 Welcome everybody to another episode of the non-profit show. We're really excited because we are in non-profit Power Week with your part-time controller. You might hear us call YPTC and we are so excited because we have a new voice on with us, Tanya B. Paul, CPA. Tanya, you're coming to us from Houston, correct? Correct. Hi, y'all. We're like, Tanya, you can't wear your cowboy hat. You could. And then I, of course, would have to get my hat on. Hey, we're going to talk about something really important today, three steps to improve your charity ratings. And this is one of those topics. I can't wait, Tanya, for you to share with us your knowledge because this is something that we need to be talking about. We're not talking about it enough. And I love that and I'm counting finance, you know, firm would bring this to the front forefront for us. So I can't wait to get into this discussion. Again, if we haven't met, I'm Julia Patrick, CEO of the American Non-profit Academy. My trusted sidekick, Jared Ransom, is not with us today, but she'll be back tomorrow. She's the CEO of the Raven Group, also known as the Non-profit Nerd. We want to thank all of our presenting sponsors without them. We would not be here day in and day out. These are the companies that support not only our non-profit sector, but the non-profit show. Blumerang, American Non-profit Academy, your part-time controller, Bee Generous, Fundraising Academy at National University, Staffing Boutique, Non-profit Thought Leader, and Non-profit Nerd. Check them out, as Jared always says, but wait, wait 28 minutes and then you can check them out because we don't want to have you miss anything. But if you do miss something, you know where to find us. You can get to more than 600 of our archived shows on Roku, YouTube, Vimeo, and Amazon Fire TV. You can also queue us up now for podcasts, if that's how you like to consume your content. We're on a myriad of streaming platforms, so check us out. We have a new podcast every single day, which is just amazing. Okay, Tanya, be Paul, CPA, Director of Houston, your part-time controller. Welcome, welcome, welcome to the show. Thank you, Julia. Hey, so Tanya, talk to us before we get into these three really important steps. Charity Watchdog sounds a little intimidating, and what are these like ratings and what's the purpose of this? I want to even, I just want to say concept. Yeah, so that's a great place to start. You know, what are Charity Watchdogs? So Charity Watchdogs, they're also, first of all, they're also nonprofits. And what they, their whole mission, their purpose is to really try to help donors make informed choices about the charities that they want, they should support or they want to support. They're called Charity Watchdogs for a reason. They, you know, they do a lot of analyzing and assessing about information that they glean about nonprofits, and they post warnings about these organizations if they find something, especially if they're poorly governed or if they're wasteful or if they're inefficient. And every Charity Watchdog does things a little bit differently. And so they collect this information and then they evaluate them based on their particular ranking or rating or grading system. And then it's also important to note that Charity Watchdogs, because they are nonprofits, the way they maintain their independence is they rely on visitors to their websites to donate to them, as well as any subscribers that uses their information regularly. Interesting. You know, it's fascinating to me to think about this because you know, we go by the number 1.8 million registered nonprofits in this country. That's a lot going on. And it's changing. Are there certain watchdog groups that are by sector or they drill down by region or state? Or how does this work? Or is it just like a free for all across the entire country? Great question. So we tend to look at a certain subset of the Charity Watchdog spectrum. So I'll kind of give you a highlight of like the three different kinds that we have been keeping an eye on. So first and foremost is Guide Start. That's the most commonly known and used by all kind of all types of people out there. They're different in that they allow the nonprofit to manage the information that they're going to share with them. And then there's a group of nonprofits that don't really let the nonprofits volunteer or control. They pull information that's out there readily available to the public. So examples like Charity Watch, Give.org, which is a subset of BBB, Better Business Bureau, and then Charity Navigator. So they take information and then they analyze that data and then they provide a ranking or a grade or a scorecard if you will. And then there's these kind of next gen, if you will, type nonprofit watchdogs, Charity Watchdogs, like GiveWell, great nonprofits, Global Giving. They're using a lot of the similar types of information about kind of what I just mentioned, but they're trying to start focusing more on impact, storytelling, cost effectiveness, project-based giving. So there's even within the Charity Watchdogs subset, we're starting to see specializations in terms of how they present that information to the public. You know, I love that you bring that up because as we know, what donors want to see and how they're making their decisions is changing dramatically, and it has generational impacts. So I would imagine younger donors, newer donors at the same time, might be a little bit more interested in this type of information before making a decision. Absolutely, absolutely. And that's the thing, kind of leading into what you're trying to ask me is why does this information matter, right? It's the people who are using this information. There's all kinds of people looking at this information. There's the individual donors, which is the most obvious, right? They have a little bit of money to give or they want to give and they're looking for information to make those decisions. You also have volunteers now who want to collaborate with winners. Everyone wants to be tied to a winner, right? So they're looking to see which organizations have good information, especially this younger generation. They're way more in tune into kind of this depth of information about nonprofits. It's not just based on name alone, just because it sounds like a big organization or a national organization. They really do lift the covers to see what's going on with the organizations that they want to volunteer their time with as well as their money. And then also thinking about stakeholders like banks, institutional funders or grantmakers, they're looking at this information, right? And then also think about board members or future employees. They're going to take a look at your organization to see if you're an organization that they want to tie their name, their reputation with, right? And then also beyond just the individual person, think about the agencies that are picking up this information, agencies that are influencing people's behavior in giving. So think about during the pandemic like Facebook, right? With their impromptu kind of pop-up giving or, you know, like the giving basket, right? All of these organizations are starting to create their own methodology or their own way of influencing people's behavior in giving money. And so if they're touting certain organizations, that's raising the credibility. And where are they going? They're going to these watchdogs to pull that information. Okay. Wow. I love how you framed this up because now let's get, I mean, I'm a believer. If I wasn't before, I'm like a total believer, but you have very specific three steps that we can take to improve our charity rating. And step number one, it might be a little surprising because it involves the IRS 990 form. Talk to us about that, Tanya. Oh goodness. There's so much I can talk about the 990. The first thing I'll tell people is people think IRS form or tax form and they immediately think numbers and they think, oh, you're an accountant. That's why you want to talk about the 990. Well, let me tell you in the nonprofit space, take a moment, get over your fear of the 990 and flip a couple of pages. And what you're going to actually find is the financial data input into a 990 is actually very minimal compared to all the other information the 990 is looking for. So some of the areas that I want to focus on so that you guys can kind of think about it is program service accomplishments, government and management disclosure, and then also compensation. And then finally, the statement of functional expenses. There's four areas in the nonprofit 990 that you really want to take a look at. So let's talk about program service accomplishments. If you flip to a 990, go to part three. And what you're going to see are their quality of questions in that section. Question one is briefly describe the organization's mission. Well, that has nothing to do with numbers, right? It's narrative. It's narrative. And then question two immediately following it is describe your organization's accomplishments for your top three largest programs, right? And so here's your opportunity to start sharing information about qualitative measures of what you did in the past year as an organization, how you had impact. If you're a homeless shelter, how many clients were you able to get off the streets and provide resources for them? Think about those types of things. The next section, part six on the form is about governance, management and disclosure. Let's take a look at a couple of these questions. Question 12 on there asks, does the organization have a written conflict of interest policy? Question 13 is about whistleblowers. Question 14 is about document retention and destruction policy. Question 15 is what's your process for determining compensation for your key employees? Are you saying yes to these questions, right? That's what they're looking for. What I tell people is if it's on the 990, you probably should have a policy and procedure for it. And if you've been watching your show all week, Angela Cokesome and my colleague Jen Aliva, they both have alluded to all of these things, right? So maybe now you're starting to see how the 990 is so important and how you can start telling a story. You know, I think it's really an interesting thing that all three of you ladies have brought up is that they're not saying and attach this document to this form. They're just saying, is it a yes or a no? Exactly. And so I think that's really, to me, that's really interesting because I like how you phrase this that it means or you can interpret that the IRS is saying this is important and so this should be done. We're not saying how it should be done, what it looks like, but your COI policy, your whistleblower policy should be structured, I guess would be the word and in practice. So I love this. I always think of the schedule O should be renamed to schedule opportunity because it seems to me that this is that narrative. This is that place where we can really tell people about our work. Exactly. And you know, that's the other thing. When I teach this, these topics to nonprofits here locally, that's one thing I tell them. You should be looking at your 990 as a marketing tool. You should be refreshing that information every year. You know, the three programs that hit it out of the park last year may not be the three programs that hit it out of the park this year. So take a closer look at that because everyone's reading it whether you like it or not. Okay, now let me let me throw a curve ball. So get your your mitt up because if you have quote unquote bad information or something, you know, was in decline or you had some issue, do you report that there in some of these narratives or or do you try to, you know, make it all rah rah, yay team kind of information? I mean, it's a marketing tool. So you want to be a little bit more on the rah rah side, but you also want to be transparent. That's the key, right? So if something went wrong, so let's take the pandemic. That's a great example, right? Okay, yeah, programs shut down across the nation globally, right? And so if you don't if you didn't put that information how you were adversely affected by your programs getting shut down, are you really being honest and transparent? Okay, right? But the spin on that the marketing spin on that is we were not able to address program A, B and C, which historically we've done, you know, a fantastic year over year for decades, but we pivoted in a time of crisis and we created a new program and did ABC, right? So that's that's how you can have that spin. Okay, yeah, I like that. I like that you helped us to understand that because rule number one transparency or I should maybe not rule but goal, you know, getting that piece in place, because that filters across all aspects of the donor relationship and stewardship and into your point that the different people that are that are watching. Now one of your next steps, step number two, which I can't wait to hear more about this, is that you say earn a guide star platinum seal of transparency. There's that word again. How do we do this? Yeah, so remember at the beginning I told you that there's all these different types of charity watchdogs. Guide star, we recommend starting with guide star because you can actually control how much information you want to share with the public out there. So guide star has four levels of seals of transparency. It starts with bronze, then silver, then gold, and then platinum. And then depending on how much information you're sharing, it's a progressive elevation from bronze to silver to gold to platinum. And, you know, when if you take a look at it, and if you read kind of the guide star self-help like how you should, you know, fill all this information out, you can actually go from a zero information transparency profile to a fully platinum transparency profile in less than an hour. They say 45 minutes, I'm going to let you take a coffee break and say it's an hour. And so, you know, the bronze takes five minutes. All you need to do is provide very basic information. What's the organization's name? What's their mission? Who's the primary contact and information on how to reach you and how a person or an organization can donate? And then the silver is a little bit more information. The gold standard wants a little bit of financial information, a little bit of information about the board, leadership demographics. And then the platinum is really not that hard either. They want you to share a fairly recent strategic plan, answer a couple of gold questions, and then provide at least one financial metric. Wow. You know, I love this because I have to admit to you when, you know, seeing these on websites and on the websites of our guests that appear on the nonprofit show and how you might hear somebody use this phrase, well, we've achieved the platinum seal of transparency, it seems like it's a really daunting and challenging thing to do. It's not. It really is not. I mean, if you go out there and they've done such a beautiful job on their website, you can go out there and it really gives you step-by-step guidance on exactly what you need. So even before you log in, you can, you know, pull all your information beforehand and then just go in and update it. And here's the thing. As soon as you register with the IRS, you already have a profile out there. GuideStar automatically creates a profile out there. You just have to go and claim it. So it's not like you're making a request that they have to set it up. It's already out there. You just have to claim it. It doesn't take that much effort to claim it. There's a whole process on there that you can do. And then you just start filling out the information. And here's the thing. You can start with bronze. Let's say you don't have all the information. You know, start today. Start with bronze. Make it a goal to increase your level of transparency once a week. Spend 15 minutes once a week. And by the end of the month, you'll have a platinum seal of transparency. I love it, Tanya. You're my soul sister because that's kind of the way I think about these things, you know, do a piece, do a piece, move forward. And yeah, it's just like anything, you know, I'm like that too. You know, if I think of something as a big project, it becomes that black cloud that follows me. Right. Oh my gosh. I love it. Now, before we go on to step three, you know, things change. So I'm assuming is this a seal that only lasts 12 months or a calendar year? Or how is this managed in essence by GuideStar? Great question. So what we recommend is every best practice dictates that every accounting department at a nonprofit organization should have a finance calendar. And in that finance calendar, you know, you think of the obvious things, right? You know, reviewing your audit, planning for your audit, making sure your 990 is taken care of, you know, you have all the grant reporting deadlines. But we also recommend at least once a year, go out and look at your ratings across the board and especially your GuideStar rating. GuideStar is making enhancements every year in terms of questions that they're asking, because they're trying to tap into what the trends are. So one of the things we didn't talk about is remember, like these nonprofit charity watchdogs, they're starting to think about other things other than just the basic financial metrics impact all of those types of things. So GuideStar is adding questions every year. And when you go into renew the information, they actually put a little asterisk on all the new questions. So it's not like you have to hunt and, you know, look for what the new question is this year. It's highlighted for you. So you just go out there, figure out what the new question is, go find the answer and plug it right in. And so we recommend at least once a year, if you don't change it or update it every two years, you will drop off on your seal of transparency. Okay, cool. That's a good thing to know. Okay, well, now I'm really interested to have you dig deep into step three, because step three is is not necessarily one that I would have automatically thought of. And that's tell stakeholders about the raving. It kind of goes back to what you said, or what I heard you say in the very beginning, that your 990 should be looked at as a marketing tool. Yep. So, you know, really tell people about it, you know, it's, it's kind of be a little bit braggy about what your organization has accomplished through the year. So you're doing all this hard work in your 990, and you're being careful about the information you're putting in there, and you're doing your annual newsletters and your, you know, your websites out there. But it's more than that these days, it's social media, it's, you know, making sure your websites were fresh, interactive, sharing with people when you get the seal of, let's say today, you only have bronze after this show, you're inspired to go out and get, you know, a platinum seal of transparency, make that a marketing event, make it a, you know, a reason to reach out to your potential donors and tell them about it. Make sure those, you know, those seals or your ratings, if it's great, put it near where your donation links are, or embed it into your conversation about your annual, you know, newsletter, say this year we upgraded from a bronze seal to a platinum seal. There's so many ways to tell a story. Social media is all about telling stories. So make sure your website is fresh. Make it engaging. Make it so that people want to come back. Think about the things that the charity watchdogs are looking at, right? They're looking at financial metrics. They're looking at impact. They're looking at community engagement. They're looking at transparency. Put that information on your website. Make it obvious so that when these charity watchdogs are coming to your website, looking at your newsletters, looking at what you're putting in your 990, the information is easy for them to grab, to re-share and do their rankings and their ratings, but also for your would-be donors. And then one additional piece that I started telling my clients and the clients, nonprofits that I teach is become even smarter, be ahead of the curve. And when you have that platinum seal and you have those great rankings and ratings with these charity watchdogs, teach your donors. Tell them why you are the best and why they should always keep you at the top of their donor list. Because guess what? Just like you're looking for new donors, there are other nonprofits waiting in the wings, trying to glean a dollar or more from your donors. And you want those, once you, it's so hard to get those donors, you want to keep them loyal. So you got to give them reasons of why they should stay loyal to you. I love that. You know, I think that's really wise because it also, Tanya, helps the whole sector. So it's not just about your individual organization, but you know, we're talking about this all the time, like how do we elevate the professionalism and the operations and the, you know, frankly, the credibility of our sector? I mean, how do we do that? And so I love that you've talked about this really, really important stuff. Now, I've got to say one thought I've had and I, I've got to ask you this. I'm a little surprised that it's the finance department pushing this. It seems to me that this should be something that development is doing or development working hand in hand with the finance department, because they're the ones talking with those donors. But so I'd love to get your opinion on that because absolutely. And it really kind of comes back to why we started talking about it, right? So, you know, we try to say that your CFO, your controller, especially if you have a YPTC controller or CFO in your midst, we want to be more than just the number cruncher. We'd like to do the analysis. We want to be your trusted advisor, right? And so one of the things that we see is some of these analytics that we're doing that we're presenting to the board in our monthly financial packets, that's what the Charity Watch Dogs are looking at, right? And so as a development director, you're more focused on who do I strategically go out and get, but we're trying to help the development director have the tools that they need to speak intelligently and eloquently and financially savvy so that they do convince those would-be donors and grant makers to give money to them versus another nonprofit. I love that you said that because, you know, we see this too often. Those development teams are like off in their own area. Accounting finance is off in another area. Now with work from anywhere. We're together. And I love what you said. You know, the information that's there needs to be shared in use. Super cool. Super cool that you came to us today to talk about this because you gave me a completely new perspective and I gotta say in more than 600 shows, I've never had anyone talk about this the way you have here today. So that's just been amazing. I know that there's so much more that YPTC shares and I just want everyone to know that there's a really cool piece of the YPTC.com website and it's called Accounting Resources. And before you're like, out snoozer, it's not at all just about numbers. It's fascinating, fascinating information. Everything from, you know, how to communicate numbers to your board, how to share information. Got some great articles about digitally presenting information and how that looks. Really cool, really cool information. And it's remarkable because it's free. You don't have to be a client of YPTC to get access to this information, which bravo to you all because this is really powerful stuff. So YPTC.com, check them out for that information. Okay, Tanya, you've been just fabulous. How was your first time on the nonprofit show? Oh, I'm excited that I was able to make you jazzed because that was my big fear that you've already heard everything after 600 shows. And, you know, listening to, you know, I did my homework too and I listened to Angela and Jen before they came. So I was really excited that I was able to tie in some of the things that they did to reinforce, like it's all connected. It's all connected. You know, I think that's one of the things that I've learned from you, your team is, and from you, even today it's been amplified is that accounting, we tend to seize up. We're like, Oh my God, numbers, spreadsheets, you know, and but yet it really is where we need to be thinking it's more of a strategic aspect. And so it has implications far greater than just, you know, a balance sheet. So I love that you could come on and share that. Now, you told me that you have to get going right after this episode because what are you doing, my friend? So I'm the finance chair for a local organization called Memorial Park Conservancy. And today we're reviewing the audit draft so that we can review, approve, and then present it to the board next week. So not only are you practicing, you know, in the sector, which I'm very grateful for, but you're practicing in your community. So bravo to you. Bravo to you. That's not an easy thing. Well, Tanya, we hope we get you back on again. This has been an amazing process for us to share this time. Nonprofit Power Week only happens a couple times a year. Jared and I are very, very specific about how we want to take our content and share information and put it together in a way that really is a deep dive. And so this is really an exciting thing for us. Again, we want to thank all of our partners, sponsors, Blue Morang, American Nonprofit Academy, Your Part-Time Controller, Be Generous, Fundraising Academy at National University, Staffing Boutique, Nonprofit Thought Leader, and the Nonprofit Nerd. Okay, Tanya, I'm gonna let you go because you have a board meeting. Thank you, Julia. It was great to spend the afternoon with you. Hey, it's been a lot of fun. And as we like to end every episode of the nonprofit show, we want to remind ourselves, our viewers, our listeners, our guests, to stay well so you can do well. Thanks so much, everybody. We'll see you.