 Welcome to the non-profit show. We are so glad that you found your way here, whether you're here as a first time viewer or listener, or you're back and you are one of our long time loyal viewers and listeners. We're glad you're here for another episode of the non-profit show. Today we have Chris Bavillac with us. He is director of finance and operations at Chasen & Company to share with you and me and all of us key issues for non-profit startups. We're going to ask Chris to set the tone for that here in just a little bit. But before we do, we want to remind you who we are. Hello to Julia Patrick, who is enjoying a much needed rest this week. So thank you for allowing me to take the reins and the ropes and lead for you today. I'm Jarrett Ransom, non-profit nerd and CEO of the Raven Group. Together, we have produced nearly 900 episodes. And I am so very honored to have the ongoing support from our partners are presenting sponsors, which include Bloomerang, American Non-Profit Academy, Your Part-Time Controller, Non-Profit Thought Leader, Fundraising Academy at National University, Staffing Boutique, Non-Profit Nerd, as well as Non-Profit Tech Talk. Many of these companies truly have been with us throughout this journey of producing 900 episodes, and we are so grateful to have their support. And we also want to remind you that if you missed any of the episodes that I just mentioned, it's OK, we've got you covered, my friends. So you can find us on different platforms. The latest and greatest is you can download the app. So if you're watching us, you can scan the QR code with your smartphone. But you can also still find us on broadcast and podcast platforms. So wherever you stream your entertainment, you can pull up the non-profit show and we're there. And I also want to share with you that our guest, Chris, has been with us before. So you can actually go back and find Chris's previous episode that he's been with us. Again, for those of you watching and listening, I want to reintroduce to you our guest for today, Chris Babalak. And he, again, is Director of Finance and Operations at Chasen & Company. Welcome to you, Chris. Thank you very much. Really appreciate the opportunity, 900 episodes. That's really, really amazing. A lot. I'm sure there's tons of great information out there. Lots of great information. Yeah. And thanks for being part of the journey as well. Tell us a little bit about yourself, Chris, and a little bit about Chasen & Company. Sure. My entire career has been working for or with non-profit organizations. I've been with Chasen Company for about seven years now. We provide virtual outsourced accounting services for non-profit organizations. So we have clients and team members all over the country and are really, really enjoy serving this space. I'm really thrilled to be here today because I think it's so important to address what's needed for new non-profits, startup non-profits. And if you're watching today, you're probably in the process of starting a non-profit or you've done some, done so recently. And I just want to say, hats off to you. You have obviously a passion for the common good, a passion for the mission that you're pursuing. And again, as someone who's worked with non-profits my entire career, I know you have a challenging task, but also a task that can be incredibly rewarding and you're to be commended for that. I also know what you're what you're probably focused on these days. It's how to deliver your mission effectively and how to how to serve the people you want to serve, how to attract stakeholders, including board members that are going to help you lead your organization. And probably most importantly, how I find some money to do what I want to do. And that's all incredibly important. And because you are doing all you're doing all that, I want to make sure everyone is I'm not here to tell you that accounting should be the most important thing you should focus on. It's not. You've got all those things that I've just mentioned. But what I am here to say that if you pay some attention to your accounting and finance function and you start to start with some good habits now, they're going to benefit you down the road when you when you start to scale up your organization. It's much easier to build things now and scale them up as you grow than it is to start from scratch. Yeah, several years down the road and try to catch up. Well, Chris, I love that you've laid the groundwork for this. So thank you for doing so because you're right. Oftentimes, organizations are built out of passion, not because they say, you know what, I'm so eager and excited to create an accounting system that's going to work for 501C3. So we have Chasen and Company to help and support us. So tell us a little bit more about these startup and good habits. You have a couple of things listed here. For those of you listening, I'll read them aloud, but it's things like wise resource utilization, informed decisions, compliance and transparency. Dig a little deeper on those. Yeah, and I think I can agree with you and say that no one starts up a nonprofit because I want to do accounting. And in fact, we're pretty darn certain that one of the reasons we exist is because most people do not want to do accounting. I'm very grateful for you. I will tell you because I am not a nerd when it comes to accounting. We have those. We have become a nerd. But anyway, yeah, these are these are some of the benefits that you can derive by starting to build good habits. Now, again, wise resource utilization, you're going to have limited resources as a nonprofit, especially as a startup. So you want to make sure you're using your resources as as effectively and as efficiently as you can and having having some accounting, having some finance procedures in place will help you do that. Also, the data you you keep track of will help you make informed decisions. Your your gut can only take you so far. And sooner or later, you're going to have to really look at data and ask data to help you make the smart decisions that are going to help your your organization become more effective and grow. As a nonprofit, there's lots of compliance that you have to follow. It can be at the federal level, the state level, even the municipal level. If you have funders, they might have compliance that you have to follow. So having your finance and accounting in good order will help you meet those compliance requirements as well. And the last thing I like to talk about is transparency. And we've done a counting on Chasen episode on transparency and blogs on it. So you can look those up, but becoming a transparent organization and learning how to do that early will help build credibility for your organization as you're going out there to to pursue your mission and to raise funds to deliver your I'm sorry, to deliver your mission. It will build credibility. It will help people trust you as well. So becoming transparent is is critical. Absolutely. That's a big thing, too, that I know savvy donors are looking at, you know, how transparent is this organization when it comes to their financials, even their strategic planning, things like that. So starting out with a solid, you know, habit structure, it makes me think of the habit stack, you know, I don't know if you read that book. I think it's James Clear, but it's all about stacking habits and making sure we're doing, you know, the right thing constantly and just building, building up the muscle for that, which also takes us to creating a foundation. And I'm going to say a solid foundation, right? And so within this foundation, you're going to touch on internal controls, the policies and procedures, COA and accounting software, as well as charitable licenses. So what more does this look like? You know, we want to start up and have good habits. And then we really want to create a solid foundation moving forward. Yeah. And these are some of the these are some of the good habits, more specifically. And we're not saying you have to do everything right away. You have to do what your organization requires at the time. And then be prepared to scale it up as your organization grows. A great example is internal controls. If you're a one person nonprofit, you are the internal controls. You are. But as you grow and as you bring more people into your organization and they're involved with your operations and your your your financial activity, whether they're whether they're excuse me, volunteers or whether they're paid, you have to start thinking about internal controls. First and foremost, it helps to mitigate fraud prevention, which does become a concern of nonprofits as they get a little bit bigger. Internal controls in tandem with policies and procedures then help you to identify errors, to identify problems, again, mitigate risk. And there are things like policies and procedures on budget preparation on how funds are going to be spent, reimbursements, financial reporting, all of these things that will help bring some order to what you do, some pattern and rhythm to what you do, but also make you more effective as an effective as an organization. So again, depending on the size of your organization, you may not have to do a lot right now, but you have to think about it as you involve more people in your organization. So that's internal controls and policies and procedures. The COA or chart of accounts is basically a way of categorizing the revenue and expenses for your organization at the most at the most fundamental level, and it's important because you need to understand what types of revenue you're bringing into an organization. Is it charitable donations? Is it fee for services? Is it member dues? Is it funding? Is it grants? That type that type of thing and the types of expenses? How do you how do you spend your money? Because again, as you grow, that data is going to be important to you to understand your organization and how you can be more effective. Then there's accounting systems and we get asked a lot, when, when do I need an accounting system? And it's I'm sorry, it's an it depends answer. If you don't have a lot of financial activity going on right now, money coming in, money going out, you can probably handle handle your your track information in an Excel workbook. And if you have an Excel workbook with one tab that's for revenue coming in and another tab for revenue going out and you're keeping track of the dates and who it came from and what type of revenue it came in, what came in and same thing on the expense side. That may be all you need right now along with carefully reviewing your bank statements to make sure that that all makes sense and that everything is reported. You can do that for a certain amount of time. But if you are an organization that has multiple sources of revenue or needs to track multiple programs or has have funders and grants, whether they're private foundation, corporate or government, you may want to seriously think about having an accounting system because it's going to get more complex very quickly. And there's going to be reporting requirements involved as well. Well, and there's I think there's a lot to think about when it comes to that chart of accounts and really looking at, you know, I mean, I started my business, honestly, Chris, as a grant writer, right? And so really looking at these are restricted funds for a specific program mostly and so making sure that we account for that properly is really critical in creating a solid foundation for moving forward. So I appreciate the Excel, you know, spreadsheets and looking at, OK, if there's going to be a little bit more complexity, we also want to consider a chart of accounts and a system that's going to work for us. Exactly. And and you want to make sure it's accounting system is set up as a nonprofit accounting system, because we've seen plenty of accounting systems that are set up as for profit for nonprofits. And of course, that's not the kind of credit that doesn't build credibility for you when you take your financial statements onto possible funders. A couple of quick things. Then charitable licenses, if you're going to be raising money in different states, you have to look at what the requirements of those states are as far as registering those states to be able to raise money there. And that becomes more and more prevalent as people are doing things on the internet and crowdfunding and those types of things. So that's something you need to look at if you're raising money. And then audit requirements. Every state has different audit requirements for organizations that are incorporated in their state. So you need to understand what the rules are for your state and at what size are you required to have a review or audit? One final one one additional note to that, though, if you are going out to raise money, particularly from grantors, funders, they may require that you have at least financial statements reviewed by by an audit firm or a full full audit done to be able to to receive money from them. So is there a threshold, a dollar threshold for that that we're looking at? That's what's different in every state. OK, it's always different. Yeah, like, for instance, I believe California is two million dollars in revenue, but Tennessee is five hundred thousand dollars in revenue. OK, so you're right. It really it depends and it's across the gamut. So really knowing our our local community would be would be important here so much to think about. And even my eyes glaze over a little bit. I will witness to you, though, Chris. I'm part of a I want to say it's a Facebook group and it's like accounting for nonprofits only to learn more about it because there is so much to consider when it comes to accounting and because it is not, you know, my zone of genius, I feel like I'm I'm always thirsty for more knowledge here. So share with us some more knowledge when it comes to tracking revenue or maybe even transactions as a whole for having effective reporting. Yeah, it's and this is, you know, I started to touch on this even if you're keeping an Excel spreadsheet or you're keeping an accounting system with a proper chart of accounts and and tracking all of your your revenue and expenses accurately and and carefully, because again, when you when you have a little bit of activity, you can kind of handle it. You can get your head around it. But as you start to get bigger and money maybe comes in multiple ways and in different patterns and expenses go out the door in different time frames and all that, you want to have good data to make make decisions, to make decisions about your nonprofit. And it's absolutely key to be able to track transition transactions accurately to be able to do that into an accounting system that's set up properly again for your for your organization so that you can then generate the types of reports that you need to make decisions. I mentioned earlier that one one case for having an accounting system maybe that you have multiple programs to track. Well, even even some of the most basic accounting systems let you track programs separately so you can understand the revenue and expenses just for each of those individual programs and you can monitor them and know which programs are doing well financially, which programs are not maybe living up to expectations. And you really can't after a while, you can't do that effectively, you know, on an Excel spreadsheet and and and it really does come down to coding, coding your transactions to the natural accounts, meaning where the money came from or what you're spending the money on and to the maybe the different departments or programs that the money is coming in for and the programs. You know, that is being spent on and that again, I'm just going to accentuate and that becomes even more critical of grants because generally a grantor will want you to track very specifically what's happening to their money. Absolutely, down to the penny, you know, and some of it. I always say, you know, if it's a a grant that requires an invoice because it's a reimbursement type of a grant, I I call those a contract. It could still very much fall within the grant, you know, guidelines or, you know, kind of like genre, if you will. But all of it is really to the T and it has to be so perfect. I've worked with many individuals, you know, that that haven't tracked the grant or it gets down to reporting time, Chris, and they say, oh, gosh, we've not even spent this money. Right. And I think how does this happen? Like, I'm always eager to spend money. Right. How do we sit on this cash and and we don't spend it until it's it's kind of like, you know, a fire drill. Do you see this happen? Oh, often. And I've experienced it personally with organizations that I've been involved with. And, you know, what happens is grants if you're very if you're lucky enough to get an unrestricted grant that you can spend it on anything, then it's not that big a deal. But a lot of times grants are restricted to a purpose, a program, a time, a time frame and and sometimes organizations just get so engaged in what they're doing and delivering services that they they either don't track or forget to, hey, we were supposed to spend this money on this and we haven't done it yet and it's the grant expires in in a month or two. And that's bad because if you go back to that grantor for money and you can't tell them that you've effectively spent them and they're not going to give you more money. So and and, you know, sometimes you go back with your tail between your legs and you ask for an extension and all that, but you can only do that so many times. So again, all of this and building these good habits is to really presenting yourself as a professional, well-run organization that handles money effectively so that people will give you more of it to fulfill your mission. Yeah, you know, and I see this not just for startup organizations. I've seen it's for some really large multimillion dollar operating budgets. And even for those like the larger organizations, I feel that it's almost too many people involved with not enough transference of knowledge, right? And so like the grant is written, the grants awarded. It's, you know, it's it's tracked. The transaction is tracked in the accounting system. And then it's kind of like we forget about it. And then the program doesn't realize that they need to, you know, spend this money. So there's there's a lot going on. And I just felt necessary. It was, you know, this isn't just for startups. This is for any size organization that that is. Yeah, it really is. I mean, nonprofits, you know, just sort of by definition are trying to do a lot with not enough resources. And so sometimes these things do slip through the cracks or someone doesn't know were you supposed to do that or was I supposed to do that? Or or they're just so busy, they don't get to it, you know? So but but you have to keep your eyes on that because it does affect how people are going to fund you in the future. Yeah. And also back to that transparency that we talked about earlier, it all kind of, you know, rolls in together. So much good insight from you, Chris. And I know we've still got a few more things to touch on. But let's talk about tax returns. We're a tax-exempt industry or sector, if you will. But we still have to do tax returns. Yes, and virtual nonprofits are required to fill out a a tax return. The most common one is the form nine ninety. And there's offshoots of the form nine nineties. You see the nine nineties, the nine ninety and I'll describe those a little bit. There are others like there's one specifically for private foundations and there's some others, but I'm not going to really touch on those. Go to the IRS website if you really want to see everything specifically and confirm what I'm about to tell you. But generally for the nine ninety, if you have receipts of two hundred thousand dollars or more or more or assets of five hundred thousand dollars or more, you have to do the form nine ninety. And to be honest, a form nine ninety is not typically something that anyone can just do and fill out themselves like our own maybe tax returns using using a tax return software. You probably will need some professional help with that, possibly also with the nine ninety easy, which is for organizations that have receipts between fifty and two hundred thousand dollars and assets that are under five hundred thousand dollars. The last one, the nine ninety and that's the most simple. It's just a postcard. There's a couple of lines to fill out. Anyone can do that if you have receipts less than or equal to fifty thousand dollars in a year because you're just getting going. You can do the nine ninety and online very quick and easily and be done with it. Is that the coupon? I remember the term nine ninety coupon being tossed around before. You know, I'm not familiar with the term coupon as much as I would do it as a postcard. It may very well be one in the same thing, but it's just a couple of lines of information and can be done in a few minutes. If it's good financial records, that's right. If you if you've done your startup and your foundational work properly and this is required, right? So like every single organization that is registered with the IRS needs to submit a nine ninety. Yeah, even like I said, even if it's you're very small, it's the nine ninety. And I mean, what what can happen if this if you don't do it after a certain amount of time, they can threaten to revoke your your 501, your 501 nonprofit status. And and they're public. The nine nineties are public. Correct. They are they are in organizations like GuideStar, collect them and make them available to whoever wants to look at them. Charity, Charity Watchdog organizations, look at them. Yeah, every all the information there is is is public information. And they will actually pull, I believe, if I'm telling the story properly, if not, please correct me. But the Charity Watchdog sites, as we so lovingly refer to them, they will pull the nine ninety from the IRS. And so we don't necessarily have to provide the nine ninety. We can. And I know specifically for GuideStar, which is now candid, but they will find it themselves, right? I mean, it's populated from. Oh, yeah, they the the organizations that want them for those purposes will go get them themselves. If someone asks you for your nine ninety, you need to provide it to them. That's that's by law. So so that information is out there. And so a couple of things. We have blogs on Charity Charity Watchdogs out there. And we did a blog on how to use your nine ninety effectively. And we also did a counting on Chasen and how to use your nine ninety effectively to promote your organization. So there's more information out there if you want to see it. Chris, thank you. And I just want to preface. I don't want anyone to leave because we still have some more information to share. But I do want to make sure everyone has heard and seen Chris Babilak, who has joined us today, director of finance as well as operations with Chasen and company Chasen and company.com is where you can find their website. It's C-H-A-Z-I-N. And I just I love that that's spelling and it's non-profit accounting and finance solutions. So please do check them out. And then the little additional nugget of information I would love for you to talk about Chris. Let us know about these video series. It's called Counting on Chasen. Would you tell us a little bit about this? Yeah, it's it's a roughly 30 minute each each video in an interview format, just like we've done today on different non-profit topics. We launched 12 topics last summer. And I think we're launching five more this month. I think it is. And there we've heard that they're very valuable to to non-profit leaders in understanding some of the different nuances of non-profit accounting and finance. And so we really encourage you to go out there and enjoy them and learn a little bit about what's behind non-profit accounting and finance. Well, this is fantastic. Again, I owned up to everyone watching accounting is not my zone of genius. So knowing that there are accounting nerds and I of course say this in such a complimentary term, I love nerds that just own up to their zone of genius. So having Chasen on our side is very appreciative and we're so grateful. Chris, this has been a wonderful conversation. Julia and I are so grateful to have Chasen and company joining us today. Chris, thank you particular for joining for the company and representing the amazing company. We also want to say thank you to our partners are presenting sponsors that allow us these opportunities. In fact, unscripted. I like to remind everyone of that because we're really grateful to be able to bring on guests like Chris and have all kinds of conversations coming up on our nine hundredth episode next month. Thank you to our sponsors, which include Blue Merang, American Nonprofit Academy, your part time controller, non-profit thought leader, fundraising academy at National University, staffing boutique, non-profit nerd and non-profit tech talk. These are the companies that have walked with us in this journey. Now, again, coming up on nine hundred episodes, we're in our fourth year and we are so grateful because we have guests, thought leaders just like Chris that have joined us here today from Chasen and company. And as I mentioned, he was on before. So if you're interested, you can share this episode, which will be up on our podcast, our broadcast, as well as our app in just a couple of hours. So if you missed anything or you want to go back and relisten, you can find us on those platforms. And then, of course, if you're interested in finding Chris in his previous episode, you can find him on those platforms as well. Chris, thank you for this honor. It's been it's been wonderful. And I'm so glad to have your wisdom in this arena. Thank you for the opportunity. I enjoyed it. Yeah. Well, as we sign up every episode, I will do the same and remind all of you to stay well so you can do well. Thank you and see you here tomorrow.