 Welcome. Thanks for joining us. Another Monday, another episode of the nonprofit show. We are so thrilled to have you here tuning in with us either live or watching one of our recordings. Today we have Chris Bobilock with us and he's going to talk to us about your financial transparency for your nonprofit. So before we get started with our conversation with Chris, Julie and I of course want to make sure that you remember who we are. We've only done 600 episodes together but we are working towards another 600. Julia Patrick, thank you my friend for creating this wonderful platform. Julia remains as the CEO of the American nonprofit Academy, and I get to have fun each and every day alongside as your co host. I'm Jared ransom, your nonprofit nerd CEO of the Raven group. And we are honored to have the continued support and investment from our presenting sponsors. 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You know again I shared today we're going to talk about finances and we're going to get down and nerdy with Chris by the lock here, director of finance and operations thrilled to have you Chris welcome. Thanks very much really happy to be here. Chris and I started working Jarrett several months ago and I don't even think you know this on a series of training videos. And it's a partnership with the American nonprofit Academy and chasing in company that only do nonprofit accounting services and so we kind of came together and said what are some of the topics that nonprofits need to know about. And whether you're in leadership or a board member. I mean, how does this all work and so Chris and I started chatting really an interesting process for all of us really had a lot of fun learned a lot. One of the things that Chris first said to me was about transparency. And we started having some conversations about this. And I was like, Wow, we need to get you on the nonprofit show and really talk about this because this isn't something that we're we think we understand what it means but we really don't. And so that's kind of the genesis of this discussion. And so sorry for that long winded introduction or recap. But I wanted to start us off and have you explained to us what is financial transparency and how can it really be a cultural piece of any of our nonprofits. Yeah, okay so we might take it a little bit further than financial transparency but that's really the core of it and think of it like in interpersonal relationship right how do you build trust in interpersonal relationship well with honesty and being genuine transparency and in sense nonprofits have relationships with their stakeholders. And so the same same rules apply you need to show honesty need to show transparency. And that's how you build credibility with your with your stakeholders and so you know this is something that I believe is fundamentally important to not only each and every nonprofit but the nonprofit sector as a whole that that that whole idea of being transparent being being credible. And it really does start with culture. And because you have to have a culture within your organization for this to work and now realize you know we did a we did accounting and chasing episode on this and one thing I didn't mention was really CEOs and executive directors and nonprofits really need to think about first of all their internal culture is their internal culture is transparent. Are they sharing information with their, with their staff and the key leaders of the organization and then from there you need to go to the board of course and hopefully you're being transparent with the board of everything because they're fiduciarily responsible for the organization but you know again is that level of transparency there. And that if those are in place from that you can develop a culture of transparency that is external to your stakeholders. So again that that word culture is very important and everyone needs to buy into it and everyone needs to support it and believe it's it's important. That makes a lot of sense and are there requirements for transparency, especially with financials because I know the 990s. That's public information so what are the requirements of being transparent requirements for very the 990 is the is the big one the form 990 needs to be available to anyone who wants to see it upon request and there's a. The fact that form 990 that takes up some key private information that your auditor provides, or your tax prepare can provide you. But it at that needs to be available. Beyond that, every state has different rules and regulations as to what needs to be presented so you need to be well aware what you're the state in which you were incorporated and what that state, that state requires. This is not so much about what's required it's about what is what you're going to do that's sort of the right thing to do and it's going to help you as a nonprofit build stronger relationships with those that support you. I love that you said that because there's a big difference between being compelled to do something. You know we use the word compliance all the time versus offering it up and saying this is the right way to operate. It's really an interesting thing and I see what you're saying about going back to the concept of culture. So let me ask this question and who is actually benefiting from this and when we talk about financial transparency. Who's our audience. Yeah, so first of all, you know I believe as I mentioned at the top, you know that the nonprofits benefit from transparency and the nonprofit sector as a whole because it just builds credibility, all around for that for the sector and the nonprofit. But when you think about stakeholders you think about all the people that come into contact with your organization and, you know, certainly their donors, their, their grantors, volunteers, not just the volunteers that help you on the front lines, deliver your mission day in and day out by the volunteers who are on your board and committees. You have partners probably you have vendors, you have the people who benefit from your services and their stakeholders as well. So everybody that whole sort of ecosystem of stakeholders benefits from a transparent culture and I think nonprofits need to generally operate with their eyes wide open to who their stakeholders are and how, how this type of culture and transparency is beneficial. We were talking to one of our guests and this makes me think of it here as well is don't share anything that you're uncomfortable with it getting out past, you know, a certain ripple effect so if you share with a certain stakeholder group have the assumption that it will be shared beyond that circle. And so I can only imagine that it makes us think and maybe pause. Okay, what are we sharing and are we truly comfortable with this information getting out beyond the intended recipients. So how much do we share like what's the best practice for you know a baseline being transparent and then even, you know, I don't know going above and beyond that baseline what does that look like. Yeah, so it can it can look like a very, a variety of things. First of all, if you Google on nonprofit transparency you're going to find a few organizations that have done checklists of things that that should be shared to be considered to be transparent. And that's a good that's a really good starting point, but it could be for instance, your organizational documents to start your nonprofit letter, your articles of corporation, your bylaws, the form 990 certainly if you're audited your audit report. Your list of board of directors key staff members and maybe it's their backgrounds as well so people understand who's on your board and what experience they have in the area. Key policies are helpful as well, because you know a lot of credibility has to do with, are you protecting the resources you're being given because essentially people are saying you know, I'm going to give you or you're actually with the nonprofit is saying to you give me your money, you give me your time and we're going to turn it into something better for the common good we're going to make it into something better. So they want to feel that that's actually going to happen. So conflict of interest policy whistleblower policy give people give people more comfort that you're, you're doing the right things to make sure that there isn't fraud or misuse of funds. If you have a strategic plan, you might want to share that if you have an annual report. Certainly you'd want to put that out. And I also don't want people to feel intimidated by the amount of the work, you know, it doesn't. I guess back in the day when I grew up and things were printed we talked about you know the glossy annual reports now their PDFs or their shared digitally or whatever. It doesn't mean a 20 page report it could be a couple pages that just summarize. You know what your funding is how you're using your funding the number of people you serve and what your what your goals are, just to give people an idea of your path and and where you're where you're trying to go. So, don't think that you need to put hours and hours and hours into a fancy formal strategic plan or or annual report it can be just a little bit of information. People get sensitive about well what about bad things that happen to our organization what if we have a bad financial year or there's there's something about organization. Well, to be honest be transparent means sharing it all sharing the good and the bad, but you don't just share the bad. And that with no information alongside it you may share okay we had a bad financial year. But here's what the board and the organization are doing to get back on track this is what we're doing to take better steps to get our finances back in order to get to serve more people to serve more people more efficiently, whatever the story is for your nonprofit what people want to know is that they again can trust you can trust the information that you're getting organizations that typically hide information. You know that they're probably looked at a little bit more critically as to whether people want to invest their time and resources there. Yeah, that's very interesting you know to not share just the good but to share the real realistic which might not be so so sunshine and roses. So how do you recommend we share this beyond posting it on our website or there are other key ways to disseminate this information. To be honest putting it on your website is really the key way to do it and maybe you do it under your about tab everybody has an about tab, and you have you could have a link under there that says transparency or could say financial information or whatever you want to call it and you basically just package it all under that one place one stop shopping for a viewer. They can find, again whatever financial statements you want to provide information about your board of directors about about your policies, everything that that you feel is part of becoming a trans transparent organization and to be honest under the about tab it could be under a couple different links under that tab but but you get the idea you go one place a person can go one place under the information they need. Maybe there's three or four years of 9090s maybe there's three or four years of audited financials there so people can see the trend is sometimes. Again, you know we've all been through tough times last couple years there's probably some that have maybe gone down a little bit after to not after 2019. But on the other hand, for growing organization they can show a really nice trend of how you, how you've grown over the last, like I said three or four years. So that's really the best. I think the best way to do it. And, you know we've talked about watchdog groups a little bit and guide star and watchdog groups will go to your website and they'll look and see what you have published there and that that impacts their ratings guide star although not a watchdog group has different levels for the information that they provide an organization so you might want to go look yourself up on guide star and see how they have you ready because I think it's there's a bronze silver and gold kind of level within guide star that depends on the information you're willing to share to people so you know there's a lot of a lot of pluses that can that can happen by just making it available. I'm fascinated because when I was thinking about this I was thinking about like this is current, you know the here and the now. I hadn't thought about going back a little bit and, and having some of those older pieces of information to give us context and to show the trajectory of where we've been and where we're coming, where we're going to I think that's really interesting. What does that look like to you, three years, five years. I'm going to, I'm going to put that one a little and it said that's really back to the, you know, kind of comfort level discussion we were having at the beginning. The staff, the board need to be comfortable with what they're showing now I would say eight 10 years of nine nineties is probably too many I'm thinking to two or three generally, you know what the most recent history of the organization. But because you know if you're doing this for a long, long time someone doesn't want to go go there and see all those nine nineties necessary they're really interested in what's happened and in more recent time. Very interesting. I mean, you know, Chris, you taught me that the new thing that's my favorite thing is schedule. Oh, on the nine nineties, a lot of a schedule opportunity. And that is that you get a chance to put your narrative forward and talk about your organization in a way that sometimes, you know, you don't get to right. I see now how this really fits into not only being transparent, but maybe connecting with people that you don't even know you're going to be connecting with that they seek you out. And they find information and then they make judgments or decisions about working with you before you might ever even know. You actually just said working with you you know I didn't really touch on this, but think of the current labor market and trying to hire people. Well what what do you want them to see when they come and do their research on your organization. Did they want to see an organization that has nothing out there about them you don't really get a feel for who they are and what they want to see an organization that's forthcoming and sharing information you can understand where they're going and what they're doing and you know again is we're all struggling in this labor environment to hire good people you really want to put your best foot forward so there's another there's another advantage of doing something like that. And it goes back to the, the culture right and so if you are an employee or potential employees seeking, you know, a new opportunity, you're right Chris you know just looking on websites to find out what is the organization sharing. So I think it's a very frustrating transparency and their communication and culture from the onset, and then to watch that journey, you know, perhaps through the interview process and onboarding process so I've never connected those two in such a cultural way so thank you for bringing, bringing that to the forefront for me. I have another question and, and Jared and I talked about this a lot and that is, you know, oftentimes our boards are comprised of business people who come at at nonprofit board service with a benevolent heart and attitude, but they don't always you know that the, as you would say the cultural differences or the performance differences. How hard do you think it would be for some of these board members to be comfortable with the dissemination of so much financial information. It can be difficult for some I mean I've worked with, you know, treasures of nonprofits who come from very large companies and feel that everything should be like that fortune 500 company that they came from and it takes them a little time to realize that you know that's not the way the nonprofit world works but I think, you know it needs to be explained carefully and, you know, again, there's lots of different kinds of for profit companies there's their single ownership for profit companies which are very tightly held the information's very, very private but then there's companies that sell stock that are on stock exchange and they're owned by the shareholders and the SEC requires a certain information is provided. So I kind of think about it that way your stakeholders are your owners, they're the people again that are giving you the funds to operate. So what information do they need to keep supporting you. That should be the driving force. That should that should be the reason why you want to do that. Now again, how much information and exactly what information that's still, you know that still needs to be vetted out and and agreed upon. I understand why some people would say well I would never you know I wouldn't share that or anything but yeah you you learn after a while that the benefits really are there. I have to share to Chris that I and I know I've shared this on the show before Julia is that, you know, I was really taken aback by a very savvy donor that they did their due diligence in the financials and you know these other charity watch dog kind of platforms and they said you know right now we're not comfortable making this large investment because and they you know shared the points. If you can get this you know improved then yes let's circle back in about eight months and so I bring that up because investors, donors, supporters, they become savvier and savvier as our access to data becomes more and more accessible. So, you know whether we share it or not. I really think that you know if there's if there's a will for our donors to find it or air any stakeholder group, they will. So why not provide it, you know. Yeah, well, you know we're an accounting firm that serves now profits of the first thing we're going to say of course, is that you're fine financial data needs to be accurate and of high integrity you got to be able to produce financial data that makes sense and so any potential grantor or any potential donor can look at them and say, Okay, I understand financially where your organization is. But then going going beyond that and doing the things we're talking about today I think only strengthens only strengthens the case for someone to want to give you money and of course, the more money that's involved the more important. This is going to be. A curve ball question and we're notorious for this but I just have to. I know I just have to share Chris that you know even though we are doing the work of the angels there are times when bad things happen right and there have been cases of, you know, financial misuse and embezzlement. How do you go about addressing this in a transparent way with your stakeholder groups. Very good question. I hate this question but I love this question. So, so when we're talking about sharing the good and the bad it doesn't necessarily mean all the bad some of some things are are to be dealt with internally or within the board structure. And, you know, if it now if it's public if it's become a public thing or something that might become public in the newspapers on the way on somebody's website and which there are millions now. Then you need to address it very proactively and you need to say, you know, we understand this happened where, you know, possibly embarrassed that this happened, but we've taken a B and C precautions to make sure this never happens again. And that goes from everything as serious from a serious to a fraud incident to, like I said, a bad, a bad financial year where donations go down. Explain it there's usually there's usually an explanation there's usually some some reason or some type of comfort you can give your folks that this is this is a blep we're turning this around but this is what we're doing this is how the board is involved. Some organizations have gone as far to share portions of board minutes or finance committee minutes to show that the board has taken action that there's been very, very distinct action that's taken. Now, I mentioned on the recorded thing, you know, you have to be careful how your minutes are written and all that minutes can be written very different ways and some are overly detailed and those are the ones you might not want to share on a website but but if you want to, you know, if, if you just want to state that our board has taken this action to, you know, prevent something from happening again or percent or make sure something does happen in the future then. Sure. Great. Yeah, no that's a great point. I like you know adding the minutes in there if appropriate so thank you for knocking that curveball out of the park. It's not only annual meetings for organizations that have annual meetings, where all their members are involved in members after proving this annual meeting many should be, should be sure. You know, my takeaway from that is that you almost are couching the issue of whatever the problem is in relationship to the future and prevention. Did I hear that correctly I mean you're. That's absolutely right I mean things are going to happen from time to time that are not the way we plan them. But really what it comes down to with a credible organization and organization you want to invest in is how do they handle that situation how they move forward from it. And so you want to show that you're a proactive organization that cares about doing things the right way and that you actively take steps to to make things better. Well, this has been great again. I, Jared, like I said when I first met with Chris. And I just thought this was such an important thing to be talking about. And I don't know about you, Jared, but I don't feel like enough of us are talking about it. Maybe we're prodded when something bad happens. But just as a matter of culture. I just loved having this discussion on the nonprofit show today. It's an important one. Thank you, Chris. Really welcome my pleasure. Hey, Chris Bavillac director of finance and operations at Chasen and company. I want to really quickly before we let you go. Chris talk a little bit more about counting on Chasen. This is a series that your team and I worked on through the American nonprofit Academy. Really, really interesting. I think of it as kind of a primer for those people that are working in the nonprofit sector, but not might not know really what they should be doing. They have a lot of passion and they want to work on the mission, but they need some more information about how to be specific and to be successful about, you know, the accounting interactions. And so, Chris, we have a little over a dozen, I think episodes. I think it's exactly a dozen. Okay, not a baker's, but not a baker's doesn't just doesn't. Well, really interesting from compliance to budgeting to auditing. Really, really interesting topics that I learned a lot. I did have some hair on fire moments Jared on camera. I must admit where something came up and I was like, holy moly, I didn't know about that, you know, and so these are all free. You can go to Chasen and company or counting on Chasen.com and and get free access to this. So it's not gated, which is remarkable. You can get to this information. So it's really been amazing Chris to have you and your team help us out across the sector because we need accounting help, undoubtedly. Yeah, I know we're very proud of the series and thank you for giving us the opportunity to partner with you on that. You said 12 topics that we started with that we thought were important to nonprofits things things for nonprofits to know it will raise new questions for people no doubt it will maybe direct people down a certain path that they hadn't thought of before as you mentioned those hair on fire moments. And, you know, we hope to that was sort of our kickoff launch of those those dozen topics and we hope to add some topics, some new topics over time, and that it's beneficial and love your format that you can watch it as a video or you can listen to it as to it as a podcast while walking the dog if that works for you so. Yeah, it's it's really been amazing and like I said, I learned a lot. I expect to continue to be learning any learning more. Again, everybody, thank you for joining us. I'm Julia Patrick I've been joined today by my trusty sidekick Jarrett ransom, the nonprofit nerd herself. We are not able to do our daily program more than 600 episodes without the support of these amazing sponsors, many who have been with us from day one. Blumerang American nonprofit Academy your part time controller, the nonprofit nerd fundraising Academy at National University staffing boutique and nonprofit thought leader. These are the folks that are with us day in and day out so that we can deliver a fresh and new approach with the nonprofit sector each and every day. So we thank them very very much. Hey Jarrett. It's been great to have another thought provoking episode. I'm so delighted that we could have this conversation with Chris. You want to sign us off today. Yeah, I would love to. You know, every day, we have been showing up as as we said for about the past three years, the conversation conversations evolve and so Chris thank you for shining this light on accounting and transparency it is very critical to our sector, especially as we move forward so thanks to all of you for joining us for this Monday. We like to give Monday some fun fresh feelings as well because Friday gets all of the fun, but we hope you'll join us back here tomorrow we've got a great lineup this week and until then, please stay well, so you can do well.