NFP Partners love taking on any financial challenge and helping their clients succeed. Laura Jostard NFP Partners Managing Principal joined us on the podcast to share some advice on audits and financial planning for nonprofits.
Official Transcript:
Sabrina: Hello and welcome to Fundraising Superheroes, a podcast celebrating non for profit organizations and all the people that work to make the world a better place.
This podcast is brought to you by donor engine. You can save hours of time and do so much more for less with their all in one non-profit software. Visit donorengine.com today to learn how your organization could spend less time managing your nonprofit and more time focusing on your cause. I'm your host, Sabrina Sciscente and today we have Laura Jostard, the managing principal from NFP Partners. They help nonprofits become stronger financial managers, but providing expert accounting services. And they offer some great technology tools to help you be successful. I'm so excited she was able to make it on the show today, so thank you, Laura, for being here.
Laura: Thanks for having me, Sabrina.
Sabrina: Can you start off by telling us a bit more about NFP partners and how you got started there?
Laura: Sure, I'd love to. So NFP partners is an accounting services firm that focuses solely on nonprofits. We work hard to develop a partnership with our clients. I think we're unique in that we customize our services unique to what each nonprofit needs. So it's a collaborative model instead of what some other firms might see as a prescriptive model.
So it really is that partnership that we're focusing on to get financial information to nonprofits so that they can make informed decisions. It's really fun and exciting because accounting comes with a lot of challenges. And so to help organizations work through those challenges and come out to see the light at the end of the tunnel is, is pretty exciting and fun for us as accountants, which. Shouldn't sound, doesn't normally sound that way, accountants aren't always fun.
Sabrina: Yeah, I guess a lot of people do see numbers as the boring part of running a nonprofit, but they are really vital to helping you figure out what your next steps are. Kind of analyzing how your strategy's working. So it's really crucial.
Laura: Yeah we, we really enjoyed the partnership in helping organizations overcome obstacles and hurdles in those decision making processes and understanding the numbers.
Sabrina: So one of the big things I'm always hearing about the nonprofit industry is audits. What are some of the most common mistakes you see when helping organizations with their audits? And how do you think Covid 19, will affect audits this year?
Laura: So I think the number one mistake we see in audit preparation, it comes with the preparation. So if an organization goes into their audit, not prepared. They're going to be very stressed and so are the auditors, quite frankly. Also, I think audits don't have to be stressful. I think that perspective of your auditor being an adversary and coming in to find mistakes is a misnomer. And so we really focus with our clients on building a partnership with their auditor so that they can work with them throughout the year instead of just that one stressful week when they're onsite.
The other thing we really try to work with our clients on is preparing the documents electronically that way, the auditor, can look at that information in advance and they can be prepared when they come on site with questions. And in many cases, they're even resolved before they even get onsite, which can be a big challenge, I think, to that partnership with the auditor can be really capitalized on. If you have changes in your organization, like what's happening now with Covid 19, if you work with your auditor on how to record that PPP loan that you got when it comes around to audit time next year,. You’re going to come out of that with a clean audit because you will know how you should be recording that and you and your auditor will be on the same page. So I think that's the number one advice that we can give to nonprofits, is see your auditor as your partner, not your adversary.
Sabrina: So it's like looking at the auditor as somebody you can collaborate with and ask questions in order to ensure that you are communicating your audit the best way possible to them.
Laura: That's correct. You have flexibility and latitude that I don't think non-profits really realize in your audit.
The numbers are the numbers, and we work hard to work with our clients to make sure that their monthly reports are audit ready so their auditor could walk in the door at any time and be prepared.
So I think that that's that's a big part of that preparation and that partnership and that collaboration. So that as you're getting those books audit ready every month, you can ask your auditor questions throughout the year. And as far as covid 19 goes, we're seeing that the auditors are putting notes in the audited financial statements.
Recognizing and acknowledging the challenge that the nonprofit might be facing as a result of this, even from the 2019 audits, they have to put some sort of a note in the on in. And you as a is the client of the auditor and the nonprofit have the ability to tailor the language that's put in that note, which is key because that's where your funders are going to go to look at the success of the organization and how your nonprofit is performing.
So be, be careful and cautious and clear about how covid 19 is affecting your nonprofit so that if you have a reduction in revenue or your net income doesn't look as positive as you had hoped or planned. Funders are going to understand that you're not unique. You're not alone in this. And that's, I think, comforting for people as they think about how to draft that language.
Sabrina: Yeah, that's a really good point. As I do more interviews with consultant of nonprofits about how they're handling the covid 19 situation at this time, a lot of them are saying that it's really stressful because you don't want to show your funders that you're struggling at this time.
But I think the point that you made about having that communication and not being afraid to say like this is what we're going through, but this is also what we're doing to fix it is a great way to show your auditors and your supporters that you're going to make it through this successfully. So how has the whole covid 19 situation changed how you work with your clients? Do you find that their needs are a lot different than they were a couple months ago?
Laura: I would say we have a lot of status quo and then we have a lot of oh my gosh, now what do I do? So as everyone the uncertainty is just the stressor that everyone is trying to deal with. And so we're trying to be as sensitive as we can to the clients and helping them understand and try to figure out, pull out our crystal ball and figure out what that future is going to look like for them.
What we have found to be key and very necessary in helping our clients understand is what is their cash look like? Your bottom line, your net income is one thing, but as a treasurer for a board says to me at every monthly meeting, that doesn't mean anything to me. Cash is king.
So we're working hard to translate what they're, the nonprofits net income means to what their cash is going to look like. We've supported a lot of clients in applications for the payroll protection program loan, which in many cases will end up being forgiven.
So helping them understand what the what the quote unquote loan means and how they can ensure that they have the documentation necessary to make sure that that funding they will be able to keep 100 percent of that funding. Again, it all comes back to cash. Can I make payroll?
We have had a couple of clients that have had to temporarily suspend services because their direct services providers and so working with them on how to handle employee layoffs or furloughs. What do those decisions look like?
And then the big thing is, how do you continue to do your job when you don't have access to the file cabinet that might have all of your vendor bills in it?
We do have some clients that still live in that kind of an environment. And so it's been interesting. And for us who work completely, remotely exciting to help them make that transition to a new way of doing their job and that they can be as successful and still produce all the necessary financial information bill payments, payroll processing, they can still do all that without sitting at the desk that they've been at for years.
So we've taken some clients to a desktop version of quick books, to a hosted version of cookbooks, and that is enabled them to continue to process payroll and pay their bills.
Sabrina: That first week, I think when everything was shifted to work from home, I think was just insane for everybody. I know a lot of my friends, a family were like, how do I work zoom? How do I who take these things that were once in person online? So, yeah, it must have been really hard for some of your clients to figure out how to make that shift.
Laura: Yes. And we have a couple of clients that are heavily dependent upon events. So their associations and their budget is funded based on an in-person event.
And so helping them figure out, well, first of all, is that event even going to be possible in October when it's originally scheduled for? And at what point is crucial to make those decisions?
And what are those contracts look like to get out of any in-person venue fees? And then it's it gets to the fun part of creativity, right, where you've got a sponsor who's going to pay for that lunch at the conference. That's not going to happen.
How can we capitalize still on that partnership with that sponsorship and retool what what that sponsor is getting as a result of their contribution to the organization? Is it more of an annual type sponsorship that helps with educational activities instead of pays for a lunch? So how can those organizations reinvent themselves?
Because in person conferences, I think, are going to be drastically changed in the future. But that's a crystal ball that in my world isn't very clear.
Sabrina: It's going to be really interesting to see how organizations make permanent changes after this and what they've learned about how they can operate. I think a lot of places are realizing now that they can work from home. And that would probably help save costs on building expenses. I know a lot of places are saving money on venues in terms of having their galas online.
But a lot of it is really uncertain, like you're saying. And from a financial perspective, how should organizations think differently during this time?
Laura: So I do think that they have to re-shift their focus on has to be done in person, whether it's staffing or it's your fundraising event or it's just how you deliver those services.
In some cases, some of our clients just don't even have that capability because they do provide direct services. But how can you continue to meet the mission of your organization by rethinking and reinventing?
What everyone else is having to do, so it might not be cutting edge because everyone else has to figure it out. But the creativity that has to go into reinventing your your organization and your delivery to the accomplishment of your missions is huge.
I think, reaching out and searching out different funding sources. Many of our clients are grant funded and so trying to figure out and work with your funders as to how you might need to retool what some of your deliverables are in your scope of work to ensure that there won't be any challenges when it comes time to reporting on how you spent those funds.
And then just really even rethinking how you find that that income to support your organization. And then, of course, the other side of it is expenses. What can you now in this new world shift as far as expenses go?
Maybe it isn't a full every office for every person, but maybe it's scaled back and there are some office sharing that happens. You need to reinvest in Zoom or whatever online meeting tool you need to have. That's where travel costs- what's going to happen to travel costs? You know, how can how can you rethink what travel needs to happen as well? I think all of those expenses need to go on to an evaluation process to determine as your forecasting. And we're encouraging our non-profit clients to do forecasting multiple years out. Because this is this is not going to be done at the end of 2020. So what do you need to do if you're a calendar fiscal year? What do you need to be looking at for twenty, twenty one and beyond even as well? So that multi-year forecasting is going to be key.
Sabrina: How can non-profits start creating that forecast and create a plan if their funding has gone down drastically?
Laura: We've put together some tools that we have out on our website with regards to forecasting. It really is taking your current budget for 2020 and looking at it for the rest of the year and honing in on every line item and the expense side to figure out what your organization needs, and then you can take that expense and and back into what you need for revenue.
And if you still can't come up with that revenue and determine if it's some sort of creative online fund raiser that you can do, or there is not a foundation that you can find to meet your needs. Can you also sell online education programs, those are gonna be out there and key the challenges, every organization struggling. So who's going to pay for that?
But I think figuring out a clear picture of what expenses you truly need going forward to help you understand what your revenue picture needs to look like. And those are the tools that we go through with clients to help them do that multi-year forecasting. Now, as you get farther out, it becomes more of a challenge, but it still helps to give her a picture of. Where your focus needs to be as an organization.
And. Get your get your organization out there and in the non-profit community, advocating for funding for certain projects from other funders and come together as a collective.
Sabrina: Do you think that moving forward a lot of organizations are going to start investing more in finding sustainable funding sources like the monthly donation programs and kind of move away from relying on the in-person events to make up their fundraising?
Laura: Yeah, I think they're yes. I think they're going to have to do that. Now, what what that looks like is, of course, different for every client, depending upon what their what their mission is.
We have a client that helps to serve military families and they do in-person retreats to help ensure that those the mental issues, helping them address those mental issues and those family issues. And how can they deliver those services now to provide the support that is so desperately needed to that community, but not in an in-person retreat? So what can they do to reinvent that?
And then finding that funder or sponsor who is willing to take a leap out there and invest in some different way of delivering. I think I think everyone has to retool their thinking. Both grantees and grantors, so that. Nonprofits that are that are so vital in our community to meeting the needs of disparate populations especially. How can they all work together to help each other accomplish their missions?
Sabrina: Yeah, that's a I don’t want to say it's an issue, but that's a challenge that I didn't even think of. You know, a lot of people are probably trying new ways to fundraise, but the services they offer because they have never done it before, funders might be wary or uncertain, you know, if it's something that they want to invest in. So I guess it's finding sustainable resources and also the challenge of communicating that you can't be successful with the sustainable resource you choose to go with.
Laura: Yeah, for sure. And it depends upon their source of funding, too, as to how flexible they can be in. So many funders are so heavily based on only funding proven delivery methods.
And I think that's just they're just going to have to rethink that. And how we can help clients find those innovative foundations will be, will be a challenge. It's not something that we typically work with our clients directly and helping them find. But we certainly help them try to think about those unique and different ways that they can sustain their organization for the long term.
Sabrina: So thank you so much, Laura, for joining us today.
For those listening, if you want to get more information on FFP partners, you can give them a visit at NFP Partners dot com. They also have a blog with some really helpful information on helping your organization get all your financials in order. They recently posted an article on protecting your organization's cash flow during this really uncertain time that I think is a really good read for those who want to learn more. As always, thank you so much for listening to Fundraising Superheroes, and we'll see you next time.
