 Welcome. Thanks for joining us for the nonprofit show. We are so glad that you're here either joining us live or watching or listening to one of our recordings. If you joined us for the green room chatter, you probably think that RJ and I are family and we're pretty darn near closed. RJ Caswell joins us from Infinite Giving. He's been on before so he's not a new face, but he is one of our favorites. Today is going to talk to us about managing nonprofit reserves. So before we dive into that conversation, we of course want you to know who you're looking at or listening to Julia Patrick, CEO. She created this wonderful opportunity called the nonprofit show. She's CEO of the American nonprofit and is enjoying a day off. So good for you Julia self care is important. I'm Jared Ransom, your nonprofit nerd CEO of the Raven Group honored to serve alongside each and every day as the co host of the show. And again, we are honored to have the sponsors, Bloomerang American nonprofit Academy Fundraising Academy nonprofit nerd, your part time controller, the nonprofit Atlas nonprofit thought leader and staffing boutique. These companies truly keep us going and growing but not just us here at the show and the nonprofit show. Each and every one of you because they exist to help you move the needle on your mission forward, however that looks for you and in your community so please do check them out they're amazing companies, amazing supporters and they are on your team. Believe it or not, we are marching towards 600 episodes and in our green room chatter RJ said, can't believe you do this each and every day and I said me either like can you believe, but it really is nice so if you missed any episode or you want to go back and repeat you're tired of binge watching Netflix you can binge watch us on Roku YouTube fire TV as well as Vimeo and if you're a podcast listener like myself, you can also queue us up on anywhere you stream your podcast but just go ahead and queue up the nonprofit show. Well RJ thanks for sitting and waiting so patiently as we jump into this conversation. I first want to say welcome back. Oh, it's a blast. It was a privilege to be invited back. You never know. After one time, you know what happens you get invited back maybe it's a sign that it went okay. It went okay. The first date was good and we're going to have more of those but definitely you know first impression was phenomenal. You joined us previously with Karen who is the founder of infinite giving. I got the pleasure of seeing both of you and many more of your team members at the AFP icon conference. But since that conference RJ, there's been a little bit of news about infinite giving. Tell us to your horn shoot from the rooftop. Your name was a world changing idea for 2022. Talk to us about that recognition. Yeah, it was a lot of fun actually we found out that fast company was going to recognize us as a world changing idea for 2022 and the software category, which most of you probably know fast company it's a pre recognizable name and a high honor. We found out that we were getting recognized as a finalist. And during the conference we couldn't say anything, because they hadn't released it yet so we had to we had to wait for them to release it which happened right at the end of the conference so we're able to celebrate right after AFP icon, which is just a true honestly to Karen and the idea she had to to found this company to serve nonprofits in a way that wasn't being done before in a way that can be done really well and transparent all those things. But it sure is an honor to be to be named by fast company. Fantastic honor because when was infinite giving founded when did Karen start. Oh, about 14 months ago. Whoo. Well, amazing that that's really amazing so RJ is going to nerd out with me and we're going to have a lot of fun. But again as the slide shows here in this we've listening infinite giving RJ is director of business development so infinite giving you can find learn find more about infinite giving as well as RJ. So we're going to talk about truly, you know, investments what what's going on with our money and our nonprofits RJ we don't have a lot of time. This is really just scratching the surface, and I best confessed up to you. This is not my will house like this is Greek to me so go easy. Lay it on us like you know like you would a kindergarten there. Maybe a fifth grader right help us understand. And let's jump off the springboard here, operating cash and your nonprofit reserves, educate us on this. Sure. Sure. Well, let's let's let's kind of start at the beginning operating cash and what that actually means so operating cash is is the cash a nonprofit needs to actually run the organization day to day so you do that budget process and you start out that budget. Now there's pieces in there right you need to have money in the bank before the budget money comes unless you're a startup. And so I empathize with all those nonprofit startups around the country and I've met with actually a number of them in the last couple months and I've helped start a lot of nonprofits right you start from zero. And so you start spending money as soon as it comes in but once you get up and running, and you have your budget you need to have enough cash in your checking account your nonprofit checking account to be able to handle all the normal expenses that come with running a nonprofit. And for me, that would be like my checking account my personal checking account, what it just takes to run a household with 14 ages and my wife and I and what happens on a day to day basis it's where our paycheck gets directed positive to. And that's the operating cash just kind of those day to day expenses. It makes a lot of sense to you have pretty large grocery bill if you have that many. And with inflation and you put you put a little bit more in that budget now. That's right you've got you know car transportation whatever that looks like again looking at inflation, which is interesting right and so let curve ball here let's talk about inflation, and how that might be impacting how we consider our operating cash and our reserves being by way of this right now. Well I mean I think it's impacting everybody right it's impacting our personal households I mean when we look at our grocery budget and our gas budget, just along those two items. When you're up, you know, six seven right now overall inflation is what 8.2%, I might be off a little bit over 8% still in it. It's been holding that way for a couple months. But our purchasing power is that much less. And so grocery store gas station is where I personally feel it the most. So nonprofits are feeling that as well and purchasing whatever it takes in their normal day to day life as an organization, their purchasing power just decreased. So that they probably the pressure on development teams to make sure everything's coming in when they hope it would come in your operating cash is is at a sufficient level to handle those fluctuations. Yeah, and you mentioned that operating cash is really everything it takes to run your organization. Many organizations work on the you know the fiscal calendar or sorry the fiscal year end. In July and so I'm sure this operating conversation programmatic conversation is happening right now so this is very relevant, very timely. What do we need how do we you know, incorporate current trends and what's happening in our world as we continue to navigate, not to mention something I kind of plugged in your ear earlier that I wanted to ask about is how political campaigns might also impact kind of our overall finances are budget and again not to get political but I know every single time there is a presidential campaign, it really shifts the philanthropy landscape and so I'm sure we need to start you know it's it's not a campaign year but it is a campaigning year right like it starts so early I already want to say stop stop with the messages but but they're coming so I'm sure that impacts you know are are operating and reserves as well. But the next thing you want to talk to us about truly is that investment best practices and so what exactly does this include RJ. Sure sure so we come I kind of come back to that example of just our personal checking account, but the next part of that would be our savings account. And hopefully, most of us have savings account that that are needed they're not day to day expenses, but there there's yearly expenses that come up, maybe my washing machine went out. And I need to pull from savings really quickly to go because we're going to have to have a washing machine in my house, we could probably do the laundromat we have in the past for a short season, but we want to get that filled the car. We had a transmission go out last year in our car, and you know three grand out the door we needed to pull that from savings that wasn't in our normal checking account ready to go as a normal expense so for a nonprofit I'd say the same thing you really want your reserve start there. With kind of your savings account, and that's probably 30 to 60 days of cash, operational reserves that are in maybe maybe a savings account maybe a money market account, something you have quick access to as a nonprofit so when something comes up. It could be cash flow just for payroll because large donation didn't come on time you and I talked before you know, if you're trying to counter year out from a budget, you typically also your finance folks are going to want you to kind of do a monthly spin where there's big months where there's more spend and less spend and whereas more donations come December is usually a really high donation month so how do you make that spread out across the year. All those things that are not my expertise but I've been a part of for a long time, all factor into that so that 30 to 60 days of operational reserves, that would kind of be your first and you know money market isn't in. It's an investment because you're getting a return low return, but you have quick access to it. So I'm surprised you said 30 to 60 I would have thought that we probably need much more than that. Well, I think the next step is yes, the next step so 30 60 days where you have really really quick access to it probably after that 60 days you want to start building a longer term reserve fun and that's where I think the investments really come into play where you could build. I would say, eight, nine years ago, it seemed to be rule of thumb you wanted three to six months of reserves as a nonprofit. Again, 30 to 60 days somewhere quick access after that. All the nonprofits I've met with in the last year, and it might be because of coven giving was was a surprise and they have cash for the first time I sit on a board of a nonprofit here in Charlotte and they actually got a huge grant from the city of Charlotte from their coven fun. Unexpected it wasn't in our budget and our board quickly decided with our executive director to say hey that's the start of a reserve fund, and it actually ended up being like eight months of operating cash that we could set aside. So it seems to be the nonprofits we talk about now after they have that 30 60 days are really putting away sometimes 69 even 12 months I talked to two nonprofits in the last probably six weeks that both have 12 months of reserves now right everybody's on a continuum, everybody every nonprofits in a different situation but I think the principles are the same, be able to plan. And the reason I think investments come in, and you and I talked about it is you have your checking account, you have your savings or money account, and then you have your 401k or 403b. If you're a person for me that's a 403b got a couple different ones and put them in our array, but that's all invested in the market. And yes, stepping in the market is risky but we also know for me to retire. I'm going to have to be in the market to realize long term gains over time the markets in a tough spot right now, but we know history proves out that over time, that's going to go up. And for a nonprofit, I would say the same principle those six nine 12 months, you want to get them in where they can work for you because you're not touching them right now. At the end of the giving we would say you want to put that money. Invest the funds that you're not going to need in the next year. That's why we think that 30 to 60 days you probably want quick access to. Liquid accessible. Exactly. Now depending on who you use, maybe a plug for infant giving maybe not. You still can depending on who you use to invest can have access to those funds. Some places that's more cumbersome than others. Part of the reason we exist is to make that easier because we're using technology right. It's still not the same as literally instantaneous with a savings account to a checking account. I mean that would happen that day. With us who still take a couple days but anything over a year. Let's let that grow, just like you would your 403 be. I love that and I love congratulations you know, first of all thank you for serving your community and being on a board that's fantastic. Congratulations to the organization for for not only receiving that money but acknowledging hey, this is our first little bit that we're going to put away and it's going to help us grow. So RJ mentioned and I kind of kind of went blue by it but the political campaign and and how that might impact our future. Any thoughts on that as we move forward in the next you know two to three years, how that like pull out that crystal ball and shine it up and tell us what can we prepare for that is. It's a great question. I think it's incredibly difficult question. And I'm sure somebody much smarter me can actually start looking at data. There's tons of data nerds out there and pulling donor information overseas and during kind of the, especially presidential elections but any elections kind of what that does and which which party is coming out on top or not probably influences that data as well but I would say, at a bare minimum yes, we're going to see an impact depending on what sector you're in as a nonprofit. What service you provide. Those I think all factor into those debates, as well as law. I mean every. Yeah, I think every season we hear more about this tax deduction. Will it stay what will it shift will it change for donors. Will that change will the standard deduction stay will it will it go up let go down and we saw that shift a couple years ago politically as well. When some donors were making one large gift. That was really a two year gift for making it one year because of taxes. So I think that tax implication for the donor. Not that I'm a crystal ball. What, how that shapes out politically I think really does impact nonprofits, especially on their budgets and those bless their heart those advancement and development folks who are in it every day, trying to navigate that world on the donors. I knew you could fit in a bless your heart. I just. It's a great I can't even stop it. I know no it's fantastic. Well thank you for for riffing off that you know I know neither of us are really the experts when it comes to political or presidential campaigns. But you know infinite giving is fantastic really with the investment investment you talked about best practices. What are other options we might consider and really sink our teeth into when it comes to other options for investing. Is there anything else we really need to like have our finger on the pulse RJ. Sure, I mean a couple other options I think, again, trying to get a good base, whether it's individually and your personal finances having that big strong foundation. The same I think it's true for nonprofit, having really skilled executive directors and finance folks and board members to know what is the foundation we want to lay what is that operating reserves what are the capital reserves not every nonprofit needs capital reserves but someone need to look at capital reserves that they have capital needs buildings facilities. Cars trucks. That's that's separate than operational reserves. So I think capital reserves or another thing that not every nonprofit need to look at, but some will definitely need to look at a capital reserve fund that most likely be invested because you're going to have a schedule for investments that goes out sometimes five to seven years for roots and parking lots and HVAC units and so you actually, it would be wise to look at it potentially investing capital reserves because you're not going to draw on them all the time. Your fleet, if that's something vehicles right your own personal transmission technology that has been a big one, big one, and it's not going away that's going to be increasing right. I just talked to an IT consultant the other day for for an organization and he came back with a $400,000 quote. Now he did give us the caveat that is not a nonprofit right so he really just went out to the market, took a look at technology, the, you know, advancements that this organization needs and he said, here it is and I was like, whoa, my job, you know but that's that's ever changing. Um, so this is very valuable and I appreciate you bring this down to a kindergartner fifth grade level for for me to understand what I need to that's what I need. Well hey you're doing a great job. Who should be having these conversations at the organization like who do we need at the table. So, great question we actually talked a lot about this and if the giving team at AFP icon for folks who are coming by our table and it was really interesting when we were talking really about kind of our tools for stock donations crypto donations and endowments and endowments is another one you said other investment options after you have a good foundation I put a plug in after you have, you know, operating cash set aside your savings account set aside and your reserve account set aside. Great things open up right for potential for endowments and other things like that. That thing get really exciting again from legacy and for the longevity of an organization. So endowments but we were talking about people who came by the booth. But again, it was a fundraising right so most were fundraising professionals. So anytime we were talking reserves it was, oh, I need to pass this on to my CFO my finance director. And sure enough I followed up with a lot of people who asked to be followed up with that AFP and sit them some more information and it was this is awesome I got to get it to my CFO. And so I think you kind of have the split for for folks that need to be in the room you have kind of, I think donor development leaders need to be in the room you have course executive director and then your key finance people, and those are sometimes two different worlds, but I think they're really really important to talk together, because if they're not on the same page. It can be really tough for the organization to advance their mission. Because we talk often about those silos, you know, where it's program it's development it's finance, you don't really mingle and, you know, in exchange information as regularly as maybe it needs to be done. What about a finance committee as part of the board is that something that infinite giving is, is, you know, really discussing with is this finance committee or an investment committee task force like, where on that board governance level should should we include. So anytime I think when you're talking about investing money, it's going to go to the board right, I would say to begin depending on the size of your organization, most medium size nonprofits, even some on the small size are going to have some sort of finance subcommittee that are helping already look at the reports so I think it would start there going, what do we want, how do we approach this and that finance committee which we work with we work with a lot of finance committees was meeting with one last week, whether they want an actual investment policy they just want to make sure everything said line and then typically of course we go to the board and the executive director to go. The board let's let's invest and let's let's let's do this but I do think that those those finance folks that often can get a bad rap right are so critical to grounding the organization setting a foundation to really let everybody else run really hard at the mission. So another question is, how long is this process like if we were to say, okay RJ, we're drinking your Kool-Aid we know how you said bless your heart so we're. Um, what's the process look like what's the timeline. So, so the actual timeline to set up an investment account with us and again we're using technology so it's quicker than historically has happened, we can get you set up in 15 minutes. Wow. Okay, so set the count and then it would take a couple days for the account to be opened, and then the money would be invested so all told what three four days. Now, that's the easy part. Right. So the work is before that moment in time, and that's getting everybody on the same page. And that literally can I had one customer that took a month. I had one customer that took three months, and then I have other nonprofits I'm working with now that it's already been four months and I feel really confident we'll get there but it might be for more. It's really at the pace of what's your board meeting cycle. What's the margin for folks in their day to day to look at this. So how long it takes to get to that moment is really really varied. But we can say confidently once you get to that moment we can do it really quickly, really efficiently and really leverage technology to make it a really good process for you to actually get invested. I've noticed I started my business 2009. I've noticed this hurry up and wait mentality in the nonprofit sector. So, you know, the organization knows it's a great opportunity they know they need to take action they're not always as agile as nimble as others would like them to be. So it's really often that hurry up and wait but it takes whatever time as you said, you know, the organization needs to take do their due diligence best practice I always say you know talk to a couple of different companies you're getting the information. But if you're looking for good people great characters integrity, respect, trust, definitely infinite giving is your team. RJ Caswell again thank you for joining us getting super nerdy I still need to get you some put on those glasses right there. That's right. Just so glad you can join us. How do we go about contacting infinite giving is a you that we need to speak to do we go through the website talk to us about how we can contact the company. Any of those ways you can jump on the website fill out a form we'll get contact with you my emails RJ at infinite giving calm. You can find me on LinkedIn. Send me a DM send the connection request would love to connect with you there as well we make as easy as possible. Shout out to your LinkedIn man you've got like really good post and I was going to message you and say who does your post like, do you get prompts each and every day or they just coming from you naturally. I love to think there was some rhyme reason they that's just something I've got a note app on my phone I've an iPhone and it's a note app and I've just been kind of collecting themes and personal experiences and jot them down and in the morning. For me it's been honestly a just a good rhythm. I'm not have not historically been a writer. And this has just been great for me personally so anybody else benefits that's awesome I'd love to serve, but it's been a great exercise for me so I just opened up my note app and look through themes and ideas and in right. Well they're very authentic and they definitely resonate with me. So I love I love what you're putting out there definitely for everyone else check out RJ on LinkedIn very active and the rest of the team to so. Thank you so much, and thank you to Julia Patrick that created the nonprofit show and allows me to have fun and play with guests like RJ. It's really good and we can connect and have some friendly banter. I'm honored to be here, and we are so honored to have the continued support from our presenting sponsors those of you watching you can see them on the screen but those of you listening to our podcast version. I'd like to give a shout out to blue marine American nonprofit Academy fundraising Academy nonprofit nerd, your part time controller, the nonprofit Atlas nonprofit thought leader, as well as staffing boutique. Now is a great time to check out these companies they are fantastic they're on your team in your community, helping to drive your mission forward so RJ again thank you for bringing this down to a level that I can understand and sharing your your valuable time and expertise with all of our guests. I couldn't be more more privileged to be here thanks so much Jared. Absolutely and congrats the entire team for this recognition that fast company just really thrilled to see the growth of this company and again really really good people so. Thanks to everyone who joined us either live or the recording version we are honored to have you here for the nonprofit show. We hope you'll join us tomorrow and until then we always ask you to please stay well, so you can continue to do well.