 Welcome, so glad you're here to nerd out with us for another episode of the nonprofit show. Today we have Alicia Eastbold in the hot seat joining us from your part-time controller or as we will reference YPTC quite a bit. Alicia serves as an associate at your part-time controller and she's gonna talk to us about what it's like to leverage your financial statements to help you tell that NPO story. So stay with us. We of course want to remind our viewers and our listeners who's here. So good morning to Julia Patrick, CEO of the American Nonprofit Academy. Also myself, I'm here. I'm Jira Ransom, nonprofit nerd CEO of the Raven Group. It was questionable this morning if I was here or not but I'm here so grateful to be alongside you Julia each and every day to have these conversations. We are so very grateful to have the ongoing support, investment and truly trust from these presenting sponsors. So thank you, huge shout out goes out to our besties at Bloomerang American Nonprofit Academy, fundraising academy at National University, be generous, your part-time controller. Again, where Alicia joins us from, nonprofit nerd, nonprofit thought leader as well as staffing boutique. So thank you, thank you, thank you to these amazing presenting sponsors. So glad to have you here part of these now marching towards believe it or not 750 episodes. I know before it was like 700, 600. So we just keep counting. I know it's been a lot of fun. So if you missed any of the episodes, you can find them on Roku, YouTube, Amazon Fire TV and Vimeo for those of you that are podcast listeners like Moa, you can also listen to the nonprofit show wherever you stream your podcast. So without further ado, Alicia, you've been waiting so patiently and we are so very glad to have you here. I want to give a huge welcome to Alicia Eastvold again, associate at your part-time controller. Welcome. Hi, nice to meet all of you and excited to be here. I listened to your show a lot and it's fun to be a part of this. So. Awesome. Well, I hope you have like one of those giant Super Bowl big screens that you can watch yourself on the rebroadcast and archive. Cause if you've been listening, that's one thing but when you have to watch it and you watch yourself. Yeah, way better. Well, you know, this is a podcast. So like I, I'm not in my pajamas today. I'm actually dressed, which is good, like really nice. I've got a good looking outfit on. So all of you listening through Spotify. Yes. You know, we're very well dressed. That's right. My mom always thought I'd be on Spotify with like a singing career, but it's gonna be accounting. Well, you can be the singing accountant. Okay. Yes. There you go. Well, that's the next level guys. I think it is an X level. Sing, sing us. Don't sing us the blues. Sing us a poppy about financial statements. And the first thing that you're gonna tell us which I'm like stunned is that financial statements don't all look the same. And to me, I kind of always thought that there was like a strict protocol that they have to be presented exactly the same way. Yeah. One in my mind. You're like, what? No. Yeah. I think it depends. In your audience, if you're getting an audit, there are a lot of requirements for how it should be presented, but for most of our decision making, they ought not be one size fit all. So, you know, but the problem is when they come out of our accounting softwares, and I mean, we find this no matter whether you're using QuickBooks or MIP or anything, they're pretty generic. And I like to call them a one size fit all rain poncho. They're gonna keep you dry in the rainstorm, but they're not gonna be good for a sunny day on the beach or a training day for like the Alaska and Iditarod or you can continue with the analogy. We've had a lot of fun trying to figure out, but basically it covers you, but that's about it. And the software, it can group the data, but it doesn't do a good job of interpreting it and or analyzing it and help you make decisions. And so as a result, your financials are noisy and it keeps your readers from focusing on the important story. And as a result, they're not very compelling. Like you're spending so much time where to look on the page, whether it's maybe it's not even on the first page, maybe it's the second or third page that you can't make decisions, you don't know what questions to ask. And so we can really tailor them for each of our users to make decisions. And there's different users and there's different needs. So, you know, your director, they're gonna need reports that show them like how to make decisions about operations. Like how much do we have left to spend on staffing? Are we over budget or under budget for each of these little specific things that I'm tracking? How much cash do we have left? Or your board, they're gonna need to talk about like high level, financial sustainability, key trends. And your funders are gonna wanna know all the funds we gave you, are you spending it on the things that we said? And each of those reports are different. And they can be even different reports. Like if I'm monitoring cash, I might need to see something like a cash forecast that brings my budget together and helps me know when I'm gonna be tight on cash using my budget. Or if I've got grants, I have this funny story where I put together the standard financials out of, you know, QuickBooks for a client. And, you know, I have my statement of activities. It's called an income statement. And I'm, you know, here's your financials. And she looked at it. She said, I don't get this. This isn't helping me at all because I got grants that started last year and are ending two years from now. And I don't know how much I've left to spend. So that income statement, when you have to follow some accounting rules and recognize revenue in a prior year, it's really hard to read an income statement or statement of activities and understand it. So something like a net asset schedule that we make, that really helps. Or you got money set aside, like maybe you got a grant and they gave you the funds up front. And you're a little bit tight and you're not sure if you're using that cash to help fund some other programs, which is a real issue in the nonprofit world is tracking your restricted funds. So understanding your statement of financial position or your balance sheet, it's gonna be really important. But you can see each of those has really different needs. And there's different ways to put all that together. So Alicia, I'm gonna warm it up that in my time over, I would say 35 years of board service, there's two types of boards. One that they're really intimidated to ask questions and they feel like the accountants and the bookkeeper and the CFO, they've done all this work and you're not really to question it or ask too many questions that that's for the audit and finance committee. And then there are others that get down into the weeds, like, well, why are we buying that much toilet paper? I mean, it's, I mean, Jared, do you see that? I see it all the time, yes. I mean, how do we mitigate that? And is that why we need to be looking at these financial statements differently or is that just gonna be part of the deal? No, I mean, I really think, I mean, I was talking with a colleague just the other day about what she's hearing from directors about the relationships with the boards. And the challenges of figuring out funding and strategizing, like they need help, they need their board to be stepping up. But when we cloud it with a ton of information and I'll talk about in a little bit about some of the traits of reports that kind of keep people from asking questions. But when you need to empower your board, you need to give them clear, concise information so that they can get to what's important. And you gotta get rid of some of that detail and focus them in on the parts that really help them make those decisions. So I actually believe that like if your board or your readers are not asking questions, that's a sign that you might not be doing a great job with how you're presenting it, you could do better. I actually think more questions and the right kinds of questions. So like you talked about the toilet paper situation, that's a different kind of, that's not gonna help you make decisions and you need to focus your reader on what they have. So I have a few pitfalls I've come up with where I say, all right, these are the things like stay away from this because that's gonna lead you to quiet board members or nosy people, it's not nosy, they're just doing what they think they're supposed to do. But like empower them to help you, you gotta design these a little better. Well, let's talk about that. So let's talk about some of those common pitfalls of ill-fitting financials because Alicia, I laughed about the toilet paper, I've seen it where the board gets into the day-to-day operations and that's why I laughed. I do a lot of strategic planning for organizations and regardless of the age, I kid you not, the CEO will tell me, can you please remind the board what their role is? Because it's not the buying of the toilet paper, right? Like that's a day-to-day operation. So what are some of these common pitfalls of ill-fitting financials that you're talking about? Yeah, and these are all things that if you do it right, you are reminding your board what they're there for. So one, disorganized, I've got three things. One is disorganized and information overload. So disorganized is like, you don't know where to look on the page for the information. This is usually like if you've been doing the accounts for a long time and somebody throws in and maybe your personnel, it's the most important expense but it's on like the second page or you got all these account code numbers or things. I just call that just messy. Like it's time to go do some cleaning, some Marie Kondo on your financials and spark some joy. Make sure it makes sense, you're welcome. Yes, and then I think also information overload is just multiple pages, more detailed than is necessary. And we kind of have a saying in YPTC that anything that you can't fit on one page, it probably needs to be another report. Like you shouldn't be, you should, if you can't fit it simply on a page, it's probably time to rethink how it lays out. So consolidating information, grouping things together is really important. So that's the first thing. And then the second, I think this kind of goes with one of your stories that you talked about, but we call this irrelevant information or I like to think of the story of report creep. This is when someone a long time ago said, oh, I wonder how much, what percentage we're spending on X? And also we've got a dashboard or some chart made out of Excel and like your financial package is 10 pages long and it's got these crazy charts that nobody really asks questions about. And kind of it's because everyone's too afraid to take it out because they think they should know what it's for but they actually don't. And I think that's a real thing. Like we don't want to look like we don't know what we're doing, but the truth is like, if it's not obvious, it's probably time to rethink it. And I think we need to be a little bolder about it. And as directors, like we need to do a better job of making that decision for our board to help them. But another part of it relevance is like what you're comparing to. Sometimes we don't even compare to things, we just show here's our statement of activities as of today, but I got to compare to something so I can see where we've been or where we're going and what you compare to is important. So like I had a booster club, I was making a statement of activities for. And I compared to the year before, but we realized, wait a second, it was a pandemic year and they weren't really operating. Like what's the point of comparing the last year if it's not a good helpful comparison? Maybe you compare to the budget or compare to a year that you are reaching for. There's just so many different ways we can do it or the last month so you can see what changed in a month. So, and then the third one I say is assuming the reports we print out are easy to read and interpret, which they're not. We make our readers do all the heavy lifting, it's like inviting someone over for dinner and saying, all right, go to the fridge, make dinner for us because they may be really good cooks but the whole idea is that like we're there to make the dinner. So like, and what happens is that's what affects your readers, they don't ask questions. They're afraid to look uninformed or unknowledgeable but we're making them. And then they're using all their brain juice to try to figure out how to read your report in the meeting rather than actually ask good questions. It doesn't empower them. They're not gonna be able to help you and your financials, they're not working for you. They're just a checkbox, but we could do better. Okay, so I have two questions along those lines. Are you an advocate of sending this information to the board early so that when they get to the meeting in theory, they will have read through these and written down or thought about questions. And then the second part of this question is, we know this and Jared and I talk about this a lot. Board members are generally on lots of other boards. And so they're doing this process. If you come before this board member and you have a different looking, if you will, non-conforming or ill-fitting financial but it doesn't look like all their other reports, are they gonna be skeptical or are they gonna be like, wait a minute, this isn't enough information? Like, how did those two pieces fit? I know that was a big question. No, there's two questions there. It's like, when is the delivery? And I think that's a really good question that kind of depends on your board and what you expect them to do in the meeting. I think you need to be really intentional. I mean, I had a client who had a quick, they said, oh my gosh, I got a board meeting tomorrow. Can you put something together? And we did all sorts of thoughtful work to present it but I could see the board was like, they heard it but they were just, it was too much. They couldn't process the information and give good questions. And so we really had to rethink, like, okay, we need to backdate this to when that we need them to have that information to think about it. And then what every board needs is a little different. Like, I think it's not like, because it's customized, like you're gonna try on an outfit and you're gonna have to tailor it and you're gonna have to fit it for what works for you. And that's an ongoing process. So figuring out what your board needs is a, it's not a, there's no tech that's gonna figure that out for you. You're gonna have to really think, there's tech that'll help it be easier, like a good tool in a kitchen. It may help you do it faster so that you can focus more time on the analysis but really you have to, you have to do that work of thinking of what they need. Alicia, I'm curious, and my understanding are what I've seen with many boards is they share the same financial reports month over month or quarter over quarter, whenever they meet. Are you suggesting, and I'm curious if you do, that we stick like whatever it is we think works for us, we stick with that report or should we change our report month over month or quarter, however often we meet? What is your rule of thumb with that? My rule of thumb is what's the question? So, I mean, that gets down to how you tailor. So like I have all these tools for like how to make it look good on a page or how to get the story across but really like this gets down to how you tailor it is you start with the question, that's your rule of thumb. So if your question is, what's the question that you need to be answering? So what does that particular reader need to have answered to help them do their jobs better? You know, I had a client, they came to us and they said, you know what, we're drawing from our strategic reserve and our goal over, we got to figure out how long we can stay in business before we got it closed the doors. So I had a whole, that was my question answering. Those were the charts and the graphs and the pictures I created and the financials I honed them in on that question. But guess what? They started a great fundraising campaign. They got some funding, they got some grants and after a few months, that wasn't the question anymore. It was changing. And even that changing that in-between process isn't right away. We've had to really listen and say, okay, I think our new question is like, how do we wanna grow? Where can we have more staffing or what kind of programs do we wanna start? I like that. It's a totally different set. But if you start with the question, it really guides you and you have to just keep, you have to stay close to the people. I mean, that's the heart of it. And I mean, gosh, we tell that story all the time on your podcast about storytelling. We're telling it to our fundraisers for our funding, for our grant funding. All of it is about stories. We gotta do it with our financial information too. Who needs to start? What's a story? What do we need to do? How are we calling our readers to action? It all leaves together. We just need to do a better job with it with our financial statements. And we need to understand how to read them. I mean, I feel like that could be its own podcast. It was like, it's hard to understand what you're looking at sometimes. So yeah, it's draining your board how to read them as well. I love the financial narrative to go with the data visualization. It's like, this is the interpretation of what you're seeing. And when you first came on, Alicia, you were talking about really the three audiences, right? So we have the board, we have the funders, but then we also have the executives that are running the organization. And those three financials and those three stories might be a little different depending on the audience. Is that right? Oh, totally. And you could add probably 10 more audiences to that list. If you're going to a bank, applying for a loan, they're gonna probably want your audited financials. So each group is different in stepping back and seeing what they need and building that. What about your internal staff? Like your program directors who need to track their budgets. Like that's its own thing. And when you talk about those grants, that is a big one, especially in my line of work. It's, you know, we might get a million dollars, but that's for the next two years. So how are you tracking those restricted dollars and being able to report on them? Yes, yeah. And it is a lot. And it takes, when you see a good report, you're like, I got it. Like I understand it. That's when I feel like I've hit it with my clients. I can see, and I mean, I just think of that story of, like I'm sitting across the table from the structures, like I don't get what this, I'm gonna say income statement, but statement of activity. I don't get what this means. This isn't helping me because she had grants in lots of different years and she could not get under it. So we had to develop a different report. It's still told the same information, but in a different way that hones you in. And there's tons of ways too that you can make things simpler. And like consolidating is just so helpful because it respects your reader's time. Like it's respects that they are intelligent people. It doesn't mean that they need all your information. Like your job of grouping things and saying, I don't, I respect that you don't need to be an expert in every detail of this business to make really good decisions. I'm gonna give you the details you need. I'm not trying to hide anything. I'm just trying to focus you in. If you need more detail, we can get you that too. But let's focus our readers and doing it with a picture, doing it with a graph sometimes, I can throw a graph on my, before my financials and it might tell the story even better and quicker. I can see, oh, we're running out of cash in March. Yeah, red flag, red flag. Hey, Alicia, one thing that happens here in these conversations is we might have a viewer ask a question in real time, which lucky you we have. So one of our viewers wants to know if there is a resource that you can point them to that would provide some good examples of a variety of these financial reports you're describing. I know YPTC offers gosh, tons of information on the website. Is that where you would point them or where can they find good examples of these reports? Yeah, I really would, I mean, I'm so proud of our work on the DVG team at YPTC because I know how important this storytelling is. And we're all trying behind the scenes to figure out ways to show this information. But our DVG team has done a great job of showing examples of how you can capture in one picture or even the financial statements, seeing what our packages are, ways that you can consolidate those things. So I go check out our showcase on our website and see because there's some really good resources and ideas there. Yeah, yeah. You're our pen controller, yes. So to our viewer that asked that question, YPTC.com would be where that's at. And then the DataViz group has continued to add more posts about that. And really a lot of this, Alicia is actually available within the software. A lot of times we just don't know that we can run these reports that way, right? So some things are available in the software. I mean, and we have worked left and right to figure out every tool we possibly can to get it out of our software. That's our goal. But the truth is they all have their barriers. And there's tons of things that I think every nonprofit should look into the tech that you can... There's all these API integrations now that coordinate with things like QuickBooks or others that could do some of that financial planning and analysis for you. And the truth is we haven't found the perfect tool. We need a few. And truthfully with, I think with nonprofits, there's some extra layers. Personally, I think tracking grants and trying to figure out how to do that reporting that goes over fiscal years. I don't think QuickBooks quite has it figured out. We've found some workarounds, but really what we do in our group is if we can't find the tool, we build it. And so we're kind of starting with, all right, what is the stuff that we got to pull out? Because the goal is you got to do this on a regular basis. Like, when your professor told you to write an essay on the Civil War, she didn't tell you to write 100 pages or as many pages you want. She said 500 pages and you spent all your time. You're trying to do your 10 pages was the easy part. Putting it in 500 words was the hard part. So I feel like simplifying and then doing that efficiently, that tools can help you do that. And we've tried to find or build the tools that can help us do it because we do have to do it often and it does take work to simplify. Well, it's not going away. I think that we get more and more board members who have this experience where they get some really great information, they can be better leaders. And then they're like, holy moly, they go back to their next organization that they serve or down the road and they're not gonna be satisfied with that dump of paper. And, see you later, figure it out. I mean, we're gonna be educating our board members, thank goodness, to do and expect more. Julia, do you remember one of our guests came on and they made the reference that for a new board member, it takes them about 18 months before they feel comfortable and confident to ask questions at the board meeting. And that was such a sobering statistic for me because I think that could be halfway towards their three-year term, right? And so half of their time is already absolved into them just kind of sitting back being passive. So I would love for this, telling the financial statements so that a board member can do what they're there to do is to guide the mission of the organization. But Julia, do you remember hearing that? And I just thought, oh my gosh, that's horrible. You know, we talk about that a lot in our board training with the American Nonprofit Academy is that you have got to expect an easy 12 month integration into that leadership. Because think about it, in a lot of cases, these board members, maybe they're only coming to you four times a year. That's right. Or six or eight times. And so you're expecting them to have the confidence to have the knowledge and to have the presence to make extremely important decisions or engage in that because most of these people are high performers and so they're not gonna step outside the lines if they're not 100% confident. Hey, you have helped build us a lot of confidence here today, Alicia. If you joined us in the green room chatter, we were teasing Alicia about how Jared and I are always like, ooh, accountants on the nonprofit show, are they gonna be good? But we love the YPTC folks. You all seem to have a lot of energy. You help engage and explain and educate us. And so it's really been fun and we're so thrilled that you could join us. Check out Alicia Easefold's work with that data visualization group. You can find more information on yptc.com, your part-time controller, because you really do delve into a lot of things that not only just speak to the accounting side, but I think Alicia, they speak to the human side. Like how are you gonna get more, you know, stronger outcomes with the people that we work with? Right? Yeah. I mean, it's really like in light of what you were just saying, we're giving your board or your decision-makers a leg up. Like we're saying, all right, you want them to be empowered to help you make decisions. Host the room. Be a good host. Set the table. Don't give him a link on show. Gonna take more work. You got a vacuum, you got to get it all set up, but we can do that in a hundred ways, whether it's with our financials or not. Part of it is you got to understand it. You got to know what you're looking at and know how to pull it out of your system and make good decisions, but yeah, it's being a good host. I love it. I think that's just amazing. We've never heard an accountant tell us that before in all these episodes, but I love it. I appreciate it. Hey everybody, thanks for joining us. Again, if we haven't met, I'm Julia Patrick, CEO of the American Nonprofit Academy, joined by my personal nonprofit nerd, but the nonprofit nerd for all of us, Jared Ransom, CEO of the Raven Group. Again, we wanna make sure that we thank all of our presenting sponsors who are here with us day in and day out. As Jared mentioned, we're finishing up year three, moving into the start of year four. And so Blumerang, American Nonprofit Academy, your part-time controller, be generous. Fundraising Academy at National University, staffing boutique, nonprofit thought leader and nonprofit nerd. These are the folks that have been with us day in and day out. They make a huge, huge impact and investment in our sector. And we wanna make sure that we express our gratitude. And to you, Alicia, this was fantastic. We appreciate you being in the hot seat. Glad to be here. Yeah, every month, every organization that's supporting us has a representative on the show. So Alicia was joining us today from your part-time controller. So excited to have nerded out with you and appreciate all of you that have joined us either live or perhaps on the recording. If you are watching the recording, I hear that we're a good binge series. So you can just sit and watch one and then before you know it, you've watched six of them or something. Yes, past the popcorn. So really glad to have you here. We have quite the lineup this week. And as we end every episode, we like to remind you, ourselves, our viewers as well as our guests to please stay well so you can do well. Thanks, Alicia.