robinson and nancy wasserman, co authors of the board members easier than you think guide to non-profit finances, let’s, let’s talk some about diversifying income sources. Nancy, you make a point of of having that in a couple of chapters of the book, why is that important? First, you never want to be totally reliant on just one thunder. You don’t want to be in a situation where if that one funders suddenly says, we don’t like what you’re doing, um, that you’re suddenly scrambling in having to find other. Ways to support your activities and your programs on what you do for this, folks. I think we’ve seen a lot of that in our recession. Agencies that rely exclusively or too heavily on, say, government fees for services or maybe even government agency grants, oer and oer foundation grants those of all sources that have been cut back. Indeed, that’s, true and that’s, part of what it’s both diversifying types of financial support but also the number of supporters within each types. So you’re not totally reliant on just one foundation or won a charitable donor-centric donors on dh foundations and government and your own revenues. If there’s a way for you to do that, we have a comment again from twitter. I’m just going to point out tio, the person who wrote that, john, that we did talk earlier about individual personal liability for non-profits. You may have missed that part of the show, but you can always catch it on the archive on itunes on our itunes pages non-profit radio dot net. Then what are andy some of the sources of income that non-profit might look to that that they’re not currently exploiting. So there’s three big buckets here, tony, the first buck, it is private e-giving private giving is foundations, corporations, individuals and, of course, lets people leave behind when they pass away the big category there’s individuals within private e-giving about eighty percent of the money year after year comes from people, and most of the groups that i work with don’t invest enough time and energy using money from individual donors. So that’s the first category second category is public funding that goverment funding from the state local, regional, municipal, all the government levels. And as you already indicated, this is a shrinking resource right now and the groups that i think you’re getting hammered the worst during the recession or they were relying on government. The third bucket is earned income, which is non-profits arching for the services they provide or in some cases selling goods, unity, and of the three that’s the biggest of all this is sort of the surprise for people is that earned income is about the same amount as private and public funding. Put together when you look at all the non-profit across the country that’s. Interesting. Yeah, you don’t generally see that in in fund-raising reports like e-giving yusa, because earned income is not part of their there. Sorry about private philanthropy there now very clear, the numbers a little skewed, because if you’re a private college and you’re charging tuition, that shows up has earned income. If you’re a private hospital and you’re charging non-profit hospital in, you’re charging for medical services that shows up as earned income, so those numbers really sort of skew the data. But i’ll i worked with a number of organizations where i’m always pushing him to say, is there something you do that you could package up cell? Do you have some skill that people would buy from way have to take a break? We’re going to talk more about earned income right after this break, stay with us. Dafs you’re listening to the talking alternative network. Are you feeling overwhelmed in the current chaos of our changing times? A deeper understanding of authentic astrology can uncover solutions in every area of life. After all, metaphysics is just quantum physics, politically expressed hi and montgomery taylor and i offer lectures, seminars and private consultations. For more information, contact me at monte m o nt y at r l j media. Dot com are you stuck in your business or career trying to take your business to the next level, and it keeps hitting a wall? This is sam liebowitz, the conscious consultant. I will help you get to the root cause of your abundance issues and help move you forward in your life. Call me now and let’s. Create the future you dream of. Two, one, two, seven, two, one, eight, one, eight, three, that’s to one to seven to one, eight one eight three. The conscious consultant helping conscious people. Be better business people. Hey, all you crazy listeners looking to boost your business? Why not advertise on talking alternative with very reasonable rates? Interested simply email at info at talking alternative dot com i said we’d come back immediately and talk about earned income, but even though i am narcissistic, i forgot it’s it’s, my this is my turn now so it’s time for tony’s take two for a moment or two. My block this week is our irs is helping you. They’re new site is called i r s stay exempt and of course there’s a link to it on this week’s block post, and that site has courses and webinars and other resource is that the irs has produced for new organizations and for existing organizations, and then they have a section called also in depth topics, and i have links not only to that site but to a few of the topics that i know that charity struggle with and that i’ve had guests on to talk about applying for tax exemption, unrelated business income and four o three b retirement plans and the unrelated business income actually is sort of a spin off topic from what we’re about to i’m about to talk about with my guests earning income so the content from the irs it’s all plain language, it’s really very easy language. Teo to grasp it’s a little hokey in some places. There’s, an instructor named coach in a bunch of the bunch of the content you’ll learn from from that guy coach. But, you know it’s, an enormous bureaucracy trying to be accessible and helpful. And i admire that so on my block this week, our irs is helping you, my blog’s that tony martignetti dot com and that’s the new girl from what it used to be. Tony martignetti dot com that is tony’s take two for friday, march second, two thousand twelve it’s march already. And this is the ninth show of two thousand twelve. Andy robinson and nancy washington. And with me, we’re talking about b f d board. Financials dilemma. Andy earned income. What? What kind of charity possibly do? What’s a should be looking at tio. Try to make some money off their activities. Their work? Well, the question i always have groups that air wondering about this is what you have. What, you two or what do you know somebody else onto have or do or no most non-profits during the service business way deliver services. Sometimes we have expertise in that area and, you know i mean there’s a structure brainstorm that people could do around this. A lot of what we do in the nonprofit world is give it away, and the really entrepreneurial organizations look at what they’re giving away and they say, it’s paying market for this and, you know, we can we can spend the rest of the show talking about this. I don’t know if you want to, but, um, there’s a lot of opportunities there, and i see many, many organizations could be more self sufficient financially if they got at figuring out what they know and how to package it up. Okay, is there an example you can share with us? Ah, charity that didn’t realize what they had and and then ended up being able to exploit it and make some money from it. Well, i’m the author of a book on the subject about selling social change, and but my favorite ample of this, um, you know, for a group for years in tucson, arizona, caldnear search their seed bank on made of american crops and you know, what they do is protect eats from going extinct by planting them and growing them and distributing them and probably thirty percent. Of their of their income, its seed sales. I mean, there’s the bank and they receive selling what they recently started doing, which was fascinating as they opened something they called state school. And these are people who want to learn about how to protect seeds, grow them as amount of the next generations, really about sort of biological and genetic buddy, okay, money, and they come to arizona for a week and they get trained and everything you need to know to run your own. C back and it’s, an organization that was sitting on this for probably thirty years, only recently realized that people would pay for that knowledge in a classroom setting. Oh, they have been doing that all for free while they hadn’t been training other people. They’ve been taking care of this, but they hadn’t been teaching on. I said, okay, and they realised there are there, you know, the whole renaissance of local agriculture in our country right now. And they thought we could tap into this there’s a market here for people who want to learn how to do this. And so they started doing this, and they’re doing this four or five. Times a year and it sells out, and they’re starting to move it around to other parts of the country. So i mean that’s one example that’s an example of knowledge, they had a knowledge and a skill that was very marketable that’s, right? And until you have you know what, you need a finalist for better words, does he need someone in the organization who had an entrepreneurial gene who can look around and say, you know what, somebody’s going to want to buy this and not every non-profit is blessed with people who think that way, and i think part of what nancy and i are trying to do in our professional lives is to get more of that thinking out into the non-profit community. Andy related. Teo diversifying income. I had a comment from linkedin this woman had just had a board meeting this earlier this week regarding the need for transparency and distribution of responsibility when it comes to finances, bookkeeping and reporting function of their historic non-profit theater, they’ve been doing their thing, they’ve been doing things their way a long time on dh one big problem is that they have a banker on the board and he doesn’t see the problems s so it sounds like and and then she says i was able to get the check writing privileges moved to another person. This is sort of segway ing into ah, conflict of interest conversation. But it sounds like maybe he was the only one writing checks. Um, i secured a nice grant from a foundation and they want a financial audit. I’m moving for a review. However fear we won’t get any more money once it’s known how ignorant the board is about accountability. Nancy drew and he’s laughing. Nancy let’s, bring you back. What would you what would you say there? Well, you know, how are we defining accountability here? Is there a lack love? But what a financial audit might uncover is in propriety. But it sounds like that’s, not the case. More likely, it’s going to it’s, not the financial audit per se, but the form nine. Ninety that you filed with the irs. Which asks you now to tell us who does the board looking financials. Um, how does is the board of informed? Has the board seen an audit? Uh, did they review it and approve it? It’s really? You know, there there’s sort of two sets of questions, the very pragmatic did did you get an audit? Did you review? What did you look at it? And then the the more important question in my mind, which i think is the question we’re trying to answer with the whole book, which is, does the board really understand what all these numbers are telling them? And ideally with with a financial audit and accountant has come in and spoken directly with the board of directors and walked through each and every page of it and talk about why the financials are the way they are and what they mean? Um, and i think both andy and i have seen, you know, numbers of organizations where there’s a lot of people sitting around the table on dh, they leave it to the banker or the investment professionals, too. You know, they well, they know about numbers, and they handle it and it’s really something that everybody needs to know how to do if only to make sure that the mission of the organization is fully addressed by by the board and the organization. This also relates, teo, the conversation about diversifying income and hear this woman, i believe she’s a fundraiser there, a volunteer fundraiser on dh trying to diversify income source, getting a grant but fearful that the grantmaker not be renewed because there isn’t the transparency and accountability that thie the the grant source will probably be. Yeah, and this is another point that was raised. He sort of came out sideways is this question about separation of duties, which is, you know, in a healthy organization, people break up that work, one person opens the envelope, somebody else writes the checks, and somebody else approves them and somebody else, uh, get the, uh, bank statement and balances the checkbook, and the idea here is that you’re trying to avoid mischief, yeah, and fraud. And if somebody says, oh, i’ll take care of all of these things, you know, maybe they have good intentions and they’re going to be perfectly honest about it, but you really need to break that into separate pieces so people can have oversight over each other, let’s, segway into conflict of interest, andy define for us what conflict of interest is we hear it so often. Yeah, well, my sense of it, at least in terms of the context we’re having here, is that if you serve on a non-profit board, your job is to put the needs of the organization above your own personal needs. And where this plays out sometimes is people who try and receive a benefit from serving on the board at the personal benefit it has nothing to do with advancing the mission of the organization where they get tricky is that in a lot of voluntary organisations, there are inherent conflicts of interest. If you goes to a private school and you’re on the board, your job is to advocate for policies that are going to benefit the children in the school, and in some case, that means they’re going to benefit your kid individually and sort of sorting those things out can be challenging, but the bottom line is the decisions you make have to put the needs of the organization in front of your own personal needs. Nancy, how can we try to avoid conflicts of interest? One of the best ways is tohave ah, a written conflict of interest policy, where you’ve already addressed some of the situations that are likely to happen before they happened, where you sit there and say, you know, no defined what it is that is seen as either a riel conflict of interests or a perceived conflict of interest. Um, which might be a case where somebody was, for example, um, can somebody bid someone who serves on the board of directors bid on a project while they’re still on the board of directors or not? Or do they have toe resigned before they even submit a bid? Or do they only resign if they’re awarded the bid? Or do they have to resign? Or can they simply step out of the room for the discussion? Those are the kinds of questions that got kind of can get kind of challenging um, particularly when any member of the board stands to benefit financially from any decision of the board that’s an outright in my mind it outright conflict of interest and, uh, in most boards, you want to make sure that person doesn’t participate. And it’s it’s always easier to have that discussion when there isn’t ah, hot potato sitting in the room, that’s somebody’s thinking that they have every right to be part of the discussion on do you have to therefore bring up both the fact that somebody in the room is feeling uncomfortable that this person is present and it gets a little bit more tense in those sorts of situations prevention, having a written policy that folks have already talked through and everybody feels responsible for making sure it’s so prevention ahead of time, much better than dealing with it when it’s a crisis or potential crisis and, you know, it also is the transparency issue. You want to make sure that your presentation to the community at large is bonem it is as unaccountable organizations that that gives everybody equal opportunity to benefit from three organizations purchases. Is this the kind of policy a boardmember should sign and review every year or something like that? It’s not a bad idea, you know, it depends on the nature of the organization. I you know, i worked with a community loan fund and that’s absolutely required that you disclose your conflicts of interest each and every year and that you review the conflict of interest policy every year bonem the other thing that you know, incredibly important, disclosed, disclosed disclosed way have just a minute before a break, andy, anything you want to add to conflict of interest discussion. I think the main thing is that if you see it, you have to name it after. If you’re boardmember and you smell something like this, you have to have the courage to bring it up and nancy said, it’s much easier to do this if there’s an existing policy in place first, if somebody sees something like this andy again just a few seconds before break, who should they bring it up to your i’ma boardmember who do i talk to? Well, i would probably go to the chair first and say, i think there’s something fishy here, let’s, talk about it and i would start there, and then presumably, the board, the chair will bring it to the full board. Andy robinson and nancy washington are my guests. We’re going to take a break. When we return, we’ll dive into some financial statements to wrap up, stay with us, talking alternative radio twenty four hours a day. Hi, i’m carol ward from the body mind wellness program. Listen to my show for ideas and information to help you live a healthier life in body, mind and spirit. You hear from terrific guests who are experts in the areas of health, wellness and creativity. So join me every thursday at eleven a, m eastern standard time on talking alternative dot com professionals serving community. This is tony martignetti aptly named host of tony martignetti non-profit radio. Big non-profit ideas for the other ninety five percent technology fund-raising compliance, social media, small and medium non-profits have needs in all these areas. My guests are expert in all these areas and mohr. Tony martignetti non-profit radio friday’s one to two eastern on talking alternative broadcast are you concerned about the future of your business for career? Would you like it all to just be better? Well, the way to do that is to better communication, and the best way to do that is training from the team at improving communications. This is larry sharp, host of the ivory tower radio program and director at improving communications. Does your office needs better leadership? Customer service sales or maybe better writing are speaking skills. Could they be better at dealing with confrontation conflicts, touchy subjects all are covered here at improving communications. If you’re in the new york city area, stop by one of our public classes or get your human resource is in touch with us. The website is improving communications, dot com that’s improving communications, dot com improve your professional environment. Be more effective, be happier. And make more money. Improving communications. That’s. The answer. Talking. Welcome back to big non-profit ideas for the other ninety five percent on tony martignetti non-profit radio. Nancy let’s. Talk a little about financial statements. What? What? Uh, what are the basics? First what’s the overview. There’s. Really? Two major statements that everybody has to deliver once the balance sheet, which is a snapshot on any given day, typically the end of the month or the end of the quarter. The end of the year. Um, which outlines what the organization owns and what they owe and what they’re worth, which is the difference between everything they own. Less everything they owe as faras it’s paper value is what they would be worth on that day. Uh, the other major statement is the statement of activities also called the profit loss or a p n l which is? Where do you get all your money? Your income your revenues from and then what does it goto pay for all your expenses and the bottom line? There is your net income at the end of end of a certain time period. The statement of activities is more like a movie. It covers a period of time. Uh, typically, uh, the beginning. Of the year to the end of the most previous sorry, the most recent months. So if we were on a board today, we probably wouldn’t see the thie statement of activities through the end of february because somebody would have had to have it all cleaned up as of yesterday. But we could expect to see something through the end of january and depending on what your fiscal year, wass would determine the begin of the beginning period. We talked earlier about full disclosure, so i’m going to make a disclosure the on ly accounting course that i’ve ever taken i dropped out of because i was i was i was going to fail, so so i’m like perfect for this book, this it’s very informative, and it is an easy read, and it is helpful guide um, nancy helped me understand i this was always seem like magic to me on a balance sheet. How is it that the assets equal the liabilities? How does that always come out so equal? I mean, its intended that way. Obviously. How does that possible? Seems like magic. Now you’re asking somebody who was not trained as a classically trained accountant. You can’t pull back now. Your name is on the book, you’re name is there. I’m looking right at it, says nancy wasserman’s. But it’s, um, it’s based on double entry bookkeeping, which was developed by the chinese and it’s follows up from the abacus. And i was sort of, uh, uh, amplified by the italians in the renaissance. Essentially, when you put an entry and double entry bookkeeping, everything that goes up, something has to go down and it all balances out in the end, in the cash comes out. And if your balance sheet that’s like number one is the balance sheet, if the total assets does not equal the total liabilities and equity, it is an incorrectly prepared balance sheet. There’s a reason they call it a balance right about yes, exactly. I love that my italian forebears had something to do with confusing me. Now in the current day. Um okay. What? How can we help? Boardmember is nancy who whose eyes kind of glaze over when they get to the balance sheet. Aside from looking to see whether the two the assets and liabilities equal which they always do right step number one is a balance number to do your total current assets. In other words, what? What? Khun b cash within a year’s time exceed your current liabilities. The things you have to pay off with cash in a year’s time. And so are you liquid or not? Do you have? Do you have cash available to do things? This’s? The place where you’re looking for those payroll liabilities or payroll tax liabilities? If there’s a number there that’s frighteningly large, you’ve got a big problem. And if its payroll tax liabilities, he was a boardmember maybe personally liable. Um, what are your long term liabilities look like? Is that that’s your debt? Basically. And, you know, does it make tense to you? Is that number reflects the debt? You know, the organization has your net net assets now, you know, the language of accounting is kind of like greek. And i sometimes think they made up all these names to make it even more confusing. It would be so much easier if it was it was italian. It could be it would be. And where there’s a lot of cognitive is and it’s a romance language. I think it would be oh, i’m sorry, no problem, but that total net assets number, which simply means, you know what? What’s this organization more if it if it had two legged liquidate today and if that’s a negative number, you should be concerned. And certainly many of organizations where that is the case. So those are the big things on the balance sheet, you know, does it? Does it short of make sense to you to the fixed assets and their value? Um, feel like what you have if he suddenly see something that shows that you have a fixed asset of, you know, equipment worth one hundred thousand dollars, you’re scratching your head because you have no idea what you have for equipment something’s wrong with and you should and should ask that question. Absolutely. You mentioned earlier frighteningly large numbers mean is part of what we should be doing is looking for anomalies. That’s really what you’re looking, you’re looking for things that you know that don’t make sense or don’t feel right or that you can’t if you can’t, if it doesn’t feel right and you can’t really explain it, you want to ask questions from and the numbers you know, the thing about numbers, they’re pretty, they’re very ghetto. They’re either on or off and, um it’s harder to lie with numbers. So you’re going to know right away that you could have frighteningly large numbers with the complex organization, and that would be fine from if if they’re bad hosed out. If there’s cash in the bank, if it feels like there’s equity, this is ah critical subject. Another question that i asked on the on the pre show survey is for those charities that do have a board committee devoted to financial issues. Are you confident that each committee member is fluent in your numbers and understand your financial position? Only twenty five percent said yes, the remaining seventy five percent were either no or not sure on dno was pretty large about sixty percent way have to stop there. Andy robinson and nancy wasserman are co authors of the board members easier than you think. Guide to non-profit finances published by emerson and church andy. Nancy, thank you very much for being guests. Thank you. It’s. Been a real pleasure. And also thanks to your publisher, kathleen brennan at emerson and church for her promotion assistance for the show next week you know his company and you may be wearing his name on your hoody market go ceo of the very consistent brand echo enterprises has ideas on branding and other business lessons applicable to charities, and craig newmark, the founder of craigslist and craigconnects, shares his thoughts on simple communications. Thes were both pre recorded at last year’s nextgencharity conference keep up with what’s coming up! 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