 Welcome to the nonprofit show. We are so glad that you're here starting your, oh, I almost said starting your week with us, but it's Tuesday, starting my week with me. This is my Monday, but I'm glad to be back. So thank you. We have Rachel DeMateo with us today as director of YPTC, which stands for your part-time controller. And she's here to talk to us about Foraging Strong Foundation, an NPO nonprofit organization relationship. So we're excited to hear from you, Rachel, and just stay with us as we do a little bit of our housekeeping, but we wanna make sure that our viewers as well as our many listeners know who we are if we haven't met yet. So hello to you, Julia, CEO of the American Nonprofit Academy. I'm Jarrett Ransom, your nonprofit nerd, CEO of the Raven Group and honored to serve alongside, day in, day out here with Julia as the co-host of the show. We wouldn't be where we are today, which is over 800 episodes without our work BFFs. So a huge shout out to our friends over at Bloomerang American Nonprofit Academy, your part-time controller, where Rachel's joining us from, also nonprofit thought leader, fundraising academy at National University, staffing boutique, nonprofit nerd, as well as nonprofit tech talk. Do us a favor, do yourself a favor, but do our sponsors a favor, check them out because they're here to help you. And I really like to say that their mission is your mission. So they are here to help you do more good. And if you missed any of our episodes, you know where to find them by now, but if you haven't heard the latest and greatest, you can download the app. As Julia, thank you, Vanna White, showing off your phone there. You can download the app and just in a couple of hours later, you will get a notification that the show is up. I got my notification yesterday. I want you to know that, Julia. So I might've missed the show, but I didn't miss the notification. And you can also see us on streaming broadcast as well as listen to us in podcasts. So I have a long drive coming up, Julia, and I'm excited to tune into the nonprofit show and listen to some of those podcasts. So again, we are so excited to have today's guests joining us all the way from New York, Rachel D. Mateo, Director of Your Part-Time Controller. Welcome to you, Rachel. Thank you. So good to be here with you. Yeah, we're really excited to have you. Your Part-Time Controller, or as we often say, YPTC has been with us from the very beginning and we're really grateful for the partnership. I think a lot of our viewers and listeners have probably seen or heard some of the representatives, the co-workers and colleagues that you work with, but tell us a little bit about your different vertical, if you will. Yeah, so right now I am the Director of our New York office, but also working on launching our foundation's vertical or specialization and YPTC, we've been working with nonprofits for 30 years now. It's our 30th birthday this year. That's right. And we work with all types of nonprofits. And now that we've been growing to a certain size, we're just working on sort of looking at the different specializations within the nonprofit industry to make sure that we have the right training materials in-house, but also that we're talking to the different audiences where they are. And so I'm leading up our foundation's vertical. So it's going to foundations conferences, talking to foundations directly there to build that practice. We're already working with about a hundred foundations now, but there's... You know, it's really cool to know that YPTC is making this investment because of all the things that nonprofits do, and Jared, I know you and I have talked about this, there's such a cloud of mystery surrounding relationships between foundations and nonprofits. And it messes everybody's heads up. And I'm always amazed. I think because Jared and I are in the middle, we hear it from both sides. You know, we hear the nonprofits complaining, we hear the concerns from the foundations, and they're afraid to talk, I think, in some way. So today's conversation is going to be really powerful. And the first thing that we want to ask you is about nonprofits being audit-ready. And this is like one of those demands, it seems like that the pressure's coming down from the foundation, but then the nonprofit moving back up, it's like not in alignment. Talk to us about this. Yeah, so I am excited to talk about sort of the intersection of nonprofits and foundations working together on financial stuff because the financial stuff is what I know. So before diving into the audit readiness, I just want to briefly mention the difference between external reports and internal reports. So most foundations are asking for audits and 990s. The 990s nonprofits have to do that. Exempt organizations have to file a 990. Many nonprofits are doing audits if their state requires it. Every state's a little bit different. I looked up Arizona before this and I see that it's not required for Arizona, but a lot of nonprofits are required by the state to have an audit. And when foundations request that information, they really can have more confidence in that information because it has been reviewed by a third party that's outside of the organization. But some foundations also ask for financial statements for this year to date. And that's really where I want to talk about the audit readiness, is that some nonprofits keep their books on an accrual basis throughout the year, which is really the best practice. And that's really what give the foundation an apples to apples comparison between this year and the audited financials. But some nonprofits might not have the capacity to do that every month. And so what the foundation might be getting from those nonprofits might not be sort of at the same level as what they're seeing in those audited financial statements. So I guess the comments to the foundations in the room might be if you're not using that information, this is kind of like across the board, if you're asking for something because you've always asked for it, think about what you're really asking for and how you really use that information and if you're going to use that information. And if you're not using it, then maybe you take it off the list, consider taking it off the list. But if you are using it, take it with a grain of salt knowing that different nonprofits have different capacity and ask some clarifying questions. I'm not saying add it to your checklist and add it to a budget narrative that has to be submitted, but maybe just pick up the phone and ask questions about are you reconciling your books every month? Are these presented on an accrual basis? Because from those answers, I wouldn't say, don't fund the organization, but you would see maybe there's another way you can be helping this organization grow their capacity and their back office by supporting general operating support to build that back office or maybe even adding some training opportunities. Maybe the finance team from the foundation or another finance expert could help teach the grantees about these best practices or even go in and help the nonprofit. I think that would be so helpful. And I've written many a grants in my lifetime, Rachel, and I feel like there's a little bit of a distance, if you will, when it comes to writing the proposal from the person, excuse me, writing it and then the financial component, you know? And usually I'm the one that says, here, can you help with this? Because that's not my domain, you know? And so having those answers and all of them are a little different. So it's not a, you know, copy and paste. Yeah, and absolutely, I think it's so important for nonprofits to have a good relationship between development and finance so that when you're putting those proposals together, it's a cohesive story that the numbers are telling the same thing as the narrative portions. You know, our conversation with Deanna, right, Julia? When we had Deanna on to talk about how do the development professionals and the accounting professionals best work together to support one another? Yeah, and the answer is a lot of times they don't work together until there's a problem and then there's a lot of finger pointing because everybody's on deadline. You know, you mentioned something, Rachel, that kind of struck a chord and I think this is gonna be a theme throughout, but there's a standardization that everybody's using and now as we are engaging with more portals and in the digital process, our relationships have changed. We don't have those program officers necessarily coming to our place of business, our programs in talking it through and then figuring out specific things. A lot of times these are like postings and you have to respond to it. So talk to us about, I wanna use the word perils, but the concept of using templates, how they work, how they can be manipulated, can they? I mean, what do you see in this space? Yeah, I think there's sort of like two types of ways that foundations request financial information either put it into my format, like I'm the foundation, put it into my format, like the online portals that you're referring to or just give me whatever you have nonprofit and I will work with whatever you give me. And I think coming from the accounting side, I really just caution foundations that it takes time to map the nonprofits accounting records into the categories that are being dictated. In that process, there could be typos and room for error and I think that foundations use these templates so that they can have like apples to apples comparisons, but there's still interpretation between the lines. You're still probably not getting identical interpretations from one organization to the next. But I understand that certain software might be set up in a way that you have to take the information that way. So I guess I would encourage foundations to maybe consider using the categories from the 990, which all the nonprofits are having to put their stuff into those categories anyway. So it's a little bit more of a universal language, so to speak. So when you have that issue and you're like struggling, as Jared said, to get all the stuff done, get this uploaded because money's on the table and you've tried so hard to create a relationship that even puts you through the door further and faster and then you have these problems. It's so intimidating to call that foundation. Like you said, pick up the phone. Talk to us a little bit about that. I mean, is that the right way to deal with it or wait until they call you? I mean, give us some context for battling some of these issues. Yeah, so I think that there is an increasing push in the foundation world to have open conversations with grantees. I mean, foundations are really talking about that a lot, more and more in the last couple of years. And I think some nonprofits are still a little bit nervous to have that conversation, but I think that we have to have this two-way communication. There's an increasing push on the foundation side to have more of a partnership, right? More of a level relationship than like give or and getter kind of relationship. And I think too, the more that you build that relationship and not wait to the final hour to submit the proposal, right? That's really where the magic happens because I've submitted proposals, Rachel, to foundations that say they require audited financials, but the organization didn't have any, right? And so you'll have a conversation and then the foundation person will say, oh, that's okay, we can also accept X, Y, and Z. And it's like, wow, you know, if we hadn't had this conversation, we would have just not applied. Yeah, you would have moved on. You know, Jared, talk to me about, in the discussion that we're having, talk to me about your comfort level as somebody that's been on that other side of the desk. Have you felt comfortable? I mean, I know you, so I would say, yes. Yes, I know. Is this the sort of thing that you would recommend that the grant writer gets engaged with or run it up the flagpole and get the executive director? Like, what's the dynamic of that piece? So it's funny you say that, Julia, because I know that I am a strong leader. We'll use that, right? But still, I just feel that the foundations, when they have this requirement, you abide by that, right? And you really don't disrupt the apple cart. And so I would say, you know, it really depends on who has that relationship. If it's a hired like contract grant writer, maybe they don't have that relationship. So maybe the best person who's been talking with the foundation, be it the CEO, be it the development director, you know, like really who has that best relationship with the foundation. Interesting. Rachel, do you think, are you in accordance with that? That it's kind of relationship driven versus task driven? Like who's responsible for this task? Yeah, I mean, I think that was a great answer from Jared. Again, I'm kind of more focused in on the finance piece. I think it probably would not be an accountant to accountant phone call. So yeah, whoever at the nonprofit really owns that relationship with the foundation. Yeah, and it's tricky, right? Because sometimes we'll feel like these hoops are, you know, they're on flames and they're like spinning and we have to jump through them. And it's just, it's a lot at times. And you're right, Rachel. Like everyone's a little different. And so, you know, it's not, it's just not a copy and paste. But I love having some kind, I love using the 990. You know, if everybody could just get on board for that, I think our world would be better. Yes, just some consistency among all the foundations. Wouldn't that be amazing? That would be amazing. Rachel, when, you know, I know that this is going to be an exciting time for you in YPTC as you move into this big part of where we are in the nonprofit sector in our country. But talk to us a little bit about these grant requirements and to your point, making them a little bit more cohesive, making them work for different, making them work the same for different types of organizations. Is that just a fantasy or do you see that foundations are understanding this and are trying to move in that direction? Or what's your take on this? I think there is a movement happening in philanthropy. It might be quicker for some foundations than others. But I am hearing a lot of funders saying, like we looked at our requirements to say, why do we ask for each one of these things? And let's take some off the list that we got them, we put them in a file and they really weren't being utilized to make our decisions. So what information do we actually need to make this decision? I think in the height of COVID, trust-based philanthropy really showed up, really percolated to the top. And I love seeing that because foundations, grand tours, family, so many entities that were giving money, they would say, we know that we restricted it towards X, Y, and Z. But use them however you wish. And having that trust in the relationship and having that trust-based philanthropy, I'm so excited to see where that's going to take our sector. So do you think that it's going to keep going forward? Or do you think, and I'll ask this question to both of you ladies, do you think that people are going to revert back? Because, Rachel, you said something really magical at the very beginning, and we've always done it this way, and that's what we do. And instead of stopping and saying, OK, why do we do this? What's the implication? What is your sense of this? You go first, Rachel. Yeah, I mean, I do think things are changing. Like, I was just at a conference with some foundations a few weeks ago, and I was eating lunch next to someone, and they told me the name of the foundation. And I remember, like, sometimes people in my office send me award letters and say, this is crazy. How do we account for this revenue? And I remember the foundation saying, because I had seen several of these letters, just all these milestones that had to be met to get the funding. And I said to the program officer, like, oh, yeah, I remember reading your award letters. They had all these milestones. And she said, that must have been like four or five years ago because we've changed. Our founders were from tech, and they really had this mindset in the beginning that we had to have all these milestones because that's the world that they came from. But now we do general operating support grants. I love that story. I do. I think it's changing. I think when it comes to relationships that I think a lot of red tape is going away, let's look at, overall, the admin cost. Like, that whole admin cost conversation, it still exists. But I feel like there's enough of us pushing against it to say, it's not about the overhead cost. It's about the impact. And let's keep talking about the impact. And I think more and more and more people, foundations, as well as individual donors, are starting to get that, as well as capacity. There's only so much time. And as Rachel mentioned, there's teams of one. And I'm talking like an entire nonprofit, a team of one. There's development departments, teams of one. Not to mention so much turnover and just burnout, compassion fatigue, everything that's happening. I think it's time to turn the dime and say, how can we do this differently? So we don't have that much more time left. But, Jared, I'm going to ask you this question. And then I'm going to ask Rachel what she's saying. But it seems to me very early in the days when I first met you, you mentioned to me, and you have verified this over the course of time, that an organization really should not plan or spend time on getting revenue from a foundation in terms of more than 30% because it's too perilous, it's too difficult, all these different reasons. Are you still seeing that? And again, both of you ladies, give us your feedback on what that looks like. Because we keep hearing about the amount of wealth that's being moved into these foundations and these vehicles. So should we and the nonprofit sector adjust our percentages up? So I'll answer, but Rachel, I'm really excited to hear what you have to say. I've seen a mixture of everything. I still do coach no more than 30%, but the reality is with all of the CARES Act and ARPA funding, there is so much money out there for a certain sector of nonprofits that the scale has been tipped, right? So many organizations that I've worked with have moved the needle increase their operating budget by five, six, $8 million over the last three years. And now trying to figure out what is reality now, and how might we scale back? And so I see grants as one and contracts as another, contracts meaning it's a reimbursement opportunity. And so I don't really see that as a grant, but it often gets lumped in that category, if you will. But Rachel, what are you seeing? Yeah, I guess from my standpoint, and I don't know that I've ever thought about the effort that goes in as a percentage like that, but I guess from what I'm seeing in the foundation world that right sizing your grant requirements is a term that I hear people use with the idea being, if it's like a $5,000 grant, the application process should be much simpler than a $500,000 grant. Please. I love that you brought that up. I really appreciate that. That goes back to the systems approach. If you're like, well, that's just the way we do it, no matter the amount of money. Wow, okay, yeah, thank you for bringing that up. You know, the other thing I'm seeing, and I think it's worth mentioning, is there's a lot of foundations that offer reviewers as part of the review committee. And lately, you know, I've been giving the privilege to sit on these and they say to me, if there's a way we can do it better, please let us know. And it's like, oh my gosh, hallelujah. Well, thank you for asking. Here's my list, right? And I really think that's a great opportunity. That's amazing that they're asking for feedback, yes. Are you seeing that, Rachel, or are you seeing your foundation customers asking that of you as a professional? I mean, are you seeing it as being market-driven or more, you know, service-driven? Yeah, I guess they ask us a little from just the finance piece of it, you know, the finance side about kind of what goes into, what goes into the application from the finance side. Yeah. There's this fun, I don't know. It's kind of like, I don't know if this is true or what, but I've seen it on one of my forums that I'm a member of. Rachel and I loved it. And one grantor, their application says, submit to us the last grant you submitted. And it was like, really? It's that easy? Is that even possible? I know. Can you imagine, Julia? Because I can't. Because Rachel's right. Like there's some of these grants that are 5,000, even 1,000, 1,500 depending on the organization's size, you know, and they're asking for your DNA. And it's like, forget it. This is way too much work. Well, you know, it's interesting, Rachel, because you pointed out so early on, and when I first met you, there's such a disparity between what the foundations are doing and what they believe is the right course. And then you have the nonprofits over here, and they're kind of just like, they're kissing cousins, if you will. They're not quite ready to get in alignment. And yet, ultimately, we're all working towards the same things, but there's just this stress, you know? Stress, yeah. It's really, really hard. Yeah, and I do think that things are changing. Like I said, maybe slower for some than others. I think foundations do want to be better partners to the nonprofits. I think a lot of nonprofits are still scared because of, I guess, how things have been historically, but you know, for example, if I as a nonprofit am having a deficit, you know, I might be afraid to talk to my funder about that, but the funder might be the best person to talk to about it. He might be able to help. Yeah, it's really true. And, you know, gosh, it goes back to what you started off with us today. And that is that piece of the pie, which is communication. And if we don't have that confidence or that relationship, man, it just doesn't work for anybody because ultimately the founder wants to have a successful, you know, outcome. So, you know, they want to see success. They want to see impact. Yeah, so their job is to give money, you know, like that was their job and they want to give it. Yeah, and they want it to be, they want that investment to be successful. And so it's really been interesting, Rachel, to talk to you. And I think you've got a really exciting job ahead of you and we're going to really be interested in taking this journey with you and being able to be a voice of communication between these two pieces because it's apparent that this can really help our sector. And if we don't know how to work with foundations and then we don't know how to go about this journey, then everyone loses, including the foundations, right? I mean, so Rachel DeMateo, director, your part-time controller coming to us today from New York. Check out yptc.com. There's so much free information and connectivity to good ideas and some amazing thought leadership on the finance side of our sector. And 30 years of anything is a lot. Congratulations YPTC on their birthday. That's amazing. Yeah, really cool, really, really exciting. Hey, everybody, we, as Jared mentioned, I'm Julia Patrick, Jared Ransom, non-profit nerd. We just surpassed our 800th episode. And so I tell the story often, but Eric Frank was one of our very first people that we had. We had a new studio, we invited him in and I remember really quickly, he was crazy tall and we had to adjust all of our cameras. Do you remember that? Because we were like, oh my God, you're so tall. We were trying to figure out how to get him, he and you in the frame and it just came to me, but YPTC has really been an amazing partner of ours as has Bloomerang, American Non-profit Academy, Non-profit Thought Leader, Fundraising Academy at National University, Staff and Boutique, Non-profit Nerd and Non-profit Tech Tuck. Say that three times. But anyway, your part-time controller, always a pleasure to have you and all your team members join us. Thank you, Rachel. Thank you for having me. It's been a lot of fun. Hey everybody, as we end every episode of the Non-profit Show, we want to remind ourselves or viewers or listeners or guests to stay well so you can do well. We'll see you back here tomorrow. Thank you, ladies so much.