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E invoice excel format for non-profit organizations

all right welcome everybody so this is um a webinar today really we're calling this nonprofit accounting 101 uh you know the real goal for us is to really for everyone who's on this call uh whether you're a board member an executive director or um accounting staff uh or even program staff to really be able to learn sort of the nuts and bolts of what goes into a good accounting system and how you can use that system uh to make better financial decisions which ultimately you know helps you uh and all of us in what you are doing out there um so real quick the basic flow is I'm G just do a real quick intro and then we'll get into the meat of it um we'll wrap up with the Q&A session I think I probably will be able to talk here for about I don't know 40 45 minutes and then hopefully we'll have you know um 101 15 minutes of Q&A and we can obviously go past that if people have more detailed questions so our who is Easy Office who am I um uh I'm the founder and CEO of easy office and our goal in life our mission is to improve the effectiveness and efficiency of nonprofit organizations you know one of our slogans one of our philosophies is to do what you do best and uh my wife will tell you that I would not be a good camp counselor but um we're actually decent at accounting and so the idea is that uh together if we're all focusing on what we do best um the sector as a whole is better off and we're we're all going to be able to accomplish much more uh the other thing is we do Finance and Accounting services this is something that we specialize in and have expertise in our our slogan there is to be audit ready because we think no matter what size your organization even if you're not required to do an audit um or if you're a large organization we want you to be audit ready throughout the throughout the weeks throughout the months throughout the quarters so that you're always um looking at accurate and good financial information we were founded by a team of Yale mbas and CPAs um we were founded expressly to assist nonprofits so we work exclusively with nonprofits um I'm a former executive director so I know uh a lot about uh what it's like to be um running a nonprofit U resource constraint obvious uh often times and also just to be pulled in a bunch of different directions so I have a lot of um sympathy for that we currently have about 150 nonprofits that we serve in 26 different states uh with about 30 on our accounting staff why do we care about nonprofits why why do um is this an important issue for all of us one is there's really a lot of room for improvement in the sector you know an an audit by Indiana University found over 50% of nonprofits don't actually follow Gap and so you know Gap is the general guidelines and rules for accounting standards in the US and their audit found that over half weren't actually following those guidelines uh 20% actually reported imposible or sometimes impossible numbers on their 990 um in those cases they found that about half of those actually made the organization or the nonprofit look worse so the numbers if they had actually followed Gap the numbers would have been more accurate would have looked better so what what this suggests and which I I think experience for me really proves true is this is not mal people aren't cooking the books but it's just simply a lack of expertise and understanding uh we always laugh that you know few CPAs become executive directors and vice versa and there's a reason for that um you know sort of like me in the camp counselor example most executive directors are really wearing a whole bunch of different hats pulled in a bunch of different directions you're managing the board you're managing your staff you're uh cause oriented so you're you know get engaged in your programs so there's just a whole lot of stuff going on and one of the things with nonprofits is you really need access to a wide range of skills and expertise that's typically hard to find in any one single person um nonprofits and general you know I think 98% are under three million uh their budget and so that just suggests that it's difficult to have uh you know a broad range of skills and talent in any single organization another thing that's sort of unfortunate and I'll only touch on this but it is an important area for nonprofits to consider is that nonprofit organizations are actually disproportionately impacted by fraud so a study by Harvard showed that an nonprofit organizations with less than 100 employees so you know the vast majority of nonprofit profits have less than 100 employees their average fraud size was $98,000 so about 100 Grand and then for groups that are over 100 employees so much larger much more a lot more money flowing around a lot more resources when they caught fraud it also was around 100 Grand and so your smaller organizations often are lacking the controls or just specifically lacking the expertise to really track that um internal and external audits uh only catch things about you know one out of six times and the um 23ds of the fraud is actually caught through proper controls so when you come in and you actually do a check you know you bring in an auditor something you may or may not catch it but the vast majority of fraud gets caught by just having you know good oldfashioned checks and balances and we did have one question someone asked if this will be available later uh we are going to record this and put it on our our blog so the rest of today we're going to sort of walk through this financial accountability um metric the thing our philosophy is to have a good accounting department there's really three pieces to it you need to build uh a good system you then need to run that system consistently and the reporting and everything should just sort of fall out of it um and so really having that infrastructure helps you achieve your mission so we're going to go through the build piece of it first so the fundamental building block the fundamental thing that is uh important in your accounting system and tracking uh what how to reflect the activities of your organization really comes down to your chart of accounts so yeah you're going to want to use an accounting system such as QuickBooks Peach Tree fun easy net Suite um Oracle uh uh black b's Financial Edge there's a a bunch of different systems out there and they're all going to have a chart of accounts and it's really like I said it's the building block of the whole system one thing I really want to point out and this is this is extremely true there's a big difference between a for-profit chart of accounts and a nonprofits chart of accounts so a lot of nonprofits that we run across they they're treasur maybe even there a you know is a corporate controller or really knows for-profit accounting um but nonprofit counting is all of that with another whole layer of complexity wrapped around it and so there's a really big difference so when you're setting up this building block it's really important that um when you're doing that and if you're doing it with your treasure you're doing it yourself that you really understand um the nonprofit implications um about I don't know about six or seven years ago Indiana University um came out with a unified chart of accounts and the idea was that this was a chart of accounts that could work across the nonprofit sector um and it's just sort of a uh a nice structure to begin bringing some sort of consistency into the nonprofit sector and and this is a really good place to start when you're designing your own chart of accounts or when you're thinking about tweaking or changing your chart of accounts um the uh and here's the the web link for it if you just Google Yuka or national Center for charitable statistics you'll be able to find that or you can send me a note afterwards and I I can definitely point this point it point you in the right direction um but so really the chart of accounts is broken into you know several different areas the things that go into the statement of financial position or in the for-profit world is known as the balance sheet those are your assets your liabilities and your net assets um net assets is sort of again a nonprofit term for Equity you know it's what left over after your assets and liabilities so you can see a screenshot over here on the right this is just an Excel and you can see how it's sort of um there's parent accounts and then these sub accounts and so it has a nice ion structure so you can collapse it or blow it out uh if you need more detail so you know the collapsed version may be important for a board meeting and the detailed version may be important for um you know staff as they look through it for the statement of activities which is like your profit and loss statement this is the thing that most nonprofits are most interested in um you know it goes through your contributed support So donations grants your earned revenues um and then on down the line and then you know the seven the 700 7,000 category is Personnel related expenses which make up about 75% of nonprofits budgets and then there's non-personnel related so uh supplies off office expenses that sort of thing so the one downside of ucoa is it's designed whether you're the American Museum of Natural History or you are uh you know a soup kitchen in Tulsa or you are a um you know Boy Scout troop in um Wyoming it's really designed to sort of be a catchall but the problem is for the vast majority of nonprofits always say you know it's like killing a mosquito with a sledgehammer it's really overkilled 800 lines long and it's way too complex way too much for any um any one thing so the nice thing is you know you probably want to eliminate a lot of the line items that are in that chart of accounts um to really simplify it the other mistake so this is sort of QuickBooks terminology but the ability to use the class like in QuickBooks they have classes the idea is that on any single transaction you mark it in with the within the chart of account but then you mark it with a second attribute which is whether it's a program expense or an admin expense um we often see groups who try to sort of put that into the chart of accounts so where the program the admin the fundraising so in the chart of accounts you might say program office supplies admin office supplies and fundraising office supplies and we really think that's not the best way to go it can get pretty um difficult to manage pretty quickly so that's something to watch out for so that's really the chart of accounts I Bree through that pretty quickly but the important message there is you know if you're going to spend some time and energy if you build it correctly right at the core all the reporting and everything should fall out of it a lot of people spend a lot of time in Excel manipulating reports moving stuff around reformatting it um and your reporting really should be as close to as click of a button as possible and if it is that means that you've built it correctly up front the second half of building it correctly is your budget um and this is something that stresses everybody out including myself um but knowing that uh you know sitting down and planning out what's going to happen over the next three months and over the next year we think is really important regardless of the size of your organization it's important for you as a family um it's the same thing if you have a $50,000 organization um and even more important as you get larger so one thing it does is establishes credibility so when you go out to funders and they say well what are we going to fund and you can you know whip your budget out of your back p uh pocket and say Here's what we're doing so it really builds a lot of credibility um it sets expectations for both you your staff and your donors provides the measurement tool so every month every three months every six months you can say you know we sat down and dreamed about what we were going to do what we were going to accomplish as an organization you know were we able to do that um it obviously doesn't measure the impact the social impact of the organization but it does help you know where and how you're spending your money and where you are um are you on track for that are you g to run out of money or are you not going to run out of money um one of the big things unfortunately you know fortunately or unfortunately depending on how you look at it in our sector is there's an emphasis on programs where versus fundraising versus admin so there's a lot of donors out there who really harp on and focus on that fundraising admin ratio and that that's a you know another two-hour discussion for another day on whether that's good or bad but the reality is it's there and it exists and so when you're doing your accounting it's really important to be able to have that number at the tip of your tongue and to be able to report on that um and manage to that as well the thing that budgets do is it really helps you um manage your cash because if you get something unexpected comes up then you know how to sort of deal with it in the future so creating a budget there are five five big areas in creating a budget um you know if you're an organization of less than five million really just focusing on the revenue and expenses um that that's going to be the primary focus that's going to be where you're going to spend the vast majority of your time budgeting one of the things that we often see is there's a difference between your dreams and what's reasonable and so uh I think the nonprofit sector in general is a very uh optimistic group of people and we're all very passionate about what we're doing and we're always dreaming and hoping that everyone else around us you know uh Falls in line with that but if you have a five-year history of growing 10% a year um unless there's a really good reason don't budget to double right so set reasonable targets and and that's something that your board can really help with and that's a that's a um reasonable board expectations really help you think through that make sure that you have separate budgets for program admin and fundraising um a budget on a you know the vast majority of groups Budget on a monthly basis that's generally our recommendation some exceptions to that are uh you know nonprofits with say under $200,000 in expenses and maybe you're a local theater and you do uh shows in the spring and in the fall um so monthly is not going to really make a lot of sense it's not how your money flows around and it's sort of Overkill but in general we like to go monthly um and then the other thing is just making sure you have a really good Excel model the the you know Excel is sort of dangerous because you can kind of manipulate it from time to time but just being able to draft out different scenarios and saying well what if I hire two more staff or what if one of my staff leaves what does that do to us uh so you can sort of model different scenarios the other thing the other thing I'm I just emphasize here on the program fundraising and admin um it this is also required information on the IRS form 990 that's an annual form you have to file at the end of each year regardless of size if you're less than 50,000 you don't but above that you do um there's something called a 990 in if you're below 50,000 but the uh so not only is this important for funders not only is this important for you to be able to manage your business but it's also required information for the 990 so if you are not tracking this today this is certainly something you should um build into your uh your tracking system one of the nice things about the monthly uh versus quarterly is nonprofits which are typically pressed for cash right we're all sort of constrained on resources and so when you're doing it monthly it really forces you to stay on top of things when you're budgeting monthly and you're looking at that on a monthly basis um but it you you can really get Overkill it does not have to be that difficult um you know for most items your rent your energy bill your uh you know your telephone cell phone bills whatever it is most things you can just divide by 12 if you know you know you've got a summer camp and for three months expenses are going to double then those are the major program expenses that you sort of need to budget truly think through on a month basis but most stuff most executive director salary it's probably not going to radic change throughout the year so those just divide by 12 and keep moving so that's really the build piece again so just to reiterate when you build that budget correctly and you build the fundamental um chart of accounts correctly once those things are built uh the Running part of it the monthly bookkeeping the monthly accounting the monthly financial statements all of that just needs to be done consistently okay so I have a a question here I just want to answer it before I get get away from it question is um why do you not advise using a range of classes such as program supplies admin supplies fundraising supplies um isn't it easier to see to run a report on to see how much you spent on supplies for fundraising so uh that that's actually exactly our the idea is that you know the way I think of is your chart of accounts runs down the left side of the page and your classes run across the top top part of the page and so you want to in your chart of accounts I want to know everything I spend on supplies so my total column just tells me everything I spend on supplies but then each of the different columns sort of breaks that down by program by admin and fundraising um so that's both useful from a financial reporting stand point and that's also how we advise setting up your budgets so hopefully that answerers the question if not I will we'll jump back into that um during the Q&A session at the end that's an important question so the next part of it you know the building it really should be a one-time event um you probably want to review it every two or three years to make sure it's fresh to make sure it's updated to make sure um you know it's getting you the information that you need but the real bulk of the work in accounting is really this bookkeeping piece and making sure you have accurate data so once you build that infrastructure you have to manage it and one of the things that we frequently see is your reports are really only as good as your data entry so if you have garbage in you're going to get garbage out right so if the the transactional accounting is not done properly um then it's going to be very difficult to have any confidence in the reports that fall out of the system one of the things that we frequently see when we take over accounts is you know within the accounting you can actually just see you know how they've had three different bookkeepers so there'll be a a chart of a line in the chart of accounts is going to have transactions and then all sudden it goes six months without any transactions and that's when the new bookkeeper came in and started treating treating those transactions differently and so that the real challenge that nonprofits face um is just that sort of constant turnover and so keeping the probably the most important thing in running your books is consistency and um when you have that constant turnover it just creates a lot of issues around really having that consistency and having uh both consistency in how it's done but also an understanding of how you built that fundamental structure to make sure that it everything is lined up so again you know kind of to State the obvious the key to useful financial statements is accurate and reliable data so you know if you're sitting around the Board Room and and No One Believes the numbers um it's not going to be a great discussion right so you got to have a lot of confidence in those numbers so when you're when you're setting up bookkeeping there's really three different areas there's people there's the processes and procedures and policies that you follow and then there's the actual technology and so from a people standpoint there's really several different options on how you get this done right so one you know obviously a very common way is you actually hire you have in-house staff who actually do the bookkeeping um the other area is some smaller organizations you know the treasurer is actually doing the bookkeeping um the other way you can you can have it is there there are a lot of Freelancers so people who work on 10 15 10 15 different clients and they are typically local people um who work you know just are working independently and they'll do five hours here five hours there 10 hours here um there's obviously organizations like us that are um you know sort of we provide services you know using a team based structure um and then also sometimes CPA firms will do this they tend to be the most expensive um but that is that's also a way that people get this done there's pros and cons of all the different uh systems you know um there's cost concerns obviously volunteers are you know great as far as cost goes but there's a lot of concerns then around controls and consistency um so that's sort of a trade-off you have to think through when you're deciding like how you want to achieve this um but those that's the general ways that the four General ways that organizations deal um find you know the the humans to do this work um the next thing I call it Financial systems I'm not meaning technology here I'm meaning more the processes policies and procedures so example is time sheets so how are you tracking time sheets in your organization are you using sheets of paper are they being properly approved and signed off um how is that information stored um are you using web-based tools there's a lot of amazing web-based tools out there for everything from time tracking to accounts payable approvals to online bill pay so the the thing around the the financial systems is you really want to one again back to the consistency message as much as you can be consistent um your life's going to be a lot smoother a lot easier the other thing is really make sure that there's appropriate checks and balances um again back to the very early comments around fraud really knowing and understanding um what those checks and balances should be so if you have specific questions around it the general rule is um anything that you can have if one person has the ability to move money so whether to deposit money to pay money to send out payroll you want to separate person reconciling that so that you know just as a fundamental the bare minimum is always have a check whenever money is floating around and then the last thing is technology um I've got a slide in the back around technology um and we we work with about 10 or 15 different systems you know the the thing that we come back to is 90% of nonprofits use QuickBooks um and it meets 95% of their needs so if you're an organization you're under you know your one or two million or less QuickBooks vast majority you're going to be able to to use that some hardcore accountants don't like it because it gives you so much flexibility it sort of gives you enough rope to get in trouble or enough rope to hang yourself the um if you have consistent policies and procedures and if you have consistent bookkeeping that's not an issue um but it's by far the most I think affordable and valuable there's definitely things higher up the food chain such as net Suite um which are a bit more expensive but you get way more for for that and so as your organization grows you know sort of the $3 million threshold as you go past that um we advise at that point you want to probably take a deeper look and look at maybe some different technology so the last thing here so we're about 30 minutes in I'm going to spend uh 10 or 15 minutes talking through financial reporting we're also having an entire hourlong webinar in December where we're going to go through financial reporting in great detail it's going to be a little more Hands-On talking about how to actually read and interpret these statements um for now I'm just going to give an overview of these are the types of statements you need to be looking at these are the types of things that you need to think through and these are the types of reports that your financial system and your ongoing bookkeeping should be able to produce so if you're not able to produce these things you know I encourage you to go back look at your chart of accounts or to look at the actual bookkeeping policies and procedures and how you're doing it um I really encourage people to to no matter how small you are to complete reporting on a monthly basis it does a couple things one is it's forcing everyone to look at it on a monthly basis so the executive director should really be able to understand this and make sense of it the second thing that it does is you know from time to time there are bookkeeping errors you know it's like a typo you know someone puts in a bill wrong so when you're looking at on a monthly basis you're looking at it in March those things will pop out to you and you'll go oh you know what um this got missed for February but if you're looking at stuff as three months old six months old I mean I have a hard time remembering what happened last week much less what happened six months ago so I really think reporting has to be completed on a monthly basis and then for the board most groups you you know um provide summary level reporting on a quarterly basis depends on your size we've got some larger groups that have you know very complex board reporting on a monthly basis which is great if your board is that involved but generally for the vast majority of nonprofits we think um it's quarterly and we'll talk a little bit more about that now there around the reporting and this goes back to bookkeeping as well there's really two primary accounting methods there's cash accounting and there's acral accounting um for the absolute vast majority of nonprofits we suggest AC cruel accounting um the cash accounting is just it's more like your home finances it's you know money in Money out how much money is left can I go out to dinner this weekend um AC cruel accounting it gives a much more accurate picture of your organization um and is generally uh our our suggestion I will say that for for most of our clients we use what we call a modified acral um accounting method which is for large items we're full-blown acral we're really taking care of making sure the expense and the income hit in the right period but for smaller expenses you know the bookkeeping effort is um is too much or is too expensive to really see any benefit so um this is again you know this is kind of a larger discussion uh around what's acrel and what's cash you know basically uh acrel means the income or the expense is is not necessarily tied to the cash flow and that's the fundamental difference um and this is something that you know uh organizations really should be aware of and sort of understand um and in our webinar in December we'll go into this in a little more detail uh to so so people can sort of see the difference um you know one example is so if someone makes a pledge and says I'm going to give you $100 then you book that um Revenue uh however they may not pay you that $100 until three months later and when the cash comes in you receive the cash but you actually book the revenue when you receive that pledge um and there's more to that example but that's the basic difference um another example is a vendor comes in and provides services for you in September they come in and they wash all your windows but they don't send you the invoice until October or November the expense should hit should hit your books in September when the work is performed not necessarily when you got the invoice so that's a couple of examples of how that works and it impacts your reports so there's really these these are just some core reports um some core reports here on that need to be produced on a monthly basis the uh statement of financial position which is the balance sheet if you will it shows you how much cash you have it shows you how much money you're due you know what's your account's receivable how much money is coming in how much money is due to be going out um your statement of activities is you know your profit and loss to use the for profit term but it's how much money came in what are your what's your revenue and what sort of expenses are on the way out the door so that's the one that people spend probably 80% of their time on um a budget versus actual so again once you set that budget up in the build phase if you've got a good budget you can compare that to what actually happened that does a couple things one is it it helps you monitor what's really going on in the organization and then two if there is a bookkeeping error it really shows up because you're going I only budget $1,000 for the phones you know why is there a $6,000 phone expense so either that's a mistake or something I need to really look into um a lot more to figure out what's going on somebody's going crazy with their Verizon bill um and then statement functional expenses this is just uh you know breaking out how much are we spending on program a program B program c um and really looking at um um your activity on a a program by program basis um the other one that's not in there uh which which uh is a lot of organizations look at but not all is a cash flow um there's two types of cash flow there's one that's looking at historical cash flow um and then there's a forward looking sort of forecast or projection of cash flow which almost tends to be the more important one and I'll touch on that more in a little bit but yeah with with acral accounting you really do want to pay attention to um uh your cash flow because if you get all those pledges that come in and you're like oh I got $10,000 but if they're pledges and not actually cash you know that's important to figure out before you go spend the money um one last thing is the fund balance report so this is a report that shows you particularly for people out there who have grants reimbursable grants um and a lot of restricted funding or even if you put the restrictions on yourself you say I'm going to have this event and all the money we raised today is going to go towards you know the kids in um in Thailand so that fund balance report shows you exactly how how much is in the fund as of you know today how much money we've spent on it this year how much money has gone out the door and that that gives you a snapshot uh I have this much more to spend in this category or I need to raise this much more money to sort of cover this category so it's a very helpful report and um one that can be created with a even in QuickBooks U can be created at a click of a button one thing I'll say here on the budget versus actuals is um this last item to really one of the things if if you have an item in your budget but there's no actuals that tells you one of two things uh and vice versa if you have an item with no budget but a whole bunch of actuals either one there's a bookkeeping issue that you sort of need to figure out the root cause of you know when you budgeted it you put it in line 7200 but the bookkeeper is putting it in line 7250 so they're not matching up so that's something you have to go back and sort of figure out the root cause of it um or you know you've changed as an organization you you've added a program or you you've steered it in a different direction and uh you just need to be aware of that and to recognize the implications um overall to your organization statement of functional expenses again this is the program admin and fundraising I've I've touched on this so I don't want to belabor the point but uh it it is something that's important in for a lot of funders uh for good or bad and that's something that you really want you want your books to be able to produce for you you when you need it you know maybe you don't want to look at it on a monthly basis um or maybe you do that's kind of up to you yeah that we we frequently get a ton of questions around hey does this count can I count this towards programs can I count this towards fundraising can I count this you know does this have to be counted towards admin so the the guidelines on this uh for Gap there's somewhat there um it's definitely an area where you want someone to help you think through but basically you need to pick a methodology and the rules say there's three you know it needs to be documented so you need to have it written down it needs to be reasonable and again back to my word of the day it needs to be consistent so if you've got a policy that's documented reasonable and consistent um you're you know you're halfway there the there are certain rules around around so say you send out a newsletter if that newsletter is soliciting funding soliciting money saying hey please give money then that's a fundraising expense and if you send out a newsletter and half of it you want to classified as advocacy or education um and then at the end of it you ask for money the IRS rules are such that that has to all go towards fundraising but if you send out a newsletter you don't ask for money and the whole thing is saying you know support our children schools come to this you know educational seminar on how to raise better children then that can be a program expense um so there are very specific rules particularly around fundraising um that you need to be aware of the most popular way to allocate expenses is just based on employees time so that's kind of the most common um you can also allocate it BAS Bas on square footage you can you can allocate it based on um your budgets for the year uh again if it's documented reasonable and consistent you know reasonable being a keyword um you can do that um typically we like to get those allocations approved by both the executive director sometimes the board um and then if you do have an auditor it's always smart just kind of run it by the auditor and say hey are you guys okay with this methodology because that's what they're going to be checking at the end of the year and there's a lot of other things besides just salaries that can be allocated um you can allocate your rent so if you've got an office and half of it's used for training of refugees and half of it's used for you know your administrative staff then you can split that out across program and admin you know office space your um does not have to just be overhead right because you're actually using it to to deliver your programs so really you can go through through your whole chart of accounts and kind of think through what of this has to be in one spot or the other there are certain expenses um that again the IRS is you know strict on us around fundraising um board meetings you know you can't say a board meeting is a program expense that has to always be uh administrative so there there are a few little exceptions but as a general rule you know document it make sure it's reasonable and consistent and then if you do have an order get them to sign off on it and here's what an end result could look like this could be your quarterly report um showing your admin programs fundraising and what those percentages are and this is just a summary and you can see over here the chart of accounts at 7500 8100 so again that's a collapsed version that shows um sorry that's the collapse version that shows uh those examples so the statement of financial position which again is the balance sheet um there's three three types of net assets which is you know what what does the organization actually have or own there's unrestricted funds which we all love there's temporarily restricted funds and those are funds that are either restricted in purpose or restricted in time so there's those are the two types of restrictions so it's restricted in purpose means um you have to use this money for um the refugees from Somalia and restricted in time an example is someone comes to you in September and says I want to support next April's um you know reading mobile program so I only want it to be used I only want this money to be used in April so that would be a time restriction permanently restricted is for endowments so if you have an endowment um you know all about permanently restricted and if you don't have an endowment you don't have to worry about it the uh part of the a big part of the statement of financial position is around the grant tracking um and that that kind of goes back to the fund balance report knowing exactly what's left in your grants at any point in time um have you really recouped all that you could um there's really two forms of Grant tracking you know we track over $100 million worth of Grants and there's really not a type of Grant we haven't seen but really there's either grants where the revenue comes first or the expenses come first which are called reimbursable grants and how you set that up in your accounting system how you track it really kind of comes down to those those couple of things to to just boil it down to its most basic um setup and so it really varies you know by the accounting system that you use um your ultimate goal is to be able to run a statement of financial position for each and every Grant so you know exactly where it is and the vast majority of accounting systems even QuickBooks you can do this as long as you have the discipline and consistency to set it up correctly so I I'll say a few notes about presentation um and then we I'm seeing a bunch of questions pop in so I'm I'll get to those here in about 10 minutes the um when you are presenting to your board or your funders one of the things is if your board is anything like my board or my wife's nonprofits board you know there's short attention spans right and so the key is to really spend some time to give them an executive summary um really summarize the information as much as possible and all the detail the 10 pages of reports that you know and and work with just kind of keep those on hand as questions are presented one of the things I found particularly with boards is the more information you give them the more they're going to get down in the weeds and the more questions they're going to ask and I really firmly believe that the role of a board is one of governance and general direction and oversight so you kind of don't want them I think there was a book called you know um what color should the brochure be and other favorite board discussions so you really don't want your board thinking about that kind of stuff right you want them looking at what are your overall Revenue Trends what are your overall um summary numbers we really we really work hard to make sure that information is out to boards at least a week before their meeting so that they have time to review it and so then actually in your board meeting they're asking more intelligent questions and informed questions and then lastly you know the more you can prepare the more time you have the more you can understand those numbers you're going to more confident when you go into that board meeting um on this the the you know there's a lot of just general presentation tips around Simplicity using graphs and pictures but the last thing I'll say is nonprofit accounting again I've said it several times it's very different from for-profit accounting so you may have leaders in the the business community on your board Bankers uh you're still really going to have to educate your board and translate for so if you go in and talk about a statement of financial position vast majority if even accounting Savvy people are going to not ex instinctively know what that is but if you say a balance sheet you know anybody who knows accounting is going to sort of know what that is so you know we're talking about permanent restrictions and temporary restrictions those are all things that are um not intuitive uh to even you know your most business savvy person on your board so you really have to work hard to sort of educate them and inform them about what they're looking at and here's an example of a couple of charts uh that you could you could show to your board um you know at the summary level um final thoughts on this uh strong financial management is really essential to the success of any organization I know that sometimes money it's sort of you know we don't want to talk about it right because we're we're social sector we're doing good in the world we're trying to improve the lives of others so money is you know Wall Street can sort of feel dirty but it is an important thing for any organization it's important for your personal life it's important for your family it's just as important for the nonprofits that that that you love it's really important to try to engage Finance members on your board if you can get a really good Treasurer um who is helping you who's maybe reviewing the the financials with you on a monthly basis one of the things I always encourage people is don't use your board members to create the information but use your board members to help you interpret it and make decisions all of us have different gifts and skills you it's back to our kind of do what you do best philosophy um but at a minimum it if you can understand what's in this slide deck if you can understand the basic tants of it you are leap years ahead of most people in the nonprofit sector and sort of understanding um this information and and being able to make sense of it so and then build run report equals financial success so a few things um on I want to close out just very quickly to to let you know a little bit about us I'm going to spend three minutes on this and then I'm G jump into the questions and I'm going to try to unmute folks um so that we can we can capture the Q&A uh verbally as well all right so um I've mentioned this we're we're 100% focused on nonprofits uh which I think really helps us we've learned a lot over the last five years of doing this um and we're really trying to bring that out to the sector and saying hey guys this is a way that all of us can get better um we do use a team-based solution and we are offsite so I'm in boisey Idaho right now we've got clients in 26 different states um the team based solution is really nice because it solves that sort of lonely bookkeeper problem uh in that you know we're all sitting out here um side by side shoulder Tosh shoulder we're constantly asking questions of each other we're saying hey when you get that reimbursable grant for that client can you come over here and show me remind me again how you did that so the team based solution there's a lot of shared expertise that happens um there's also improved internal controls because we're splitting the work among a bunch of different people and then also it really reduces the impact of turnover um because no matter how small of a client we get we cross Trin three or four people on it so that PE and we create client specific procedures so that people can sort of um uh step in as seamlessly as possible so you know the question asks yourself when you're building uh your accounting structure is your chart of account accounts is your accounting system properly configured is it giving you the reports that you want um so make sure that you're in alignment with accounting best practices this is something that we do with all of our clients when they come on board but it's something that you can also if you have experts around you you can work with on your own are your books being run consistently and are they being run correctly um this is 90% of what easy office does is the running piece of it um and that but it's obviously a lot of groups do it do it themselves or use a CPA firm the key there is to really have good solid procedures um and to really uh make sure you're understanding that area of it and then you know in reporting we say one of the things is do you really know how to use the information you have because it's not just um building the information my goal for the nonprofit sector is that first and foremost everyone knows how to use information I don't necessarily think all 1.5 uh you know million nonprofit organizations and the uh you know 45 million people that work there need to know how to create the financial information but I do think they need to know how to read it and interpret it and use it um we we have a very flexible solution there we have a little calculator on our website that you can go if you hop on our website you can find this calculator the um it it allows you to either just say I want easo to do everything here's the total scope of what I want you guys to do or you can sort of divide it up and say I want you guys to do payroll and Bank reck but we're going to do all the donation processing so you can we can sort of work with you we can mix and match the scope to fit your budget we work with a bunch of different accounting systems um you can see them on here net Suite Oracle QuickBooks so the key for us is just online access um if you do use QuickBooks we pay all the fees for that here's a whole bunch of our clients um like I said it's about 160 excuse me about 160 clients around the country um and you know New York DC California and kind of everywhere in between so the last thing we'll do is is answer questions um Susan lentini is on the line as well she is our director of Client Services she is in New York City and I have here with me presenting um is Mary Leeton she's our director of accounting services she's a CPA with about 20 years of nonprofit accounting experience so if any of you you guys ask me any difficult questions I'm going to defer to her um but with that first thing I want to do is answer the questions that have already come in and let me see if I can pull these out I'll run through these and then I'm gon to unmute it so that everyone can start asking questions all right um if if the churr current chart of accounts does not mirror the Yuka with regard to the number groups should we change those numbers um you know uh that's a good question it is certainly worth doing we find that if you have numbers in your chart of accounts it really speeds up the bookkeeping um like we know that 7120 across you know 95% of our clients is payroll and so our payroll taxes for non-management staff so having a really consistent numbering system is nice yoa does map to like the United ways Grant standards and some of those things so that is a uh that's probably not a bad idea um yeah so here here's a great question um for a very small organization of less than 100,000 a year is it acceptable to budget some classes on a non-aggregate basis so just dump everything into travel and meetings instead of breaking it out by Transportation meals lodging Etc so as the general rule I think that's absolutely a great idea one of the weird things though is the IRS 990 has some very specific categories for whatever reason um the IRS decided do that so in some cases you can lump things together but in some cases to really accurately prepare your 990 you need the detail so as a general rule it's easier at a transaction level to record it on a detailed basis and then have it roll up into the aggregate um because if it's in the Aggregate and then a funer or a 990 sort of requires you to split it out that's going to be a bunch of work later on so so the answer to that question is is it it depends in general you don't want to go overboard with a bunch of ridiculous detail but there are some things with funders and 990s where you where you do require detail um a bunch of questions around uh will this uh presentation be available online and the webinar we are recording this and so all this is going to get posted on our blog which you can find at YY office.com um okay so I think that I think that's the end of the questions uh there were a bunch of questions about will this be available um we are also it's very likely we work with a lot of different uh referral partners and state associations around the country that will be offering this and other webinars um on their schedule as well we will probably do this one again in the spring um but we're happy to do this if you want us to do this for you or for your board or for a group of people um we're happy to do this as much as as people like but it will be on our um on our uh on our blog all right with that it is it is 458 on the East Coast um if anyone has any questions you can you can raise your hand I'm just going to start unmuting everybody so if you have questions you know chime in um as I'm doing that Susan I don't know if you want to add in uh your two cents here while I uh open up the lines all right so any any uh any further questions all right it doesn't sound like there's any further questions if you do have them let me know can you email um the info about the one you mentioned December oh yeah you bet so in the um this may have beened Jeff I while you're talking if you can mute okay I'll mute everybody I see I see why they tell us to mute because it's h noisy all right I've muted everybody um yeah so the webinar and most of you probably received an email had three different webinars listed some of you may have just heard about this one um but there are two more webinars coming up we'll send out reminders we'll send out reminder emails to our you know to our newsletter list so if you want to learn more about that shoot me an email or Susan an email you've got our email addresses here on the um on the screen or you can go to our website and you can sign up for our newsletter but that that'll be the best way to make sure you get this information all right it looks like Paul has a question all right any any more questions I have a oh sorry go ahead Anna yeah yeah I have a question um when you have um programs to which you want to give a portion of the administrative cost um you do it by budgeting the administrative cost separately and then applying I mean I'm just trying to think through would it be better for me to just put a percentage of the director's salary inside of it program and then not have an independent administrative budget or is it better to have a separate administrative budget does the question make sense I think so so let me repeat the question make sure I got it so um for specific grants or specific programs sometime you're trying to figure out how to allocate people's salary who maybe work on that program but also do administrative things not only the salaries but you know the cost the office cost or whatever if I want all the programs to have a portion of the administrative because they could not function with the administration right so you want them to pay for part of the administration and to that be in their budget so when they know what they need to fundraise for their you know they take into account that part so what is it h how do I do that do I put the salaries and the costs into the program budget or do I keep an independent administrative budget you know what I'm saying yeah so as an organization I think it's important to keep a separate administrative budget so as an organization you want to be able to show this these programs accounted for 80% of my activity and my total admin was 20% okay that said a lot of Grants will give you an acceptable admin percent right so um we're going to allow you to to spend 12% of this Grant on administrative expenses and so that that's a it's a little bit more of a complicated question around um if your program equals a grant um how we do that is a little different okay um and I don't know Mary if you wanna it's proba it's probably a 15 minute discussion um on how best to do that yeah but I think that you you do want to have a separate organizational category that encompasses all of your Administration yeah yeah yeah that's a good point so our next webinar in November is around Grant tracking yeah um do you have a bunch of are you referring specifically to Grants Onna you know not necessarily I um we have been working with with a group and they sort of um prefer that you know administrative um costs be Associated to specific programs so I was trying how to figure that from the accounting perspective but maybe it's just easier to do it how I've always done it which is to keep us seate administrative and then um you can get um how do you say that uh uh a rate for which grants will accept that percentage and they don't need to know exactly the grant anyway I see it may be just easier to do it as I've always done it yeah yeah I think that's good okay so uh one last question here um I struggle with how much detail to give the board should I give actual versus budget and year-to dat uh and last year or just the basic information um you know it depends on your board it depends on your size I think in general what you've described is pretty good right I give the actual versus the budget uh a lot of times what we see people do is they'll do an actual versus budget for the current quarter an actual versus budget for the and an actual budget for the whole year so they can sort of look at it two different ways you know I I think my take on this is the more you show summary the more different ways you can show summary level information the better where I sort of where I sort of hold off on sharing stuff with the board is you know the breakdown between office expenses and Postage and travel you know like I I don't want to get into those discussions but I do want them to understand how we're doing for the quarter how we're doing for the year how we're doing this year versus last year so the more different ways you can present summary information I think is good so where where I get concerned with boards is when you're showing too much uh line item detail really thank you hopefully that answer your question Paul it did I end up giving them a spreadsheet of just all this information because I think it might be useful in different places and I'm not sure what they want and I'm having trouble getting feedback from them yeah yeah that's um yeah and if they're not giving you feedback then I just yeah it's really hard but I I would kind of um what you're doing is probably working um because they would probably complain if it wasn't as my guess but I mean I don't know you're bored okay thank you yeah um all right a question from Candace I just unmuted you Candace um okay well maybe we may have lost Candace here um you are unmuted Candis so if we can't hear you it's probably a a microphone issue or something um we I'll just go ahead and close out everyone should have our email information our phone number you have our website and there's a hundred different ways to get a hold of feel free to just reach out with questions we will have another webinar in November and another one in December that are scheduled the next one will be Grant tracking it'll be a little more Hands-On a little more in-depth to go through um exactly how Grant tracking works and in common pitfalls um and then we'll really dive into financial reporting uh in December so look forward to hopefully hearing seeing a lot of you back and with that will sign off thanks everybody thanks for joining us thank you