 to each and every one of you joining us live or watching this recording or listening to the recording, thrilled to have Ellie Hume with us today with your part-time controller to talk to us about the top finance tips for your grant management. So Ellie's got a plethora of wisdom to share here. Those of you that joined us in our green room chatter, you heard a little bit about our expertise already. But before we start this conversation with Ellie, Julie and I wanna make sure that you know who you are looking at or maybe who you're listening to, Julia Patrick, welcome CEO of the American Nonprofit Academy. I'm Jarrett Ransom, your nonprofit nerd, CEO of the Raven Group. We continue to be honored to have the support from Bloomerang, American Nonprofit Academy, fundraising academy, nonprofit nerd, your part-time controller, staffing between nonprofit thought leader as well as the nonprofit Atlas. These companies partner with us to help you do more good. Please check them out. Please check out these companies because they literally are here to help you drive your mission forward. So please do check them out. Their services, their people, they're all amazing and we're really grateful to have their continued support. If you missed any of our episodes, you can find them, Roku, YouTube, Fire TV, as well as Vimeo. So just say the nonprofit show in your smart remote and voila, we appear on your big screen. Or your small one, whatever size you have or also in podcast form. So make sure that you queue up the nonprofit show on any of your streaming platforms. I was listening to my favorite podcast this morning and it's a great way for me to start my day. So make sure that you do queue up the nonprofit show because you can hear what Ellie Hume is about to share with us today. As we talk about grant writing and how the finance plays and should play a big role in this. So welcome, Ellie. Nice to have you back. Thank you, Jared. I'm happy to be here. Yeah. You know, Ellie, we always get these like ideas and these like thoughts. And then we're like, okay, we got to get a hold of YPTC and we got to get a hold of Ellie and we got to find out what she thinks and how we can pull this all together. And all of the ding-dangs, you can always do it. You can always, if we have a weird question, you can always seem to put it into an semblance of order. And so we're very, very appreciative of that. And so one of the things that we thought would be cool is to really talk to you about this grant management concept. Grants are such a mysterious thing. When you do it well, it's great when you struggle, it's horrible. And yet I think we focus too much on just the grant application and the win. Right, right. But that's just like the start of it, right? Exactly, exactly. That's just the tip of the iceberg. And there's even things to think about before the application and the win. So that's definitely something I want to chat about too. Yeah. Well, let's get you started and you want to share with us that all funding is not created equal. And so this already is a hair on fire moment. What do you mean by this, sister? Well, so just what you had said, getting into grant proposals and thinking about what you need to even apply, but before you even consider like, yes, I'm definitely gonna apply, you also have to think about, well, what happens if we get it? What happens if we get it? Because, and I mean in the sense that not all funding is created equal is because accepting every new grant out there might not be the right answer for your organization, right? And I really think this applies significantly in the government funding realm or perhaps maybe from a foundation that the people funding it don't have the best reputations or something bad happened in the news and now it doesn't hit that funding has these bad connotations to it. But in government funding in particular, you really have to think about, well, what's gonna be required later when we have to give them back the information about how we spent their money because those steps might be too cost prohibitive to actually create the processes required to meet the government funding reporting requirements. And if your organization doesn't know what that looks like before, it might be a complete waste of time to work on that money. You might spend an inordinate amount of effort trying to get a $10,000 grant and then the reporting requirements cost you a bunch of money in accounting support to get them the information they need to report on that $10,000. So that's what I mean by it's not all created equal. Okay, so- For saying that, first of all. Because I don't think that's a popular opinion and especially for what I hear out in the community, we have to apply for all the grants, whether it's $2,000, $1,500, $20,000. There's compliance that we have to keep in mind. And one of the things we're gonna talk about is not writing grants, not submitting your proposal in a silo. So you really need to have a well thought discussion while you're prospecting this funding opportunity to see as you just said, it's not equal, right? Like what is it we have to do to remain in compliance? What is the management requirement? An organization that I'm working with now, they are just dipping their toes into having a single audit because they've gone above the threshold of federal funding. Yeah, and that's a big challenge. Okay, that's a challenge. And a big price tag, right? Well, that's what my question is. And I hate to put you like this on the hot seat this early, but this is a question to both of you. Do you have a percentage that you think should be applied to any programming budget or grant situation that is going to cover the costs of administrating it? So for example, if you're gonna get, is it like a 10%, 5%, 3%? I mean, do you ever look at this situation in this manner to say, yeah, we have to look at it in that manner? And I think the problem is people don't look at it in that manner. And I worked for a nonprofit many years ago and we had a really smart CFO and I was learning from him at the time that you have to look at all of your administrative costs and say, when we apply for grants, what is an appropriate percentage that we need to try to get on every single grant in administrative overhead in order to cover the rest of everything? And then you know, you're gonna have some grants that will not accept that amount. You have some that are very like, no, we will not do any overhead and we will only do 5% or 10%. So then you have to adjust and say, okay, well, on the ones that will accept it, do I have to increase a little bit more to make sure that I get myself covered from the ones that won't cover it? And that's really where it's a much bigger perspective and conversation across the organization. And in those grants that don't cover overhead or a very tiny amount that are allowed to be part of the grant proposal, that's, you have to really consider, can we accomplish the activities that are required with this amount of overhead? The answer is almost always no. But if we can't, do we have extra room somewhere else to cover the cost and will that make this money worth it? I mean, that big nut to crack, Julia. It just kind of gives me the chills, Jared. I mean, it really does. For sure. And that's really why I love this topic and I love that you're here to nerd out with us, Ellie, because too many organizations are not fully educated on the grant management piece. Absolutely. And I will tell you, right now, we're budgeting 20,000 for our audit. So that would be our annual audit as well as an individual audit. So 20,000 and this is for organizations, again, that are of a certain magnitude, but this is a multimillion dollar organization. So for those of you that might be saying, okay, we're not in the multimillion dollars, this might not be something at this level for you to think about, but you still have to communicate across your departments and you still have to take a look at what is it that we have potential funding for? And should we apply, are we able to maintain compliance? And then Ellie, speak to us about this communication and what should it look like? Sure. And also just to add on to what you just said, it is about understanding like, what are you applying for? What costs is it going to cover? And making sure that you're not, the grant writers aren't working over here, keep writing grants for program A, keep writing grant proposals, grant proposal, and not knowing really what is approved and then did you get a bunch of money for the same thing? And now you have no money for program B because you spent all your effort getting multiple versions of funding for program A and now you're like overfunded there and not funded enough. And that's what I mean by you have to be constantly communicating across the departments. Well, where are the gaps that are leftover and how can finance help educate and communicate clearly with the development team to say, okay, this program, if we're gonna go target funding for this program, we already have all of these sources of funding and they already cover these expenses, but here's our gaps. This is if we have to be specific in what we ask in a grant proposal that we need the money for, here are the areas that we actually need the money for as opposed to just guessing and saying like, oh, we need money for program supplies and the rent for the space to have the program. Well, you might have already asked for that five times and then you got it three times and now what do you do? Now you don't have any money to pay the teachers or, because there are some grants that are so, so specific and you have to be very careful about how many times you ask for the same funding, but that's why that communication across the different departments of what are the program needs? What is actually funded and not funded from a financial perspective and then how can we give the grant writers and the fundraising department the information they need in order to really be able to write those proposals to cover the things that we still need. One of the questions I like to ask is if money was not an issue, what would you ask for? Right? Like what is it that you need if money wasn't an issue? Because I really feel, Ellie, and please talk to us about this, the scarcity mindset in the nonprofit sector and it's like, well, we can't do that because it's too much money or we can't ask for this or we can't expand that because it's simply going to cost too much money. So how do we address that as we communicate with our teams to identify, okay, what could we bring on, right? Like what is possible? For me, I think if it's an open-ended question, always ask for general operating dollars. Here you go. I agree, right? Not that you can do whatever you need to with it, right? Yes, right. But at the same time, I think also thinking about if I go and I apply for this new money because I want to start this new program or project or something, you also have to then flip it and say, well, what new expenses am I gonna incur? And so am I trying to cover current expenses that I already know I have or am I then gonna have to expand my budget to cover new expenses just to take this money for this purpose? And I think people forget to think about that often in the process, but general operating dollars, never just ask as much as you can get. Yeah, yeah, I think that's great. And the image that is up for those of you watching now is tracking expenses for those reports. And you've touched a little bit on this, Ellie, but let's dive deeper because I think we should set up the proper tracking before we even apply. And as you talked about earlier, you're communicating across different departments, we might be remiss and we're double, triple quadruple dipping and that's not okay. 100% it's not okay to be double and triple dipping into funding for the same expenses. And I agree, from a financial perspective, we wanna set up an accounting system that will try to meet as many needs as possible, right? We know that we have to report to the IRS on the form 990. We know that at a certain level of contributions, we have to get an audit and there's certain requirements for that where we, in both of those, we have to be tracking expenses by programs, by general administrative costs and by fundraising costs. So we know the basics, right? But we also know, well, we wanna understand what each program is doing and there might be projects within each program or department and then there might be funders that we have to track how we're spending their money. So you have to think about how the accounting system will work in general and that I think is often remiss in nonprofits getting started. They don't know how to think about all of those expectations that will come later when they initially set up their accounting system. But it also means that everybody involved, fundraising, program folks, finance, everybody has to be accountable to the dollars that they received and be able to say, okay, this expense was appropriate and approved for this grant or this program. And that's what I mean by tracking and there has to be accountability across the organization. It can't just be finance making their best guess about which funder it goes to or which program it goes to based on very little information from the vendor on an invoice. And so that tracking process starts from the very, very early stages of setting up an accounting system and it evolves as the needs change but there are some basic needs that have to be set up straight from the beginning. So it makes me wonder, ask the question in this kind of dovetails to something Jared said earlier in the Green Room Chatter and that is that do you find that the folks in programming even understand this concept that there are reporting mechanisms and tracking mechanisms because that could be a heavy lift for a lot of organizations. If they don't even realize that this is their responsibility it's not just finance and those folks down and those other cubicles. It should be known but it's not. And I think it's the executive director's responsibility and the CFO or controller or whoever's leading the finance team to make sure that they're properly educating the entire company about everybody's responsibility when it comes to financial management and tracking things. And I think all too often especially in smaller organizations they're just as we said before operating in their own little silo. I'm just a programs person. I'm just over here doing this or I'm just a fundraising person. I'm over here doing this and they're forgetting that everybody's working on the same mission at the organization and they all have to be participating as a team in order to meet that mission and that means sharing that information and being educated about what their role is in every bit of the organization and it all comes back to financial management because it's all about the money we get in and the money we get to spend. Right. Julie, what I like to coach and I agree with you wholeheartedly Ellie and I feel like you and I could go on tour together and we could just reach at all these nonprofits but what I like to do is to create a grant management committee task force whatever you wanna call it, right? So it's the grant writer or the development person that is really prospecting the funding opportunities. You have a finance person in this conversation. You have a programs person in this conversation because that person should know what needs to be implemented, executed and evaluated, right? And then you also need to make sure with the finance person that they are able to track this. They're bringing those dollars to the table to say, wait, time out. Now we've already got funding for this. So we're really at max capacity unless you're expanding this program then we can talk about that. So I really think it, as Ellie has said you have to communicate. And I think you need to do that before you actually put pen to paper in the old days or like fingerprints to keyboard. You have to communicate in this team of do we even want to apply to this? Because here's what we have to do and bringing the players on the team together to talk about that end goal to stick with your sports analogy, Ellie. I think that's key, huge key for success. Now, I love that structure. I love that idea. Ellie, are you seeing this being done? I unfortunately see it too often not being done. And one of the things that we teach our staff is when you get to an organization you can't just be talking to the executive director. You can't just be talking to the other people in the finance team if they're big enough to have other people in the finance team. You have to build relationships with people across the organization and understand what is happening in the programs, what is happening at the fundraising level and make sure that they include you in those conversations. And I think organizations just don't automatically operate that way, unfortunately. And the bigger they get, the worse it is. I think in my opinion, like the bigger and bigger the programs get the less communication there is between the different departments. And it's just an expectation that, oh, I sent you this email, you should know what I'm talking about. But the other thing with working remotely it's much harder to create those relationships than you used to when you went to their office. And I remember, you got to know every single employee because you were at the client's office and you interacted with everybody because they were coming to your desk and asking you questions and including you in the staff meeting or including you here or there. So there was a different level of relationship building when we were visiting our clients on site. And we have had to do extensive communication and training with our staff and saying, like, you still have to create the environment to keep that dialogue going because there's no water cooler to overhear a conversation of that. Or like, oh, wait, I need to know that. You should be here, right? But it's almost like a training thing when you start working with an organization and whatever department you're in is like, hey, do we have an open dialogue with the other departments? And if not, why? And can we create it? Yeah, that is so good. And let's drive that communication home. It's kind of been our thread throughout today's topic, which I love. And I really do think that all of us, as I was taught growing up, you mean well. We all mean well, but sometimes we misstep, right? And so really taking a look at, okay, how do we communicate, communicate, communicate with all of the players on our team and the funders, right? And I'm curious, Ellie, this is a curve ball. So I'm sorry, sorry, not sorry, because I know you're gonna hit it out of the park. How do we communicate with funders if we did not account properly in our management system? Like how do we go to funders for this? And I know we didn't pre-plan this, so this is legitimate. But like, what do we do when that happens? Good question, good question. That is a great question. And it happens all the time, to be honest, that there is a misstep that people didn't get the right information, it didn't get coded the right place where it was supposed to be. So you gotta do your homework internally and say, okay, is there something we need to change because we made an error? And then all of a sudden we have the right information for this funder, or did we truly misstep in the process of saying like, oh, we asked you for this, but we really needed it for this? It's getting your facts straight, talking as a group across the departments about like what is the message that we need to take as a whole to the funder and what are we asking them to change or give us flexibility or more time to adjust for. And it's just creating a strategy within the organization about how best to communicate whatever that issue or error was. And whether it's telling the client, okay, or the customer we're going to fix it and then we'll get you a better report or we need to adjust how much flexibility do we have to repurpose the dollars into the right area where they actually were spent. And I think it's all about communicating across everybody, understanding what the strategy and the conversation should be with the funder and then who's the right person to communicate that message and have that conversation with the funder in order to get the point across. I love that. And I knew you were going to hit a home run. I totally had faith in you. An award letter comes when there's been an acceptance of your proposal. And so for those of you that might not be familiar with this process, once you submit your proposal, you should receive either electronically or hard copy USPS letter that states whether your proposal has been accepted or rejected, right? And so that accepted letter, Ellie, could you speak to us? I know we don't have tons of times here, but like, how is that a tool for success in the grant management? Good question. Ooh, that one might be a little bit more of a curveball, but from the accounting perspective, when that letter comes, it is legitimately revenue to the organization for the most part. Once it's in writing and there's no conditions attached to it that you don't have to do something first, but if they made that award, the time, the clock starts now. Let's figure out how do we track it? Let's go back to the proposal process and find out in the application, what do they tell us the reporting requirements we're gonna be? Are we set up to do it? And before the first dollar is expended, are we gonna be able to work within those constraints that are given around that money and be able to report back? So that's what I would say there. No, I... So setting up for success at that onset. Yes. But onset, and you're right. I mean, that basically is cash in the bank, right? Like that award letter says, here is our written commitment to you that we have agreed to fund X amount. It could be your full request. It could be partial request, right? But what I like to do also is that that letter absolutely goes to finance. They see it, they have a copy. It's on some shared drive that everyone can access. And then for those of you listening, I also like to put it in our donor database because that institutional knowledge is critical to transfer within your team because we all talk about this bus or if no one showed up to work tomorrow, like where would this information go? And so again, another curve ball hit a home run. You're so good at this, Ellie. So that award letter speaks volumes. And it really, that is your first step. And like you said, time starts now. It's like a chess game. Okay, click, I hit that time. Yeah, and what changed, right? Something that you could have waited months for that award letter to come. All kinds of things could have changed since the time that you applied for that money. And so you might have to just stop and say, oh, you know what? We need to re-communicate to this funder and say like, we love that you gave us the award, but X, Y, and Z changed. Can we adjust the purpose of the funds in any way? Can we reallocate budget line items if necessary because X, Y, and Z happened between the time that we applied and the time that you gave it to us. So it's also, I think, a consideration. That's a great point. I know that we've seen a lot of that happen, of course, during the global health pandemic of COVID-19. Funding might have been allocated for one particular purpose. And many funders said, you know what? Free for all, use it wherever you need it. And again, having that communication, being confident and open to have a conversation with the funders speaks to relationships. And I will guarantee you funders like transparency, they like to be communicated with and kept abreast of any and all changes. So, Ali, you are a natural, I'm so glad that your school teacher, as you're growing up said, you are made to be a CPA. So, Eli Hume, CPA, MBA, New York director at your part-time controller, you are fantastic, always great to have you on and nerd out with you. So thank you for being here. And of course, thank you to your part-time controller for being a fantastic supporter and partner sponsor with us of the nonprofit show. It's been amazing. My pleasure. Hey, everybody. Again, I'm Julia Patrick. I've been joined by the nonprofit nerd herself who, if you weren't in the green room chatter and you don't know this, you know, this is the sector of the nonprofit world that Jared came to us from, you know, I don't wanna say many moons ago, but at the beginning of her career. And so it's fabulous to have this knowledge. And so we're always, I'm always like, she is the nonprofit nerd. Hey, again, we wanna thank all of our sponsors who are with us day in, day out, Lumerang American Nonprofit Academy, your part-time controller, nonprofit nerd, fundraising academy, staffing boutique, nonprofit thought leader and the nonprofit Atlas. Again, they marched with us day in, day out. We're moving into year three of the nonprofit show, well past 500 episodes. And so these are the folks that stepped up and said to both Jared and I, we wanna be a part of this process to communicate to our sector. And so we are very, very grateful. Hey, Jared, I'm just like buzzing. I love this conversation. I love Ellie. I love the conversation. Ellie, you're really just a wealth of wisdom. So grateful to have you here. So grateful to have your part-time controller. I just shared the Phoenix location with someone yesterday that said, hey, do you know a nonprofit CPA? I said, do I know one? I know hundreds here. It's been fantastic. Thank you. It really has. Hey, as we end this episode, as we do every day, we wanna encourage everyone to stay well, so you can do well. We'll see you back here tomorrow.