Getting Your Ducks in a Row with Tosha Anderson

Monday February 28, 2022 comments

Any accounting business and tax advice contained in this here podcast is not intended as a thorough in-depth analysis of specific issues. Nor is it a substitute for forming information, nor is it sufficient to avoid tax related penalties. If you have specific questions that you need advice for, be sure to schedule a strategy session and not solely rely on information in this podcast. All right. Back to the episode.

Hi. So I have recognized that a lot of nonprofit leaders are really uncomfortable talking about money. And that is one of the reasons why we started the Nonprofit Ace Podcast was to get more people to say like, "Oh, I can do this. This is not that complicated."

I do recognize though, that sometimes we need to go a step deeper. And so we are having a webinar. I know. So we actually dig into how your financials and good reporting, understanding your financials will actually lead to better fundraising outcomes. Deepening your impact, serving your community more, all of those things. So definitely check out the show notes for the link to sign up.

Chyla Graham

All right. Hey everyone. Welcome to another episode of the Nonprofit Nuggets Podcast of this week. I'm excited to be talking with Tasha Anderson of the Charity CFO. Tasha and I actually met, was it 2017?

Tosha Anderson:

A while ago, Yeah.

Chyla Graham:

Yeah. So we met, and it's been good to know her and see the work she's been doing. Definitely have seen some overlap in some of our work. And I wanted to have her on, because I definitely believe in collaboration. And for those people on the outside, we look like we do very similar things. And I think if you get to know us, we are fairly different.

And I definitely wanted to know, if you're a resource, if you're looking for accounting support. Tasha is definitely someone that I would be like, "Yes, you talk to Tasha." And definitely, I like people to know that there are other options out there. So welcome. And so tell me, what are you celebrating?

Tosha Anderson:

Oh my gosh. Celebrating a lot of things, I think on a personal level. We've just now moved into our new space. So I apologize if anyone hears any jackhammers going on, it's still very much under construction. So a lot of expansion, a lot of growth. You know, nonprofits have been hit hard and I don't just mean financially. They're hit with process changes, improvements, rethinking the way that we've always done things.

I know you and I both work with organizations that are really interested in thinking outside in the box and doing something different. So I think in many of our clients, they embrace that. But what that resulted in us, is more and more organizations that were forced to find other accounting solutions. Or they were forced to think about how they can do their accounting in a different way. So with all of that, it created an opportunity for growth for us actually.

We're expanding and figuring out new and better ways to work with nonprofits. So that's certainly worth celebrating. And seeing how much, I think that we as accountants, tend to be overlooked, our work isn't very exciting. No one really knows what it is. Or wants to know what it is.

And the Charity CFO's has been recently kind of acknowledged and been honored in some really remarkable spaces for the work that we're trying to do. And Hey, just being a cool accountant is something enough to celebrate, if you can consider that being a cool account. I don't know, but yeah,

Chyla Graham:

No, I love it. So before we go further, where do you want people to find you, so on social media? We'll be sure to drop those links into the show notes, but if you want to tell people now, as they're listening.

Tosha Anderson:

Yeah, really the easiest thing to do probably is just go to my website, thecharitycfo.com. And then through that place, you'll be able to find our blog, some of our online resources, we have some free training. And then you'll also see all of our social media links. I am pretty active on Facebook, LinkedIn. Starting to try to be more involved in Twitter.

I kind of joke that I'm actually not that big of a fan or not that active as much on social media. I just like sharing all the resources out there. So go to our website, thecharitycfo.com. And then that'll kind of redirect you to a couple different options to follow what we're doing.

Chyla Graham:

Great. So we'll be sure to add those links into the website. I will see you on Twitter, maybe.

Tosha Anderson):

Yes.

Chyla Graham:

So tell us more about The Charity CFO and the space that you find you were in, thinking outside of the box. Tell me â€œthis is what I love about it?â€

Tosha Anderson:

Yeah, well, it's kind of funny. I was giving an interview yesterday on the company and how it got started. And I think like many businesses, it was completely accidental. I certainly knew there was a need. I did not necessarily know I was going to be the solution to that need. The reality is, like you, we work with small to, I guess really in the grand scheme of accounting and nonprofit industry, micro to small nonprofits. So typically less than $10 million.

And what we're really trying to do is fine tune their accounting processes, their workflow. To gain a ton of consistency, predictability, accuracy. Most of our clients end up getting government funding. More sophisticated funding like foundations, restricted grants, those sort of things. Right?

And their problem is going from having a bookkeeper that just enters stuff into QuickBooks. To now, I need to be able to slice and dice data every which way to Sunday for all of these different presentations and all these sorts of things. But I also need to do it at an affordable price. And I also need just consistency in financial reporting, right? So I just want to get my ducks in a row and I want to keep them in a row.

And I think where we differ, than other accountants, we focus a lot on operations and processes, and building out what those processes are going to look like for nonprofits. Most organizations, they don't want to, or have the skillset to develop an accounting function in those processes. But we serve as their maintenance team. So we keep their ducks in a row, if you will.

Chyla Graham:

Yeah.

Tosha Anderson:

And so we work with them, kind of different than you. I mean, we can certainly talk about some differences. But you really help go in and create new or refine or improve. And more kind of on a project basis, in some cases. Different than us, we only work with clients on an ongoing basis. So we only work with clients that we can help keep their ducks in a going forward. So we work with them on a monthly basis.

And we pretty much, in the grand scheme of accounting, we try to keep it really, really simple. We just do their bookkeeping and accounting, their financial reporting. We do all their monthly reports. And then on an annual basis, we help them get whatever reports out they need, to their funders or donors or the government or whoever. Yeah.

Chyla Graham:

Cool. So as you do that, and you think about the maintenance of getting their ducks in a row. I know for me, I had my own little aha moment, working with people. Like this is what you should be paying attention to. What is it that you are finding that you're like, "I wish people were prioritizing this piece of, but like maintenance?"

Tosha Anderson:

I would say, hmm. That's a tough question. I think that the most important piece for the maintenance is just keeping the tone at the top. If we don't have support and buy-in from those that are leading the organization.

Chyla Graham:

Yes.

Tosha Anderson:

Everything else is just going to fall flat. And honestly, we've had to have conversations with a couple leaders of nonprofits. And basically say, "Look, we're here to help you. We're only as good as the information you provide us. And I understand that means that you all have to send us things, but it's really difficult to get the integrity and keep the ducks in the row if you all aren't doing your part."

And the reality is, and I think that this is a frustration and a misunderstanding with respect to accounting and finance. And I'm saying this, not just as a firm owner that wants things done my way. I didn't give much of a bio, but I used to be a CFO of a nonprofit, right? So I used to actually work for an organization. I was the only accountant. There was about 85 of us. And the reality is, I probably had on any given day, 15 different people spending money everywhere.

I was one person, I was not involved in spending the money. I'm talking on the credit cards or creating invoices and all these sorts of things. Well, people just expected me to be responsible for hunting down the information or knowing the information.

Not just what is this for? What program is it for? It's very unfair to your accountant to put that burden on them. When in reality, those spending the money should have a sense on what am I buying this for? What part of my budget does this apply towards? You know, and what funder potentially is paying for these sorts of things? Right?

And to put this on the accountant is really unfair, it leads to a lot of burnout. It's very frustrating, because the accountant in and of itself is out on an island, the administrative island, I call it. And it doesn't feel like much of a team effort. And so taking a step further to creating a more collaborative environment has to come from the top, number one.

Number two, not just on the expense side, but on the revenue side. And I can't tell you how many times I've worked with fundraising professionals, the development directors. That will ask me as the accountant, where are we at with fundraising? Where are we at with fundraising, from their goal.

Chyla Graham:

You tell me?

Tosha Anderson:

And that's what I'm thinking, right? I'm just seeing the money that's usually coming into the organization. But I have no sense on what the pledges are or the timing of those gifts. And I think it's really important for everybody in the organization to understand, not just their overall budget, but cashflow. Especially if you're a development director, right?

You can get pledges all day long, but if those dollars are not coming in. Or you're not being strategic about getting those dollars coming in, we're going to have a problem making good on our bills and making payroll and those sort things. So I guess, if I could change anything to really boil it down, is to have buy-in from the CEO. To understand financial management is not something you can delegate.

And I know we're a little bit biased because we own our own businesses. We are accountants. But I will say, I don't do my personal bookkeeping for my firm, but have to look at the numbers. I look at revenue projections. I look at expenses. I look at our cash balance. I look at who owes us money. I look at who we owe money to. I have to do that on a weekly basis.

And I am pretty far removed from the bookkeeping side of things. But even though I'm an accountant, I know people are like, "But Tasha, you're an account and you understand it, and you're good at that." As a business owner or a leader of a business, you have to. That is not a responsibility you can delegate the financial understanding of where you stand or where you're going. It's just not something you can delegate, and you shouldn't delegate. Right?

I would never delegate that, even, and I have delegated the bookkeeping. I have not delegated the ownership of the money comes and goes.

Chyla Graham:

Yeah. Because the buck stops with you. As the leader of an organization, it is your responsibility. Your responsibility to the board, to funders. I know how we did. I know where we spent the money.

How much you spent on paper clips? But I can tell you, this is what we're doing on a regular basis. And I think a lot of people assume that they have to be in the weeds in the bookkeeping. And you have to tell them. "No. Actually let's take a step back." You'll have people, or we'll support you with those people. But you need to be able to say, "Hi, high level, what's the plan? The goal? What else shouldn't we be looking out for?"

So yeah. No, it is definitely the thing that you're like, "Am I on the island by myself?" We both worked as finance leaders at organizations. And I remember going around, because I knew a grant was up. And I was like, "Excuse me. So are you buying this or not?" Because I'm not typically the one with the credit card, making any purchases. And I've had to do that, in that one case, I was just like, "Are you buying it? Because this benefit is tomorrow."

Tosha Anderson:

Yeah. Yeah. Mm-hmm (affirmative)

Chyla Graham:

I just want to make sure that I don't need to go ahead and do more work on my side. And it's easier for me to go ahead and buy it. And so really it's reminding them like, "Hi, top of mind, we have these things to buy."

The next question I have for you, is more about like as you've seen organizations, especially I know working with a lot of micro nonprofits. What are some of the resources? Maybe some of the things you have on your website that you're like, 'Man, I wish more people were tapping into this or checking this out."

Tosha Anderson:

Yeah. Great question. I actually, and I think I mentioned this to you before. It's hot off the press, I just released, and I'm sure you get the same FAQs, we get. For a micro sized organization, so we're talking, if I had to define that more, less than $250,000 in revenue, I mean, you could argue it's smaller than that.

But I feel like once an organization crosses that $250,000 threshold, they have certain things in place, right? They likely have some sort of bookkeeper. Or even a board member that understands bookkeeping, doing the work and those sort of things. If you're less than two $250,000, or getting started, you and I get these questions all the time. What should I be doing about this? How do I do that?

And the reality is, they just don't have any money to pay someone to do these things. And frankly, even if you did have a little bit of money, a lot of CPAs just aren't going to set up maybe your QuickBooks account and give you two hours of training. And then be on call for your questions like going forward, unfortunately.

I mean, you might be able to find someone, and that would be fantastic. But the reality is they might not be as responsive as you need them to be and those sort of things. So what I did, if you go to thecharitycfouniversity.com. So same as my company name, but add university to the end.

We have a course that we created. The first two hours is free, and it's basically a crash course in all things that you need to know as a leader of a nonprofit. This is also important. If you're a board member, maybe, a new board member. Or you're new to bookkeeping too, or maybe you have some bookkeeping experience, but you're new to nonprofit accounting specifically. It kind of gives you a crash course.

What are the differences between for-profit and nonprofit accounting? What are the differences in the financial reports? How should you look at these financial reports? The total contents, about six hours. The first two hours are free. The first two hours is kind of the introductory, like the primer. Think about it like, this is the information I need to know if I'm leading an organization.

The content, it's a really low price point. It's like $29. But the remainder of the content was like, okay, now that I have this foundation. The paid version is like, okay, now I need to do this myself. I need to actually set up a QuickBooks account. So if you're an organization and you already have some of these things in place, just focus on those first two hours.

And this is a resource that can help your board as part of board orientation. I developed it with that in mind. I developed it, if you are new, maybe you're stepping into a leadership role. Maybe you've been more on the programmatic side and you weren't involved in budgeting or financial reporting, and you're new to that area.

Or maybe you came from the for-profit world. And now either as a board member or a leader of a nonprofit, you find yourself trying to figure out, okay, what are all these restricted funds? You mean, I can't just spend this money how I want? And I have to report this out?

And so we give you a lot of good hacks that we have identified on making the accounting accurate, timely, predictable, easy, affordable, all of the things. And it's usually one of the things that I've noticed, and you might too, have noticed. That sometimes people just want to throw more money at the problem. If the accounting isn't right, let's just add another accountant.

And oftentimes, it's not the accountant that's bad. It's well, maybe it is the accountant that's bad, which may be a system breakdown. It's a system breakdown or a workflow process. And the reality is, if you're in an organization, and I'm speaking from my own experience, so I'm projecting. That it's not that I was not intelligent enough. It's not that I'm not a good problem solver or creative person and critical thinker when I was in that role.

A couple reasons why you don't implement new things, in my experience. And again, I'm projecting, when you work for a nonprofit. Number one, you're already treading water, barely keeping your head above that water, right? So to take on a project, to not only research a better solution, but implement that better solution. Nobody's got time for that. And even if you do have time for that, you don't necessarily know the unintended consequences if something goes wrong.

You don't have the time to fix it. And it inevitably will go wrong. Right? And it could be a simple thing, but it could not be a simple thing. And then you have to deal with all the unintended consequences of that. Right? And so we find ourselves doing the same things over and over and over again.

So what we've tried to do, is kind of given, these are some proven hacks for us. This is how we've done it. This is how we've set things up, to kind of take the work out for nonprofit leaders. So you don't have to go recreate the wheel and just cross your fingers and hope that things will turn out well. So I would say that's a good resource to start from.

Chyla Graham:

Love it. Okay. So before you go, last question. What is one question you wish people would ask? So like having been on some podcasts or doing interviews, you're like, "This is the question you want to ask?"

I hate the question of, well, so what should I do about chart of accounts? And so what is the question? This is the thing that I wish people would be like, "Tosha, tell me?"

Tosha Anderson:

Yeah. I would say people get so hung up. This is going to be controversial. People get so hung up on their budgets. They get so hung up on their revenues and their expenses. They get so hung up on the presentation of the financial reports. That I would say for a small growing organization, the number one thing that they should be focusing on is cashflow.

And I think sometimes nonprofits will hyper focus. We spent too much on paper. So instead of buying this thickness of paper, buy this thickness of paper. I've sat in on board meetings where they've said, "Well, we spend too much on program events." It was for an early childhood center. And by program events, I mean like the parent events, the Mother's Day tea and parent appreciation. It's like less than a thousand dollars out of a million budget.

We're sitting there in these meetings, having micro conversations about really insignificant numbers and we hyper focus on expense reduction. When, as you know, as entrepreneurs, you don't ever really focus so much on expense reduction. You focus on revenue generation. There's a certain point where you can strip away and strip away and strip away. And then you cripple your organization because you've left no money.

And kind of flipping that, how I've done this in my own business. And I think that success has been attributed to is revenue generation. I don't focus so much on expenses. I focus on revenue generation, and as it goes hand in hand cash flow. Know where your money is going, high level. And know where it's coming from.

So for example, if you don't know what your average monthly expenses are. How much money is going out, ballpark number? Literally, just run a profit and loss statement by month for the year, year to date. Or for the last six months. Look at the total expense line item towards the bottom. Take the average of those numbers and come up with an expense. That at least is empowering for you to know.

In order to continue running my organization, I've got to $20,000 of expenses going out every single month. You need to know that number. Ballpark. It doesn't have to be exact. You don't even need to know on specifically what, if you don't want to. I just need to know, this is how much I need to earn every single month to pay my bills. And just like you were in your personal finances. I know what my bills are. I need to bring in certain amount of dollars to make good.

Now, you take that number, you go back to your bank account. And you're like, okay, how many months can I squeeze out of this bank account if I had no other dollars come in? If you're less than 30 days, you've got problems. Because timing of when payments come in, especially depending on how your money is earned, if you tend to be more of an event based. If COVID has taught us anything, events are scary, I mean, you could have all of the things happen. Bad weather, you could have pandemics, you can have all sorts of things.

So look at what your average monthly expenses are. Go back to your bank account and do a check. And just say, "Am I at least holding on, on average, 30 days of cash or more?" That's the starting place. If you're not at 30 days, then shoot to get to 30 days. If you're at 30 days, I would encourage you to keep growing that to the point where you're at least 90 days.

People say, "Well Tosha, I already have such a tight budget. How am I going to do that?" The same way you would in your personal finances, if you were committed. I have to save money. I have to replace the tires on my car and I know this is coming. And if I don't have the tires, you're in Denver, right? Or you're in Colorado.

Chyla Graham:

Yep.

Tosha Anderson:

So you need these by winter time, like next week, probably. If I don't get new snow tires on my car, I'm in trouble. So I would actually open up a separate bank account. And if you just look at your bank account every single day or every week, right? And just move that money, literally move the money out of your bank account, where you can't spend it. And guess what? You'll figure out a way to survive.

Even if it's a hundred dollars a week, if it's $500 a week, whatever it is until you start scrolling away enough money to get to that place. And you just have to have discipline. And that's what I would encourage people to do, is focusing on revenue generation, rather than just slashing every expense. I mean, I'm not saying go crazy and just ignore expenses completely. Know on average how much money you need to bring in. And on average, like where your bank account is at all times. You should know those things.

And then you're going to start to notice some patterns. Like, okay, I know payroll comes out on the 15 and the last day of month. How is that going to impact cash? Right? And pretty soon if you're sitting on 90 days of cash, you don't really have to worry about it. But if you're less than 30 days of cash, you need to know what your bank balances are. So for that, I would encourage people, revenues, expenses, budgets, to actual. They mean nothing if you don't have cash in the bank to keep your operations going.

Chyla Graham:

This was so much fun, Tasha. I appreciate that. People listen, I tell you that these are not just the things that come up in my head, like someone. So if you all don't take anything else, remember the tone at the top.

Organization leaders, remember you just can't advocate. You can't just say like, "Well, Tosha's going to do it. Or Chyla's going to do it." To be an active participant. And like, how are we managing our funds? What's the big picture?

And then your cashflow, cash is king. Can we do this? Do we have at least 90 days worth of cash on hand? What do we need to do to get there? So I have the links for Tasha or university in the show notes. Tasha, you have a great day. Happy construction.

Thanks for listening to another episode of the Nonprofit Ace Podcast. Until next time. Bye.

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Toshaâ€™s Links:

The Charity CFO

The Charity CFO University.