 Good morning or good afternoon, it could also be the wee hours of the morning depending on what time you're choosing to tune in with us here at the nonprofit show but we are so excited to have Jennifer Banks joining us today. She is a manager with your part time controller, and she is here to talk to us about Tiz the season budget planning and so this is a really critical conversation. And I, we love I shouldn't say I because I know you two Julie I really love all of the individuals representatives from your part time controller we've learned so very much from each and every one of you Jen. So, can't, you know, wait to learn more from you here soon. But before we jump into conversation we want to remind all of you our viewers and our listeners across the globe, who we are in case we have not met yet. Derek is here she's the CEO and the brainchild behind the nonprofit show, working with the American nonprofit Academy and really excited, you know that you had this dream, as you said like four years ago now we're moving into our fourth year. And I'm so very honored each and every day Julia to serve alongside you I'm Jarrett ransom, the nonprofit nerd CEO of the Raven group, and always loved nerding out with Julia and all of our guests again thank you to our presenting sponsors that have all these nerd out sessions, every single weekday. And Julie I had a conversation yesterday with someone and, you know, telling them about the show and they said wait you do this every weekday. And so that's the common response right and I say yes, every weekday and again, you know a huge nod goes out to our amazing sponsors that allow us that opportunity so thank you. 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And then again Jen we are so thrilled Jennifer Banks manager your part time controller. Welcome. Thank you so much I am so excited to have this conversation with the two of you this is just one of my most favorite topics is actually one of the processes I just looked forward to the most. Thank you for doing day to day accounting and controller work so yeah just and I know we're living in very difficult times right now so just really looking forward to having this really important conversation around that. Well, thank you and we would be remiss if we didn't acknowledge the birthday or anniversary that your part time controller recently celebrated so 30 years of business so congratulations and thank you for all of the amazing work you do. This company is across the nation so Jen share with us where you're joining us from. Yeah sure so I'm located in Irvine and Orange County California so I primarily service our clients on the west coast so kind of newer newer geographical region for us so it's been just a really exciting time of growth and just great to work with so many nonprofits out here on the west coast. Amazing you know Orange County. Oh my gosh there's got to be such a wide assortment of nonprofits Orange County being one of the wealth centers of our country and yeah really cool I mean that that's just amazing and I have to think about it Jen's probably the first person we've had from yptc that's been in cap from California right. That I can think of I mean we had west coast right but I don't think we've had the state of California. Yeah, yeah, really really really we need a map of yptc can just flag every single state that a representative has joined us and actually well thinking about it Alicia Eastfold who talked to you all about data visualization she she lives in Sacramento California so I think she was on the show with you a few I might I might be the second person from California. There's another another lovely conversation that we had. Again, I mean I just feel like I'm surrounded by nerds and that is a compliment Jen like it's a true compliment. And because I love people that show up in their profession and they're passionate, you know, and also really willing to share. That takes us you know really to this first talking point and if you would Jen share with us about what it's like right now budgeting and unusual economic conditions. And I just have to say Julia, you know when we started this this show, you know, now four years ago, we thought that was unusual and I feel like the last four years right there's, there's unusual that continues to, you know, unfold so Jen share with us about what this might look like for us. Sure. Yeah, and I just want to kind of kick things off by saying I think it's really important to just try as much as possible I know we're living in this time of uncertainty but just to really keep a positive frame of mind and also an open mind because I really feel like there's that chance that we can take during the year to just stop and pause and reflect and just think about what have our achievements been over the past year, like what have our challenges been, but just let that really inform the process moving forward. And yeah I think it's just a great time to just really kind of have that fresh start mentality. But yeah just kind of looking you know 30,000 feet up in the air I think it's really important when we're talking about budgeting to just look at that macro perspective and especially when we're talking about economic conditions. If we think about what we've been facing and we've had financial sector turmoil banking crisis. The Federal Reserve is just recently predicted that the economy may dip into a recession in the back half of this year because of that financial crisis. We've been dealing with high inflation, we've been dealing with labor shortages. But we have kind of still the fallout of COVID where we had a lot of supply chain shortages and public debt has soared you know kind of what we were talking about earlier so we do have all of these kind of macro wider macro conditions occurring that eventually I know they're going to have non profits now and if certain certain things are not that's going to have a trickle down effect so I think it's just really important to kind of consider those those options. And one of the things that I really like to do and I know this is a little bit old school but I like to kind of go back to my my SWAT analysis. And actually do that upside down. I read a great article in the Harvard Business Review, where they talked about, I'm sorry just to kind of backtrack when we're talking about SWAT is just one of these kind of classic business strategy tools, where you look at your strengths your weaknesses, your opportunities and your threats. And I actually think it's important to do that the other way around to kind of take that 30,000 foot view look at these macro conditions, really try and map out our opportunities and our threats within those. And then that really helps to inform the analysis of our strengths and weaknesses it just really puts that into a greater context so I think just kind of first and foremost. It's a great way to kind of start the planning process and I know it's a I know it's old school but I would still recommend doing it I think it's a really helpful exercise. Yeah, I love my mind so I love the SWAT analysis I use it a lot with strategic planning I noticed that the majority of people are very familiar already with the SWAT analysis. I like to add trends and I'm curious Julia if you've seen you know SWAT with trends because definitely looking at what's trending when it comes to efficiencies and technologies and all the tech stacks that we can talk about right. So I so appreciate that and whether it's old school, I think it's a classic. And I think especially and Jen will talk about this a little bit more but you know you're not normally sitting at your desk by yourself doing this you have other people that engage in this process at some point if not from the beginning and so to have that kind of baseline with SWAT analysis. I think it's really helpful and I also believe that when you do that you get everybody kind of like on the same page and you're not having to go back and forth right. You're kind of identifying some of these major themes so that that you can drill down and I so I think it's a great tool and I agree with your everybody pretty much understands what the process is or they can get up to speed quickly you know. When the Harvard Business School came out with this in the late 70s I think it was like 79 or 80 it was such a radical idea you know that it took a long time for people to get going with the concept now. You know everybody's like yeah I do it personally when I have you know I've had a bad week or I have a good week I mean I look at what this this matrix can help me through. And so yeah I think it's really really smart I really do and and again it's somewhat of a basic thing and part of this concept of talking about getting ready to do this process because is as you say it is the season and you know we have a little bit of a Christmas vibe going on here today. Yeah, you advise us to make time, mental time physical time and space for this process what does that look like. Yeah so I mean this is the type of process when we're going through it and I think especially you know when times are unusual we may want to do some scenario planning we may want to consider doing budgets that are not just one year out but there that are actually two years or three years out because we may have a foundation or grant funding that spans multiple years you know a lot of these economic conditions that we're seeing they're not necessarily new you know they've they've been carrying on for the past. I mean I think you know like you all said like the past three three years and even prior to that we thought we were budgeting in an unusual economic condition so this is the type of process where you know you're going to want to sleep on it you're going to want to do do work on it and then you're going to want to take a break and go do something else and be coming back and looking at it with the fresh pair of eyes and especially if we are you know bringing team members in and we know we might have that deadline. You know of that board that that board of directors meeting where we need to have that budget approved or we have funding requirements know what we need to provide a budget for our funders. We're making sure everyone is on the same page about those milestones that we need to meet and I think just building in that time for planning for drafting for going back for making edits and then for reviewing. And it's just so important that we document our assumptions. And then ultimately where we're building this out so that we can be proactive and not reactive. And that just really does take time so you know it's not it's not something you can just kind of throw together in a couple weeks know you want to you want to give yourself a couple of months you know like four four four to six weeks to do this I mean that's that that's generally you know what I would what I've done like with my clients and before I came to YPTC. This was not a quick process of just kind of you know throwing throwing something together in a very short time period. Yeah that was like my next question was what are we talking about in time. Evaluation four to six weeks would be your minimum and that's kind of a crunch, but you're looking at this in terms of months. Yeah, yes, yes, I would I would recommend that. And again especially if we're going to do multi year budgets and do some scenario planning. You know when we do face times of uncertainty we want to be able to pivot and so kind of thinking through you know what's our plan a what's our plan be what's our plan C. And just kind of laying out those options on the table and I think I think one of the great things to, if you do kind of budget over a longer period of time, you're not having to start from scratch. Like every every single year is not like oh gosh we've got to go back to the drawing board and I've got to remember what we were thinking before and start this process all you know all all over again so I mean and that and that will also help streamline things a little bit you know if you if you really tried to do a bit of that future future planning but but yeah I still think you need to kind of have a decent amount of time plan to really think think through it. It's a formal concept. I would love to see that in more of the organizations to have a multi year budget. I feel like one thing that we've seen pretty consistently Julia and Jen you know love your take on this is, you know, in the height of the pandemic, you know I feel like a lot of accounting professionals were saying you know do a six month budget and then revisit or do a quarterly budget and revisit that. And of course we can always revisit our budget, even a multi year budget. Are you seeing that taking place as well, like, you know, as a pretty popular decision at the moment. No, actually, you know me in total transparency know, and I think just in kind of given what we've seen and the more we're talking about these kind of macroeconomic conditions I, I would definitely advocate though that organizations really do try and do this. I know one of the trends I have been seeing is with a lot of foundations they're definitely looking at doing more multi year contracts. And then when you have you know multi year contracts, or your, your, your renewing your government grants just from a cash flow issue. You know you might have like private foundation funding that's paid in advance and then you might have government grant funding that are you know they're they're reimbursable expenses that's right and so they're and they're paid in a rears. And this might span these agreements might span multiple financial years so just when you look at where we're trending with where funding is coming from and how that's operating. I mean it just it just makes sense to me that you wouldn't you would want to try and plan your finances out. And I think just going back into what I said earlier I think it just makes it makes it so much easier to then readjust your, your forecast your cash flow forecast you know to maybe do some quarterly re forecasting. And then when you're kind of doing that annual budget process you're then updating your to and you're adding your for you know but we're much more informed about the near time so that adding that year for me that that might not be as timely of a process to kind of think through so you're just you're just building on it over time and you're just really kind of focusing on that big picture and then letting that inform your day to day decisions. Well, I appreciate the transparency. You know that's exactly what we want here and I know, you know, funders they're looking for more of a longer budget and not these you know kind of short stop gaps. I just want to ask you Jen like, we've seen obviously a high turnover across the nation in so many different positions. I have seen this turnover in the, you know, accounting department, which has impacted the budget right like not only catching up from past, but also being able to prepare right for many organizations that July one fiscal. Do you have any tips on, you know, if there has been transition staff transition leadership transition within, perhaps that accounting financial, you know, area, how we can still stay the course when it comes to making time for this. Yes. So I think that and I know I know we're going to get to this but just that kind of buy in from from the team and I think this is really important that budgeting is not just a finance function or or or an ED function or a board function you know is really across the whole organization and I know this is something that I've kind of reminded. I guess teams of nonprofits I worked with before is that if you in your normal course of work if you are making a decision that involves you know spending or receiving money. You are part of the finance function. So you, you are part of that overall responsibility for storing our assets. And I think the more people that you can get involved in the process and that this can be delegated to different areas of the team. And then if you know if we can get like some good templates in place and I know this is something that we help a lot of our clients with is just getting that budget structure set up you know so you can always kind of pull from the outside to help you develop that template and that structure and then really get all your team members involved in this process and I think that's going to help you kind of weather the storm. Much better and kind of provide that consistency as you as you go so that you have multiple people that may have historical knowledge participating in the process. You know so that does get get into this next question and that is getting that buy in getting the team. I love that you said that if you're spending money on behalf of your organization or receiving money you are part of the system and I don't think I've ever heard anyone articulate it that way. In fact we had a question that came in and said how do you do a multi year budget when it's so difficult to prepare for even a one year budget. How do you get management buy in. So, you know we've talked about the process and the structure and what we should be doing and looking at. But at the end of the day this becomes a people problem right if we can't get this. How do you advise us to navigate this. Yeah so that I mean that's a really good point with that with the question that came in because this this is really a tone that's got to be set from the top so I mean it's really the leadership and the board that needs to decide that this is a priority so I know that might you know I mean maybe the ED or a board member trying to sell sell sell their point and really frame it up to everybody else. But I think I think by looking at this multi year planning and really focusing on the benefits of that I mean we're going to be more prepared it's going to really build confidence by getting people involved we're going to all be taking ownership of our day to day decisions. And I think it really helps people when they're actively involved in the budgeting process. They really understand how they are day to day decisions are impacting the whole and really just being transparent with our finances and it's a great way to kind of hold people accountable for their decisions. And especially like if we make it a priority you know that every month we're going to track our budgets to actuals and let's actually get our team members who were helping us prepare the budget let's get them involved in the variance analysis so that they can take a look you know well why why did these numbers change why didn't things happen the way that they thought they were going to and kind of putting you know like the ball back in our in our wider teams court just so that they can really take ownership or give them the the opportunity to take ownership you know and I think that's one thing I see a lot is people are just not given the opportunity. And when you give people the opportunity it's actually amazing how decision making changes you know the more transparent you are the more ownership people have people just tend to make better decisions and so that would that would be how I how I would just very briefly that would how I would frame it up to I word or anyone about that yeah. I think that we collectively the nonprofit sector right when we hold on from that executive leadership team to the budget and everything that moves around it I honestly think we're doing a disservice to our team and then we're like, you know we're preventing and eliminating the opportunity as you said Jen for them to be a part of it like how empowering how educating how informing. And as you said they're likely to make better decisions, because they have more of the the information so I'm going to go out on the limb and say I actually think you know when we don't include more people, more team members, we're doing a disservice to our team, and to their own professional development. Oh sorry. No, I go that because I think there's too many organizations where it's like they wait until Q for for the bad news. I mean it's like, it makes the finance team look like monsters, and then there's it's always just a complete beat down it's such a negative thing versus like, Okay, you know this is where we are we can do better what are ideas. Moving the whole team through the process opposed to having it be such a punitive relationship with finance and so yeah I agree it's got to be everybody's got to be on the same page really important really important. And I can imagine doing a SWAT analysis right with that team you know with the with all of the players as you said Jen if you are receiving or receding your part of the process. Yes. I love that you know it's really been interesting to hear you talk about this. Making the process of budgeting more inclusive, more positive and more long term I think that's really brilliant saying okay, you know we're moving forward. I've got to ask this one last question of you and we we don't have that much time but it seems to me every board I've ever been on that's had this engagement piece with leadership. It's always a growth factor and we don't plan for a reduction necessarily and we you know we're like okay well we've got to increase our donors by this percentage or fund you know fund development overall or this or that. What would you say about an organization that's going to recognize that they might be shrinking. Yes, and that is a very good point that what you have that especially when we're looking at these and these uncertain economic conditions because if we're looking at a potential recession later in the year you know donors and corporations they will hold on to their assets so we might see that decline and I definitely noticed this with my clients a decline in both corporate and individual giving. And it's it is really important I think to yes to definitely let those income estimates to make them pretty conservative. It's not that we don't want to grow, but that's where we have our scenario planning where we have plan a bnc so we can we can predict these different situations that may happen and just having those plans in place is really important and I think to just one other thing to mention about that when we're looking at income is looking at our sources or kind of what our donor restrictions look like so is it restricted, or is it unrestricted, and I think that's just something that's really important to keep in mind is that as you're looking at projecting that income out you know where what what what type of income do we really need are we going to be able to cover our operating costs you know because we were everybody has a fixed cost base you know so we need to make sure that at a bare minimum, we're getting that unrestricted funding and to be able to to cover that. And just looking for alternative sources of funding because there's a lot I mean like billions and trillions of dollars tied up in donor advice funds and private foundations you know so just kind of looking you know at other at other options and they're they're not as affected by these economic turn downs because because the money has already been given the assets are already there so you know that's just something you know to maybe think about as well. So spoiler alert, we are going to be spending more time with you all at YPTC on this very topic. Because you are right this is a major input and in piece of the entire philanthropic pie that we don't really know about there's a lot of fear, and yet the data is coming in about the staggering amounts. Of money and resources. You know this is great I always love you the YPTC energy I always love that you reduce the fear or you eliminate the fear and making us understand how at the end of the day, when we do embrace these processes and understanding the numbers that it's it's to the benefit of all of us right it's not just you know making as as you know I'm showing my age but like the bean counters happy as a column. I mean you know it's really an important thing. And so super cool I've got to say we got another comment that came in that said great job everyone very actionable ideas here need to sell C suite and board to make it happen. I love that. I really love that too. That's fantastic. I love that. And the person you know that made that comment I also really encourage you to go to the YPTC website because there's even more resources. I was sharing the YPTC website just yesterday. And then it came to, you know, one of my clients wanted to know what to share, you know, by way of data and how to do it in a visual way so of course I thought of the data. Yeah, and so there's tons of information on the YPTC website, but Jen you have been such an amazing guest today we are so, you know, very lucky to have your expertise. And your talent here. So again Jennifer Banks manager at your part time controller. Again congratulations to 30 years. I love seeing all the birthday photos and the celebration, your background Jen of course is still celebrating that 30 years so thank you to Jen and also to the entire team for all that you do. Thank you. It's been such an honor to speak with the two of you. I really appreciate it. Thank you so much for having me. He'll come back. Yeah. You know, I think people think that it's, it's, it's stressful going on a live show. I own that and believe me for four years and 800 episodes, it's stressful and I get that but we try really hard. I've been the nonprofit nerd and myself to make this more fun and more energizing so that we can all learn something and I, I know Jarrett would say the same thing. The two of us learn something new every day, every day, every day and it's, it's pretty remarkable to say that. And a lot of this knowledge and excitement and, and peace of the pike goes to our partnering sponsors because without them, we would not be here and they include Bloomerang American nonprofit Academy, your part time controller nonprofit thought leader, fundraising Academy at National University, staffing boutique, nonprofit nerd and nonprofit tech talk. Again, these are the folks that allow us to come to you each and every day with something new and refreshing and something that will help your nonprofits grow and thrive, even in in uncertain times, you know, so this is why these folks are with us joining day in and day out. Wow. Okay, Jarrett numbers, baby, gotta love them. I know I can't wait to push the multi year budget like I'm just all on that right now. Yeah, me too, Jen, I think it's I loved so many things of what you said and I, I, I know that the scenario planning is so important and you have to embrace that, but that really involves a multi year function as well so I love this this this longer view. I think it's smart and I think it's safe and I think it's the way to go. I also think another way to go is how we end every episode of the nonprofit show and that's with our mantra to stay well so you can do well. Thank you, ladies. Have a great day and we'll see you here tomorrow.