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Billing statement of account sample for Nonprofit

good morning i'm sure we'll have more people filter in as we go along but at this point we're going to get started again for those people who may not have heard if you have a question today we are asking that you submit it through the q a button on the uh zoom feature and not through the chat we will be looking at the q a questions as we go along and uh that's where we where we will be uh hoping to get feedback from you and be able to answer any questions that you have so with that it is my privilege and it's my pleasure to introduce to everybody nick curran for those who don't know nick nick is he is a cpa who started his career working in public accounting in 1998 and as part of that career nick spent time auditing non-profits which led him to shift his focus to uh what he does now and that's providing specialized accounting services to non-profits in 2005 nick went out on his own and founded numbers for non-profits which is focused on helping the nonprofit community manage money with mission uh through 2021 numbers for nonprofits supported over 100 clients uh specifically non-profit clients in the uh madison and maybe a little bit into the milwaukee region as a company founder nick leads a 16-person team that perform performs a wide array of services including preparing clients for their financial audits assisting with budgeting creating financial projections and providing what i think is an important independent outside perspective on issues that his clients are dealing with nick is active in numerous professional and civic organizations including the aicpa the wisconsin cp the wi cpa sorry downtown madison rotary and the tocqueville society of the united way of dane county nick has been recognized in in business magazines 40 under 40 and was part of leadership greater madison's class of 2014. as you can see nick has a distinguished resume and brings a wealth of experience and expertise to today's presentation uh normally i'd ask everyone to give him a big round of applause but since uh we're on zoom and you're all muted you can feel free to do that he just won't hear you uh and with that i will turn it over to nick thanks nick good morning everyone peter thanks for uh reading through my resume there uh i think it feels a little bit more than what i actually do some days but um thanks for that i'm here to help answer questions so as we mentioned right at the beginning please feel free to use that q a i want to answer all of those questions for you use me as a resource this is the time to have those questions answered so i'm going to dive right in uh peter uh and his crew talked about banking on tuesday for my organization's breakfast with benefits and he was joking about how banking is a boring topic and and we were going to challenge each other to see who has the more boring topics so i enjoy this work and but i know that it's not for everyone so i like to try and talk about financials so that everybody can understand it and make it feel like it's something that you can feel comfortable about that being said it if it isn't your area of expertise all the more reason to have an expert available to you whether that's your in-house accountant whether that's an outsourced solution like numbers for non-profits make sure somebody knows what's going on with the numbers in your organizations because it is critical to making sure that you can help or you can do the mission work that your organization is set out to do so what i have up on the screen right now is called the statement of financial position most of you anybody who's worked in industry thinks of this as a balance sheet and they pretty much are synonymous it's just the accounting powers that be decided they wanted non-profit financial statements to be named differently this is a point in time so for instance the example i have up there is as of december 31st 2021 so balance sheet items can ebb and flow pretty significantly depending on what's going on at that point in time you can also see here up in the upper left hand that this these are accrual based account um accrual based financials and that differs from cash basis financials and you need to understand what how your organization is operating i will advocate doing what we do in our profession that accrual basis is the truest measure of how an organization's the truest measure of how an organization is performing financially and what accrual is it means that when you have income it's when it's earned you know you've fulfilled all of the steps up to a point where you can call this income whereas cash basis will record that income when you receive it and when it's in your bank account similarly on the expense side we record things when they're incurred so when you've had an account and look at your financials as of the end of december even if we don't send you the bill until january that time was put in december and you should record that as an expense ingly as opposed to when you pay it that will match things up into proper periods i'm a huge advocate looking at your month over month financials and making sure that you've got a consistent um flow of expenses month over month unless there are those seasonal blips for maybe an event or printing uh toward the end of the year for your fundraising efforts or stuff like that but consistency throughout is what is accomplished through accrual basis accounting i will also get on a soapbox and talk about timely financials we deliver a majority of our financials to our clients no later than the 20th each month in some instances we can even close sooner if we need to get them out for an important governance meeting if your organization is only seeing financials quarterly i don't believe you'll be making decisions as proactively as needed being able to see how you're performing against your budget is a crucial component of proper financial management and if you don't have a budget let's talk one other thing to talk about before i dive into this specific financial is are your financials audited most non-profits undergo an annual audit whether required by law and that law in wisconsin is contributed revenues over 500 000 or sometimes your bylaws within the organization require that you are audited audits aren't cheap so be sure you need an audit if a funder can accept internal financials you may want to consider foregoing an audit and a lot of places think that audits will help you know with fraud situations and i'm here to tell you that the profession even says this the audit is not designed to detect or discover fraud so if you have fraud concerns you need to schedule a separate fraud examination to know a fraud has actually occurred all right off my soapbox for the moment and let's talk about this specific financial statement which is statement of financial position again most people call this a balance sheet most of these flow top to bottom based on liquidity so liquidity means how close is it to cash and so at the very top you can see the num in this example cash is at the top and i will give you my opinion that cash is king this was proved time and time again during the pandemic organizations with reserves were able to weather the thin months until stimulus money became available available and avoided making hasty decisions ideally organizations should have three to six months of operating expenses in reserves um to know what funds are available from an unrestricted perspective you need to know if any of the cash is restricted for purpose um purpose can be a donor saying okay i'm going to give you 50 000 but you need to buy to spend that on a technology lab in your organization or you need to renovate the classroom in this space so knowing that when you have cash in your pocket what what might be purpose purposes that you still have to fulfill that money should be i don't want to say segregated directly like meaning you need a separate bank account that i think can be overkill for some organizations but you need to have a tracking mechanism to know okay we've got 446 thousand dollars in checking and savings however minus that restricted account that's very very specific to this example we might have 50 60 100 000 of that balance that is restricted for purpose and so then we would only have quick met you know 346 thousand 000 perhaps of money available to do our unrestricted operating amounts so i hope that makes sense um i'm just going to quick glance down at the q and a nothing hopping up right now another thing to be aware of when it comes to cash is protecting against the fda ic in the ncua limits most nonprofits are conscious of that the limit is typically 250 000 per institution um just a quick shout out to our friends at park bank i'm a huge fan of their ics product it provides all of the necessary protections i thought if i remember correctly from tuesday peter it's up to 80 million something crazy like that and that allows um all of your deposits to be protected and it keeps it in one spot i know some organizations struggle with well we want to get under this 250 at an institution and that sometimes leads to shuffling funds around the multiple institutions and that can become a little bit of an administrative headache so an organization like park bank has established this great product that can allow for that that peace of mind so again a shout out to our friends over there any any last comments concerns about cash all right we've got a quiet crowd today next down on the list is our receivables and these take a lot of different forms and non-profits so you can have things like accounts receivable for services performed so you might be a senior center and probably be providing meals um and need in billing for certain meals that aren't covered by government sources so you're sending invoices out to your participants in your programs another type of receivable can be pledges so your donors and the wonder wonderful world of gaap accounting requires that pledges if if um made over multiple years you booked the entire amount so if i say to an organization i'm gonna give you ten thousand dollars a year for five years i'm gonna put book a fifty thousand dollar receivable um and record that income in the year of that pledge that gets a little tricky for people to you know well i have ten thousand dollars of income for the next four years then right and that's true you have that cash coming in subsequent and you have to do some uh what do i want to say machinations of that release into your operating statement of financial activities which we're not on yet but um multi-year pledges for now i just want to mention uh are are in pledges receivable typically for non-profits and then this example doesn't show it but we have some organizations that rely heavily on government dollars and so those grants receivable are based on typically expenses that you've incurred uh over the period of a grant and then you'll you're getting reimbursed for those expenses over time so the thing to remember with receivables is winner or the thing to be conscious of with these with receivables are when are these going to pay out you know i mentioned the pledge that's likely going to happen you know if a donor is is like typical donors they're going to pay you that ten thousand dollars every november december as they're doing their year-end giving understanding when that cat that's coming cash is coming in so you can plan for cash flow in the case of grants receivable you know governments uh tend to you know some governments take time to reimburse for these costs so 30 60 90 days you're going to need to be able to cover that cash flow while you're waiting for those funds to come in so that can mean using reserves or perhaps having a line of credit available with your financial institution so being aware of the types of receivables that you have and when they will convert to cash is important and the last thing i'll mention on receivables is who's responsible for looking at the list this balance that you're seeing so fifty four thousand dollars what that is made up of is probably fifty to a hundred different invoices of five hundred to a thousand dollars of individuals who owe us money and it's got to be somebody's specific responsibility to look or to follow up with all of those funds and make sure that they're you know we're expecting them to be paid and they're getting paid timely you know sometimes with grant funds if you forgot to check the box or you didn't submit things on the proper form you know monies can be delayed so you want to be checking in with the funding source saying hey i submitted this in december and it's not paid yet what's happening and then you know you can resolve any issues that might be holding up your payments so those are my comments on receivables still seeing now q a um just real quick for this is a quickbooks sub report we're a huge quickbooks centric firm and so you'll see under positive funds uh in the current assets those are cash like items that just haven't quite gotten to the bank so if you think about it on december 31st we had some payments on some receivables those seven thousand dollars of checks are probably sitting in our safe and then we're going to take them to the bank on you know as soon as they open after new year's day so that's just a quickbooks uh tracking mechanism a holding account if you will and it's important for holding accounts you understand what they represent and when they're supposed to zero out all right we talked earlier about or i talked earlier about accrual based accounting so prepaid expenses are what you what the description is we're giving money to potentially a contractor insurance our benefits and we're paying those in advance of the month in which we're going to use those services uh technology as well a fair amount of non-profits in in the community use dane net day net has prepaid contracts for technology and you know we so you send them two thousand dollars at the beginning of the year and then you use that over over time um insurance as i mentioned some most benefits are pulled the month before the month that they're active so having an understanding of what that balance represents when it zeroes out um you know that's your accountant's responsibility to understand what that represents and the and the cash flow implications of it i've one of my first clients ever always had a huge insurance outlay in the months of january february which also happened to be the worst cash flow time for them from a fundraising perspective they just gotten off the end of the year the fundraising for a big event didn't happen until april or may so we always had to pull on our line of credit to pay this huge insurance bill in in the slow months so being aware again of your cash flow as it relates to your statement of financial position and when things are going to happen flow we'll have you discussing okay can do we have enough reserves or cash flow in our bank accounts or do we need to have a line of credit or you know worst case and i don't advocate this as a credit card to help with certain expenses for a short period of time so that's our prepaids next up here we've got fixed assets so these are the big things that organizations invest in to do their missions we're typically talking about buildings sometimes vehicles you've got maybe you know most things like computers and that are typically expensed throughout the year but you might have some furniture and equipment boilers and parking lots all of those sorts of things are long-lived assets so you put them on the books at their costs you look at a useful life and you depreciate them over time so if something it goes for seven years it costs seven thousand dollars you take a thousand dollars a month or sorry a year um against your expenses and slowly take that asset down to zero now here's a soapbox moment for me as well when you've got large capital a capital as a piece of your organization there's going to be a need to replace those items they are going to wear out they are going to need to be replaced that roof is going to need new shingles it's important for an organization to understand what the future costs of their fixed assets might look like try and do a building study to capture those costs and then you can do the the simple math backwards okay we need 500 000 20 years from now to pay for a new roof or whatever it might be going back that's 25 000 a year we have to set aside in this example and so the only way you can do that is through surplus budgeting and and that's not easy for organizations so you really have to be mindful if you've got huge capital involved in your organization that you think about trying to set aside future reserves for replacement all right down off the soapbox again all right sorry so looking at some of my admin uh chatter behind the scenes so we're still on the statement financial position uh next up is investments and so on a month over month basis you're typically updating this for gains and losses sometimes you're fortunate to be able to take a distribution from an endowment so making sure that those are properly reflected endowment distributions are not new income to the organization sometimes that's hard for people to to say well we took forty thousand dollars from our investment account why isn't that on my my profit and loss my statement of financial activities and that um is not new income to the organization the income happened when you might have had a surplus along the way and took that and put it into your investments and or the investment gains that you've had throughout the life of your investment so just an important accounting note to see you know if if you are fortunate to have an ability to take a distribution just make sure that that's properly recorded and just another note on budgeting you know if you are funding part of your operations with an endowment distribution that budget from a gap perspective would likely show a deficit because that distribution again is not new income and this can be very confusing for non-profits but the the cash that's coming in affords you that that deficit that ability to do a deficit budget when you've got an endowment distribution coming in uh-oh we might have our first q a here donated fixed assets all right so debit the fixed asset credit in-kind donated income is is the uh accounting probably 201 journal entry that you'd have to do in order to book that and then lastly you might have some other assets um intangible assets like maybe you spent a lot of money on a new website i've got an organization that's going to do a huge sales force implementation so we're likely to treat that as an intangible assets um trying to think what you know my or my own organization although it's not a non-profit you know the purchase of a book of business is often capitalized as an intangible asset and then understanding how that asset translates into the statement of financial activity so amortization costs or if that other asset might convert into cash so maybe like a cash surrender value of a life insurance policy it's just important to understand what again what the balance represents and and how will it resolve itself whether that's as a cash payment whether that's as expensing it over time those are your two things with other assets all right um i want to be able to reference this screen i do you know here's where um you know just to recap cash what is unrestricted versus hell for purpose how much is to keep in reserves we talked about receivables and investments next we're going to go into the liabilities so i want to have this back up um so these again are things that we owe at the um at any given point in time so at the end of a year you're looking at items that you had services for in 2021 that you might not pay until 2022 so that can be any number of things snow removal bills accounting services legal fees anything we want to capture that cost in the proper period so we're booking bills in the dates on the dates of when those expenses were incurred same with credit cards you know transaction dates dictate when we should put that into the financial statement some of the clients we inherit you'll see the bill often just put in the month when they're making the payment and we'd like to be so precise to put it into the proper periods and record each actual transaction in the periods we've got a program payable again for this example this is very specific um you know it's it's monies that we owe back to the program for collecting funds um to offset the expenses of a particular program so we owe that back to the program at any given point in time you might owe people money for having work done as employees so as an accrual based accounting measure if you're paying your people after the fact you know after a pay period and that falls in the next period you need to put the expense in the proper period so in this case you know our pay period might have ended on the 24th of december and then the next one fell into 2020 well we've got a week or so of time that you know people don't often like me to hear me say but think of it if the doors were to close for this organization we would owe those people 31 thousand dollars of past wages for work done in 2021 and the related taxes and the related retirement contributions so that's what this is meant to do another thing this is you know a little bit more in the weeds here but payroll accounts are meant to zero out they should hold things so i like to use the uh fill the pot and empty the pot so you fill the pot with certain payroll items so withholding for instance a lot of people like to give to united way or community shares in this community you put that into a liability account we have to turn around and remit those funds to those other organizations so if you aren't looking at you the detail of your payrolls amounts and seeing that they zero out regularly you might want to check in with the accounting department if that you know if you're looking month over month and that balance just keeps growing and growing and growing ask the question why why is our payroll liability growing are we submitting our retirement contributions in a timely manner are we getting funds that we've held for other organizations remitted to them timely are the employee withholdings that go toward health insurance benefits are those getting ex put into the proper periods on the statement of financial activities to reduce the organization's expense for those benefits so a little bit of a soapbox moment there for me as well a child support child support can be one where you know you're holding funds from an employee for a court order or a bankruptcy situation you need to make sure and timely submit those on behalf of that individual to the appropriate government agency to make sure that they're in compliance with their orders you've got other current liabilities so accrued expenses sometimes things like accrued vacation if an organization has a policy of paying out people's unused vacation you'll typically see a balance sheet item for that you know typically represents the number of hours times their hourly rate extrapolated and is a liability on the books know what that means from a cash flow perspective i've seen organizations really be mindful of managing that vacation accrual whether whether telling people to use it or lose it before the end of the year paying some out before the end of the year changing the policy altogether to say hey you know we as an organization can't afford this so be conscious of of your policies as it relates to accrued expenses and make sure that they're properly reflected on on the financials all right and there's a sales tax payable here most non-profits don't have to deal with sales tax but if you do have continuous operations that involve retail talk with your accountant about whether you should or shouldn't appropriately charge sales tax in that situation and remit those funds timely to the department of revenue some organizations have debt and and in this example i'm showing a ppp loan which was one way that you could show this during the pandemic there were other ways that you could show those funds that came in as as being reflected as a conditional grant i'm not going to bore you with a gap accounting matters right now but just be conscious of your debt how are you going to repay it how does it impact cash flow if you have debt the principal portion of your debt does not get reflected in your statement of financial activity so when you're doing your budget and only the interest portion is in that budget you're going to need a surplus budget in order to pay the principal portion of your debt so you know say it's a 2 000 amount and 500 of it is um the principal portion of the debt that six thousand dollars at a minimum is what you're going to have to show as a surplus at the bottom of your budget for this example so know that the principal portion of your debt needs to be budgeted for if you know because it shouldn't be reflected in a gap budget all right lastly we've got net assets now there are several types of net assets the example i have here is collapsed so i'll just be explaining a couple of them i can slide us forward on my slides here so the two primary ones are without donor restrictions and with donor restrictions without donor restrictions a lot of people that we used to call that unrestricted dollars and that just means you're free and clear you can use those funds however the organization needs to in order to do the mission that it's it's doing in the community some organizations boards will designate certain parts of their unrestricted funds whether that's for future programming whether it's for a future capital endeavor whether it's just as reserves that they want to be explicit in in in carving out and showing to future boards and or to the community who might be looking at these financials to show them how healthy that they are so these are important designations within your financials to be aware of and then i alluded to this earlier net assets with donor restrictions this is the cash that we have that we have to hold back in order to pay for future programming or future purpose-driven projects that a donor might have specifically requested to be done just a side note you know an organization can reject gifts of this sort if this is not the sort of thing that they want to be beholden to when you take money from a donor and they want you to buy a vehicle when they want you to expand your food program that is obligating the organization to do that so understand your gift acceptance policy and how that translates into your financials and how that looks on your net assets with donor restrictions all right back off soapbox on to the well one other note that i wanted to make [Music] hopefully you're not getting dizzy as i go back and forth so one measure that nonprofits look at so just besides the cat looking at your unrestricted cash and seeing how that compares to your average monthly expenses that's your operating reserves knowing how much is available there there's another measure called liquid unrestricted net assets and what that does is looks at your total net assets and you looks at your unrestricted portion less your fixed assets because those really aren't liquid right those are pretty tied up you know take a lot of effort to convert those to cash and then you divide that by your monthly expenses and that measures also about three to six months having that on hand if you start to get above three i think people start to question well why aren't you putting more out into the community to do to mission oriented work um but three months some some all will be willing to go all the way up to six months gives an organization the flexibility to potentially do a new program down the road before it's officially fully funded or maybe hire a new position that isn't paid for yet so uh think about two different types of reserves the op just the cash reserves and then this liquid net operating reserves which would then also consider you know your investments that are are free and clear of any restrictions and might be being held for endowment all right we got one all right going back a bit if a donor says in 2021 i'll give 50k over five years is that 50k logged as receivable in 2021 or is it log 10k over each of the five years and then what happens if they back out after two years great clarifying questions so i would be booking that receivable in 2021 for 50k if they back out after three years you've got a you've got a bad debt more or less and it and it sucks and it hits your your statement of financial activity and it is an administrative cost on top of that so um it's a it's a reason to manage those uh pledges have good relationships with your donors and make sure that somebody's you know if somebody starts to fall in arrears there can be a number of different reasons why somebody falls in their rears it can be a a divorce a job loss you know all anything tragic it's important to uh respectfully approach those donors and say hey you made this commitment to us we're relying on this commitment we understand something might have happened can we re-establish a payment plan for that so [Music] be attentive to your pledges understand what's going on with your donors and be sure to connect with them if you're starting to see anybody fall into arrears moving on we've got our statement of financial activities again most of everybody who works with for-profit organizations would think of this as a profit and loss and this is how we measure typically against the budget you're going to you're going to have a budget in here i'm only showing a comparative i might make that an adjustment for a future presentation but um understanding what our revenue streams are so that's the upper portion these are our in incoming or these are our funds that we've earned so if you in in this example we've got private pay so we've got program income from our participants in our program that aren't covered by government dollars we've got room rentals and you know so this is a senior center and they've got lots of activities going on and various funding streams that come in uh you've got government grants so this is those dollars that we've spent money and are waiting for those you know billing those monies back to the governments some of the governments are giving us those funds as we go through the year and um so this this organization is pretty reliant on that sort of funding we've got fundraising activities with events and donations gift shops are our investments so understanding what each one of these are and if there are any restrictions related to them you can see four nine nine nine here this is what i was hopefully explaining on some level so that fifty thousand dollar receivable example that ten thousand that comes in this in 2021 after let's just say the pledge was initially made in 2020 you can do a release from restriction to show that hey operationally we got 10 000 for this year because you've already counted it once you've also got an offset way down at the very bottom line 9999 so you can't count it twice but what i like to do with my non-profits is manage to this net ordinary income line that's really what how you're operating in the current year so those items at ten thousand dollars you might do a release of your endowment distribution to show that that somewhat as income but again i'm not counting it twice i'm going to take it out at the bottom but from an operational perspective i want my nonprofits to be thinking about that net ordinary income line so that that is something that keeps me employed so and it's not easy to comprehend so if you want you know to reach out to me later let's please talk about that all right i've got a question when should reimbursable grant awards be booked let's say there's a schedule of payments in the contract with the funder and the schedule extends into multiple years should the funds be booked as receivable in the year awarded or booked in the year the payments are scheduled to be made so if it's a reimbursable grant and they're fortunate and you're fortunate to have them paying you in a routine this is going to get pretty complicated you really should treat those incoming payments as deferred revenue that's a liability on your books and then as you earn the money by spending the money that's when you should be recognizing the revenue so for instance let's say we've got a hundred and twenty thousand dollar award we're getting ten thousand dollars a month from the funding source and let's say in that first month we only spend eight thousand dollars of actual expenses so eight thousand dollars is reflected in our income that remaining two thousand that we haven't spent should be sitting in a liability because if we closed our doors we in theory would have to give that money back to the government agency because we did not spend that money toward the program throughout a year's time that that monthly amount will ebb and flow because you're probably going to have some direct costs maybe you're going to have again a big printing bill or you're going to buy a big purchase of food or something like that but it's important for your accountant to know how those funds are going to ebb and flow on that particular award i hope i've answered that question for you then on the expense side understanding payroll is a big piece of nonprofits my experience typically that you know 70 80 90 of a budget is non-profit or i'm sorry is payroll and benefits so when i when i come to budgeting for nonprofits i'm really wanting to schedule out okay here's who's here last year here's who we're expecting to be around again next year here's the cost of living adjustment or the raises we're planning for here's all of the benefits that go with those people their health their dental their retirement the taxes it's a big calculation to understand what's going on with our employees kick it up one even one more notch and you're you want to understand how they might be paid for so if you've got grant dollars understanding that this hundred and twenty thousand dollars is going to pay for these three positions um and what happens if that that money isn't available that was available last year now you've got three positions that are unfunded in the coming year how are you gonna take care of that all right 15 minutes left what is bad debt so bad debt is anything that um we haven't collected from somebody that we thought was income at the time we put it on our books so we put it in receivables we put it in income we went to go collect from somebody and they said hey you know what i can't pay it or you're wrong to have recorded that so i have to then take it out of my receivables so i debit bad debts which is an expense and i credit my receivables to zero that balance out is there a best practice for account codes to track event to revenue by event versus by source from the event um this is a personal preference matter from my perspective however the organization wants to have accounts what i would call sub-accounts underneath an event is really dependent on how they're going to manage the success or measure the success of an event so let's take a golf outing for example you might start with fifty thousand dollars of sponsorship that you're budgeting for um so you're you might wanna have a sponsorship line and then you're gonna have um foursomes as a line item because you're gonna see how many thousand dollar foursomes you can get in the mix then you're gonna have silent auction you might have other best ball or ticket buys along the way so whatever categories they're going to be sub accounts underneath your fundraising events however it's going to be best for you to determine at the end that you had a successful event is how you should set up those particular charts of accounts would be my opinion i only had three pages of notes i guess i uh i can ramble after all peter so we talked about payroll being a big expense usually the next ex largest expense revolves around contractors so accountants like us hr legal technology i mentioned with a company like danette or other resources out there just capturing those costs in the months that they're incurred being sure that you you know when i look at my monthly financials with my clients you know i want to make sure that those are consistently booked each month make sure we have a bill for something check in with a vendor if we're expecting something get that bill kind of that circle of life feel next up would be rent and utilities and other related occupancy costs so you know building costs a building cost money to run and so understanding your your utilities setting aside just ongoing repairs and maintenance and then again going back to earlier budgeting for a surplus to set aside funds into a reserve account for future replacements you've got direct program costs for anybody who's got grant funds so understanding how those are are reimbursed are you getting the funds in advance reflecting those expenses appropriately are you are you prepaying something and then need to expense that for the grant but then for gaap you have to do it a different way that can get a little bit tricky so want to be conscious of how our our program costs are running through and then lastly would be any of these other amounts or somewhat call or are called overhead expenses so licensing fees dues bank fees that sort of thing so the last thing i'll mention was statements of financial activities because nonprofits are very conscious of it is that program percentage and how you come to those and you know it all starts with cost allocation and making sure you're reflecting in your financials monies that are being spent to do the good work that you're out in the community doing i know that organizations in town you know the gold standard is is united way using 14 percent for admin um i've talked with colleagues and you know we we believe that you know at least 70 percent of what you're taking in should be spent on programming you can pretty easily have an admin and fundraising costs taking up 30 percent of your budget especially if you have very heavy fundraising heavy events that will tend to skew how you operate if you you're getting government dollars i would guess your admin expense and your fundraising is going to be a little bit less but the most important thing is being able to tell your story you're going to have to go to donors and have them understand why you have certain expenses and what your breakdown is and you know be able to encourage them to give to your organization and why they should give to your organization so um just some recap here we talked about grants uh temp restricted that was something i hadn't covered so that's somewhat similar to a deferred amount where gap will require you put 120 000 uh from a foundation on the books when you receive it but you might not use that money until the subsequent year so releasing that ten thousand dollars a month into your above the line uh income again offsetting it because you can't count it twice making sure that you operationalize monies that were rece received in advance we talked about cost reimbursement i appreciated that question i hope that that i was able to clarify that well we touched on fundraising timing of the events um something to consider for uh this is just again a little bit of a soapbox matter consider year-round sponsorships with organizations see if you can get those commitments up front in the year and that will help with your cash flow overall with your organization there's usually some mutual benefit mutually beneficial situations that you can create with your sponsors by coming to them and saying hey you know we're going to do four events this year you know rather than come to you for each one of those why don't we put together a package that says hey here for twenty thousand dollars you're going to get recognized at this level at all the events i i think on the donor side they would appreciate some of the simplicity of that and again from an organizational perspective you can get some cash flow early on in the organization's um fiscal year all right i've got a question here please share a bit more about danette yeah so i mean full disclosure dana's a client of ours and they do i.t services for non-profits they have some reasonable rates and they do good work in the community helping non-profits keep their i.t infrastructure up and running and able to service some more recrab unrestricted contributions we talked some program fees investment returns and how we shouldn't treat distributions as true income you can do a release for that endowment but you know i don't want us to treat it as new income here are expenses what's important to our mission um that really is you know when you start to think about a tight budget year it's really important to look at how the personnel is structured to do the mission-based work and you know you might have to start looking at well this mission pays for itself if you will with government dollars or fundraising um this one doesn't quite is it is it essential to our organization uh does that mean we have to try and go out and fundraise better than in order to fill that gap for that particular segment of our organization what commitments do we have in our current grants what part of our people are covered by current grants what sort of raises are we going to provide incentives you know we're we're looking at a job market right now where non-profits are having a hard time the benefits offered in other situations sometimes are starting to see people looking so we really are going to have to start thinking about that as a non-profit industry how we can afford better uh benefits packages for for our people all right i've got another question here how current should we expect our monthly financials to be for our board review is there a dashboard report that can be produced through quickbooks i believe there is and then and i will not sound uh as experienced with you know we're all about getting out the financials and then being part of the discussion with our eds and our finance committees to have them understand what's going on in those financials so we tend to do more of a memo as far as the highlights that we're seeing um but as to you know you know how up to date i mean we look at our statement of financial position at the end of any month as more or less being ready to go to an audit you know understanding what each balance sheet item means making sure that the supporting documentation is there and going through those paces in order to have our clients getting good timely monthly accrual-based financials to make good decisions the ics prod okay i'll let that question fill out a little bit more just wrap up expenses so the direct program costs understanding specific costs what might be one time any use of subcontractors capturing those costs properly and then the related income making sure you're recording the cost reimbursement grant income that's going to be related to these specific programs jail i'm sorry i'm not quite following the question uh two things to protect against so there's fdic and ncua those initials so one is for banks one is for credit unions and they both have these 250 000 limits that we have to be cautious of when we're looking at our cash i hope that that clarifies recapping expenses a little bit more okay good thanks jill um occupancy insurance printing contractors just making sure we know this this is more of a recap thinking about how your organization should budget and making sure you understand the costs that go into operating and i've definitely got up on my soapbox about all of these things already debt payments making sure you have a budget that can pay for the principal portion of your debts replacement reserves so crucial for any organization that has big things uh i'm working with a large church right now and they've got a big building and they just did their building study and you know they're now going to their community and saying hey you know if we want this wonderful place around for future generations we're going to need to make sure we have this much money set aside to do building maintenance so that it's here for for others to participate cost reimbursement grants recording that revenue in the proper periods understanding the cycle of when you are likely to be paid and whether you're going to have the proper cash reserves to do to manage that that float and then pledge payments staying on top of your donor relationships understanding when those funds are coming in if somebody falls into our rears re-establishing a payment plan all right i did it i got three minutes left thank you to park bank for inviting me to do this val peter aaron you've all been great and helping me set up jordan thank you um you know i park bank and numbers for nonprofits have a lot of mutual clients and um very community focused uh and you know i've appreciated having this platform to share a little bit of the expertise that i should have in this area and if anybody has any questions please reach out to me the contact information is up on your screen i know if there are any questions around banking peter's the guy to go to to talk through ics products or anything you want to know about fraud and fraud prevention good people at park bank helping the community safeguard their assets and i wanted to quickly say thank you nick this has been an informative presentation to say the least we had a lot of great questions come in we had a lot of audience interaction which is always fantastic i hope everybody was able to take something away from all of the information that nick provided and it was a lot [Music] so thank you very much we appreciate the clients that we have in common with you we all appreciate the work that you do in the community and the fact that you are solely focused on helping non-profits make our community a better place through the work that you do with them and for them we think it's great and we appreciate you and everybody at your organization really nick yeah it's definitely just not me i've got a great team helping out so well i'd like to thank everybody again for uh jumping on and uh sitting with us for a little bit of time this morning to learn more about your financial statements and what you should be looking for as nick said you have contact information uh up on the slide right now if you have additional questions we either nick or i would be happy to answer them and as a follow-up any registered attendee will also be getting a copy of the presentation at some point in the future via an email from from us so you will have this resource available to you to re-watch to look at again again thank you to everyone for jumping on i appreciate your time and i hope you all have a great remainder of your friday and a fantastic weekend