Balancing Acts (Aired 06-03-25) Master Nonprofit Funding and Impact: Storytelling, Grants and Smart

[00:00:00] Speaker A: SA. [00:00:30] Speaker B: Welcome to Balancing Acts, your guide to grow profit and scale. I'm Linda Hamilton, your host. I'm a cpa, a certified exit planning advisor, and a systemologist. And for the past three decades, I've been helping business owners look at strategies for growth and profitability at the same time, I also work a lot with nonprofits. In both cases, whether it's a business owner or a nonprofit, we have to have both profitability and mission to be sustainable. Today's guest, Sarah Arellana, is really, really great at helping us tell our story, which is one of the most critical things that we can do. Sarah is the founder and CEO of 3D Raptor Consulting, and I'm going to let her tell us a little bit about her company before we start. [00:01:21] Speaker A: Hi, Linda. Yes, I'm so glad to be here. Thank you. So in three doctor Consulting, we work with small businesses and nonprofits to help them create data driven programs as well as help them tell their story and write successful grants. And we definitely apply similar ideas to small businesses because we have found that when small businesses take that nonprofit approach of identifying a problem, creating a solution, and getting community buy in, they're far more successful. And so we take all the skills that we've honed over the past 20 years and apply them in both areas. [00:01:53] Speaker B: So that, you know, that's important. You hear about storytelling a great deal, right? For in pretty much every environment. So why do you think storytelling itself is so important? [00:02:04] Speaker A: I think the biggest reason it's important is because it makes it more relatable. You know, I think a lot about the books that I've read and the books that are and I'm an avid reader and I love nonfiction. The books that are, that are written in nonfiction just in pro style are sometimes harder to remember or learn the lessons from, whereas authors like John Gordon, who write more in a story fashion and you can remember a story and you can relate to it. And so I think whenever you tell a story and develop those characters, that makes it so much more relatable, but also easier to digest. [00:02:34] Speaker B: I think so many leaders of nonprofits in particular, they do struggle getting their message out. Right. They have a mission they have to file and, you know, it gets into compliance and other things. So what are some of the things nonprofits have to do to actually make that story more relatable, as you just said? [00:02:52] Speaker A: Right. So a lot of it is painting the scene because we have to get the funders and the donors to get that sense of empathy. But to get that sense of empathy you have to be able to walk a mile in your client's shoes. And so when you can create that picture, when you can tell that story, you can create and generate that sense of empathy. For me, storytelling has been quite impactful and powerful because a lot of times the clients that we work with, everything is confidential or you don't want to share the personal information about the people. So when you take that storytelling element, you can take elements from different stories. It's all based on truth and data, but it's not revealing anything personal. And I think that's one of the powerful things to remember. One of the best things that I saw and experienced was I was doing some work with a nonprofit who did a lot of work in poverty, particularly in third world countries. And a lot of the foundations and donors struggled to understand what that was like. And so they built a 4D model that you could walk through and you could. Every sense was attacked of what it was like, and they said that's what really opened people's hearts up because they were able to experience it. So when you tell that story, you allow people to experience what your clients are going through. [00:04:06] Speaker B: Yeah, so. So talking about poverty or, you know, many things that business owners even do with their customers, there's a certain sense of vulnerability, of wanting to protect the identity of. Of your constituents. Whether you're a nonprofit and you have a mission to serve, or whether you're a business owner with clients you help, but, you know, don't necessarily want to be shown in a light that makes them seem weak or, you know, not in a good light. So how do you deal with that vulnerability? [00:04:36] Speaker A: I think it's getting people to be comfortable with it. You have to understand that in order to be transparent and authentic, in order to truly tell the story of your business or your nonprofit, you have to be vulnerable. If people sense that you putting your true self out there, especially in today's day and age, that's when you get that backlash and that fire. So the best way to do it, what I tell my clients, is to balance it. Be data driven, show results, but do it in a way where you also bring in a story to it. So rather than saying, we said we provided 15 dinners tonight to people and families in need, you could say we had three families show up, multiple children. They were obviously tired after a long day and struggling for food. We were able to feed this many people. And so it's getting that little bit of a story into to show it's more than just data. And that also opens you up to the vulnerability without exposing you. [00:05:27] Speaker B: Yeah, that's interesting. Especially when you talk about data driven and what. What does that really mean? I think a lot of leaders of nonprofits and small business owners do struggle with what data means. How do they translate that? Because data by itself doesn't mean anything, right? I mean, you have to turn data into information and wisdom, really, so you can act upon it. So can you talk a little more about how? Like, where should they start with measuring data if they've never measured data? [00:05:59] Speaker A: Oh, my gosh. Okay, so first, let's distinguish. There's two kinds of data. There's your qualitative, which is numerical driven, and. No, I'm sorry. Qualitative, which is story driven, and your quantitative, which is numerical driven. Both of which are very, very important. But they do, and they serve different things. So the best thing to do is to remember when you're setting up your goals and your methods for collecting data to keep it simple. You don't to do anything fancy. Don't try to impress people by the science behind it. Be very straightforward. If your goal is to feed 10 people, then your goal is to feed 10 people, and you're going to show how you're going to collect that data. Maybe it's by having people sign in and you count signatures and you have copies of those signature sheets. Maybe it's by checking people off, you know, doing tick marks as they come through the line and you save those data. Collection does not have to be difficult or complicated. And I think that's where we lose so many business owners and nonprofits, because it can be quite simple and easy to share. The other thing that's so important is I always say numbers don't tell the whole story. So you want to make sure that you have a balance of that number data as well as the story data. So anytime you can combine the two in a very simple way, that's the best way to do it. Now you're probably thinking, how do you collect that? That's a combination of testimonials, success stories, as well as number of people served. And when you put all three of those together, that's when you get that vulnerable, impactful data. [00:07:17] Speaker B: Oh, that was so insightful. And, you know, as a CPA and as a systemologist, I often help people decide what data should you collect. So if you're starting with the story, if you're starting saying, okay, we want to tell this story, and you work with an advisor, you can say, okay, how are you going to prove the story? Because there Is that kind of combination of telling something, being authentic, but also being able to have some proof of that. And I think authenticity really matters a great deal today. So I'm glad you talked about that kind of moving back and forth between the two. You do need a strategy and you do need a system for deciding what data is critical for your particular mission. What is the trap people fall into when they're like when they're trying to write about their mission and they're really struggling doing that. And you know, you put it on your 990 nonprofits file nine is with the IRS and there's that front statement that says what your mission is. And if you don't just want to tell, the IRS is kind of irrelevant. But what about letting the public who can see that 990 kind of what you do? [00:08:33] Speaker A: So if I could just take it back a step. I think what's so important and so critical that so many nonprofits miss is you also need a vision statement. And the way that that I explain it is your vision statement is your ultimate long term goal. That's the problem that you're solving. And your mission is how you're going to solve that. But you also want to keep your mission and vision statement as action statements that need to be written in active language and they need to be short, not long. So often what I see in a mission statement is three to five sentences and each sentence is a compound sentence. And there's so much information in there, you can't do that. Your mission statement needs to be something very simple. And that's the key is having that clarity of being able to drive it down to exactly how you're going to solve that issue. Something I also like to stress is while you're a nonprofit, your vision statement should never change. So I guess as a business too, your vision should never change. But your mission statement will change over time. And a lot of things impact that. What's going on politically, what's going on environmentally, what is the climate doing as well as technology that's come out. So be willing to update your mission statement, but you've got to keep it short and clear and concise. So the example I always give is based off of the Jules Verne story 80, 80 days around the World. Right? Yes, I got that right. So the vision is how is getting across the world in 80 days, right? Making it. What would the mission statement be? By any means necessary, because that was how they did it in the book. But you need something that's that short and concise that every staff member, every volunteer can remember and say to you at any given time. [00:10:04] Speaker B: Oh, I love that. That is so, so important for business owners and nonprofits. And I, I use a one page business plan with both my nonprofits and my small business owner clients when I do strategic planning and coaching. And the mission statement, to fit on a page, you need that short mission statement. It's a little like a tagline, right? [00:10:26] Speaker A: Yes. [00:10:27] Speaker B: That anyone can repeat, right? Yes. So, you know, if I say, what does Sarah do? You know, there is something very clear that I can share that someone says, you know, tell me more. [00:10:39] Speaker A: Right. [00:10:40] Speaker B: What about if, if someone were, let's, let's say they're, they're just starting to share their stories publicly. What's one small step you would leave us with for whatever, whether you want to make it to a nonprofit or for a small business or both. [00:10:58] Speaker A: So I think my statement, my advice would be for both. And it would be so really be aware of the vocabulary that you're using and to use the vocabulary of your audience. So as professionals, we all have our own vocabulary. I'm sure that, Linda, that you have your own vocabulary, cpa and if you said something to me, I wouldn't understand what you're saying necessarily. But if I want to sell you something which is either a nonprofit or a business, I need to understand what that vocabulary is, what's important to you, and in turn use that vocabulary to tell my story so that you're more likely to hear it and relate to it and want to get involved. [00:11:33] Speaker B: Thank you, Sarah. That was so powerful. I think you really brought home how telling a story can help us actually convey a clear message to those we want to work with. And I hope those of you are listening, you feel encouraged to tell your story. Sarah, how can people find you online? [00:11:51] Speaker A: Sure. So you can find me on LinkedIn under Sarah or Lana Oriana, or you can find me at my website, 3raptorconsulting.com you can message me through that website and my email is also listed on LinkedIn and I would love to hear from anybody and answer any questions that you have. [00:12:05] Speaker B: Thank you. And we'll be back in a moment. We're going to continue our conversation with Sarah about how to build programs that just, you know, that, that do more than just work, that actually work and meet the goals and missions of the organization. We'll be right back. [00:12:26] Speaker A: Sam. [00:12:58] Speaker B: Foreign welcome back to Balancing Acts, your guide to grow, profit and scale. I'm Linda Hamilton, a CPA certified exit Planning advisor and systemologist I help businesses and nonprofits with strategic planning so that they can grow with clarity and confidence. And we're talking with Sarah Ariana of 3D Raptor Consulting. I love that name. And in our last segment, we talked about storytelling. So I hope if you didn't catch that, you'll go back and listen to it, because it's really important. But now we're going to switch gears and talk about taking that story, your mission, your purpose of your business, and actually designing programs that actually work, that meet the mission and those solve the problems you want to solve. Sarah, let's talk about maybe, you know, are there mistakes you see people make when they're designing a community based program, which, which you talked to me a little about when we were preparing our interview backstage about what it means to have a. A community based program? [00:14:11] Speaker A: Right. So I think the biggest mistake, and I want to be very careful with this, is so often people that, you know, small business owners and nonprofits, we lead with our heart. And we're here because we want to solve the problems of our community, the problems that we see. The challenge is the biggest problem I see is that they'll come up with a solution that they chose or they identified the problem and they didn't ask the community what they thought the problem was, nor did they ask the community if that's the solution they wanted. And so when you lack that community buy in, that's when you see so many programs fail or not get the participation that they thought they would get. [00:14:45] Speaker B: That's interesting. So, you know, I've heard most of my career about selling people what they want and not necessarily what they need. But, but how. So how do you just, how do you actually find out what they want and how do you fit it into, you know, there's a problem and so you're trying to create a program because maybe they don't really know exactly what they want. How do you start? [00:15:10] Speaker A: So the first thing to do is you do you definitely identify the problem and you say this is a challenge that our community is facing. Then from there, that's when you want to do something that sounds really intimidating. It's a community needs assessment. And there are very, very formal ways that you can do it. You can bring in universities or you can take more of a grassroots approach. And the more of the grassroots approach would be to ask to hold a public meeting at somewhere like the library, somewhere that's very neutral, that people would be welcome, everybody would feel welcome to come to, and you would invite people and you have to specifically, specifically invite people who are involved in this problem or people who are experiencing this problem. And something that I always have to remind myself of is you can't just announce. You have to make specific invitations because people want to be invited or perhaps they don't think they have something to say. And you want to make sure that you have community elders there as well as community stakeholders, and you want to have the people that are actually experiencing the problem themselves. Once you get everybody in a room, it's asking very good questions. And so much goes back to that statement, asking really good questions is, you know, we've identified this problem because of this data. Do you agree that this is a problem? Do you think this is the problem we should be working on right now? Is this something you'd be interested in serving on a committee or a coalition for and getting them to talk? Once they talk and there's agreement on the problem and even how it's stated, then that's when you turn it over and you say, now what do you think the solution is? Research and data shows us that these solutions are what works and what we can offer this community. But I want to hear what you want to ask. And that research and data would be from communities that are similar poverty levels, similar income, economics, all of that in different states. And you would say, this is what they've done. And the reason that you do that is you want to always give people a starting point. Because if I walked up and I said, linda, how do you solve this problem and I don't give you a starting point, how likely am I to get a good answer from you or even to get you to start talking to me? So when you give them this, this insight, this place to start, and then you step back and become that notes recorder or moderator or give them a little push, that's when you see that magic start to happen. And that's when you get that solution that then you can design an entire program around. [00:17:21] Speaker B: That is very powerful advice. And you said you packed so much into that. Now we're talking about community base. And you talked about the two different people who are experiencing it and people who probably like your own organization, are trying to solve similar problems, if not the same problem. So that's kind of like starting a partnership, right? [00:17:43] Speaker A: Exactly. [00:17:43] Speaker B: How do you get comfortable with that? Because a lot of times, you know, every organization tends to be a little territorial. So how do you one identify them and start to invite them to collaborate best for the community itself? [00:17:58] Speaker A: So that's something I've been Fighting for probably the last 15 years. And when you say territorial, you are so on the money. And that's with small businesses. I've seen it with Main street organizations as well as with nonprofits. People are like, if I tell you who my funders are or if I tell you who my target audience is, I'm going to lose money. So the key to getting people to come is to make it very clear that by working together, we all prosper, we all succeed, and we all get more money. Now, with nonprofits, the easy way to do that is to show how many foundations love the partnerships and grant applications that found. Foundations love that bigger bang for the buck. So they want to see that they're funding multiple organizations or multiple organizations working together with small businesses. Some of the ways that I've tackled that is I've talked about costs that are very, really unaffordable for small businesses, like marketing and advertising, and how you could come together to share that burden so that it's less or even the idea of like a shared employee. Maybe they work part time here and part time there, so they make more than livable salary, but it's still within your budget. So showing some examples like that of what these conversations can lead to, and it's being persistent. I like to say I have dogged determination, so you can tell me no, but if I know it's a good answer, I'm going to keep just coming around asking and starting that conversation. And I think it's also just leaving the door open and saying, you're always welcome. [00:19:17] Speaker B: Oh, I love that. And I do want to talk about funders for a minute because there is, you know, people think, you know, it's only business owners who compete, have competitors, but nonprofits, it is. There is a limited amount of funding. You're competing for the same dollars. Can we drill down a little bit about how you might find other organizations to partner with? Is there a place to look for either the partnerships or even the foundations that are willing to do that? Because this is a topic that's coming up among my clients a great deal. [00:19:52] Speaker A: So I would say the best way with foundations, I always tell people, start with your community foundation. And the reason that I say start with your community foundation is they're well rooted in your community, well as in the funder community. And ask them, schedule a meeting and ask them if you can have a conversation about what foundations like to see partnerships and ask them to walk you through that conversation. They're going to want to talk to you about it. One thing I Learned in the 20 years I've been writing grants is foundations want to answer questions, they want to be available, and they don't mind walking you through an application. So whenever you schedule a meeting to talk about, hey, we would like to talk about partnership funding and how this could work, they're going to be open to that. Now, as far as how do you decide what organizations this is, what I always say is when you are in a nonprofit, you very much have to stay in your lane. So let's say that you provide, and I always go back to this to forgive me, but let's say that you provide hot lunch three days a week to people who, who are in need of hot lunch. People come, you know them, they know you, they feel safe in your organization. You start to notice a need for mental health, you start to notice a need for job development, for career training, for resume building. Those are not areas that are in your mission to solve. But you have the people, you have the audience, and you have the safe place that they trust. That's when you specifically and strategically go out to the nonprofits that provide those services and invite them to bring their services to your location and invite them, you introduce them to your audience and they see that they have a built in audience and program right there in a free location. And then together, once you get that pilot program going, you can seek funding to help offset your administrative costs and to offset their programmatic costs. And I'm sorry, I could talk about that all day. [00:21:31] Speaker B: Yeah, you know, and it's such an important topic. And so we talked a little bit about, you know, the segment is kind of, you know, how do you design a program that works, but at the same time, you have to be able to fund the program. So you're, you're meeting what a, a program that solves a problem for a constituency that will benefit from having the problem solved versus a foundation, a grantor or a partnership that wants to help you fund it with their money. And when you think about that and designing that program, how well developed does that program have to be when you go for the funding? [00:22:11] Speaker A: I would say it needs to be fully developed, but probably not to the level that you're thinking. You definitely need to have that overview, that focus. I always like to give each program its own mission that's within the organization mission. And you need the goals already set and written, and you already need to know how you're going to measure those as well as any research or comparable programs that you could say, this is what's worked Here. So we're implementing this here. But more than anything, you need that community assessment where you show the foundation that you went out and asked what was needed. Now, one thing that a lot of people don't know that is very important and vital is whenever you have a board, you want to have one to two clients or people that you serve sitting on that board so that they have a very active voice and help to navigate it. So once you've done all of that and you have that program, that's when you start talking to the foundations and you find foundations whose mission align with yours. So basically you're saying by funding my program, you're living out your mission. And in addition to that, we're also focusing on community development, economic development, and there's more long term effects and impact of this versus just this program. [00:23:14] Speaker B: Okay. And that's really helpful. You know, I work a lot within the small business community, both the women's business community, entrepreneurs and all small business owners. And so that comes up a lot for organizations that want to serve. You mentioned economic development. And so that is a part of helping businesses not fail. Right. Because there's a huge percentage of small businesses that also provide jobs for the community. Right. And as they grow, it has an impact on the community. So is there a different message than, you know, you mentioned, like serving the poor or serving lunches? What about serving business owners who need that support and education and training to succeed? [00:24:02] Speaker A: On all the grants and funding opportunities I've seen for small businesses, the biggest thing is how many jobs are you developing? How many employees are you giving skills to? How many people are you teaching employable skills to? So whenever you can focus on 21st century skills, those employable skills and opening up jobs, those are the things that are going to get you that funding. Because that's what everybody's focused on right now with the economic development. [00:24:27] Speaker B: Great. And I think a lot of people listening will benefit from that advice. You know, in wrapping up programs, what would you say is, I'm trying to, you know, think like if they want to, let's say they have a pilot program already and they've been testing it, but it maybe needs to be reshaped. What are the next steps you would do after you got your first program going and how do you continue to improve it? [00:24:57] Speaker A: Well, first of all, I want to say don't ever be afraid of failing, because there is no such thing as failure. And don't be afraid even for telling a funder that you failed. Second is always have mechanisms and points in there in your timeline where you can reassess quickly and pivot and make adaptions whenever you can, show that you're able to pivot and adapt on your feet or as I like to say, fly by the seat of your pants. Right? You don't, you know, you know where you're going, but you may need to change a little bit when you're getting there. Those are the flexibility points that are going to allow you to grow your program into what it needs to be. But I think the most important thing is to listen. And I know that that probably sounds like the oddest thing I could say with program development, but when you actively listen to the feedback that you're getting, both from the community stakeholders and from the community that you're serving, that's when you're going to be able to pivot and adapt in the best way possible. [00:25:48] Speaker B: That is a great way to end this segment with listening. That was really powerful. Again, and I would say it takes listening, right? Being willing to trust the process and be able to ask the right questions as you develop your program and make a difference in your community. How can people find you again? [00:26:05] Speaker A: I'm on LinkedIn, Sarah Orianna or 3Raptor Consulting, as well as my website. And you can reach out and send us a message to the website and I have a team member who will answer that and forward your messages to me. [00:26:15] Speaker B: Thank you so much for sharing your insights. I hope that you will come back to our next week for another episode of Balancing Acts where we will share more on helping you build clarity and confidence to grow profit and scale. Welcome back. We we were talking with Sarah Ariana of 3D Raptor Consulting about storytelling for nonprofits so that they can write well and actually connect to create good, to create change. And we also talked about how to create programs that actually work. In this segment, I want to talk about planning for nonprofits. You know, oftentimes nonprofits will think strategic planning, you know, that's like totally overwhelmed. They have to report to the board and their volunteers. They have have so much to do. And visions of a business plan are, oh, it's 40 pages and nothing happens with it. It just goes in the drawer. But we want to talk about a very special tool, one created by Jim horan more than 20 years ago. And it's a one page business plan for nonprofits. There's a version for women business owners. There's a version for busy executives. But today's topic is why the nonprofit actually needs that business plan in connection with their Storytelling and with creating programs that actually work. And we're going to Talk with Alana McNicoll, my partner in Linda A. Hamilton, CPA, LLC and in Grow Profit Scale. And Alana and I together work with many nonprofits for many, many years on helping them not only understand their financial statements, but, but also understand how they connect to the mission and the people they serve. Welcome, Alana. [00:28:33] Speaker C: Thank you so much for having me back on the show. And it's such an interesting topic because I know if you're involved with a nonprofit, you understand how important a budget is. Right? A budget you must have every year. It's really so you know how much you're allocating to which program and, and how you're going to end up. But Linda, we're talking today about business plans, which I think traditionally people focus around for profits. But, but what we've learned over our work with nonprofit clients over the years is that a business plan is actually such a powerful tool to further a mission in, in a different way than a budget does. [00:29:11] Speaker B: Exactly, exactly. And Jim Horan, he actually distilled a business plan into like five core questions. And they work for whether you're a, a business owner or maybe on a sales team or in a corporate executive and for nonprofit leaders. And the five questions that he talks about is, the first one is what is your vision for your nonprofit? And the second is what's your mission or your purpose? Who do you actually serve for your nonprofit? And then we get into linking. What are our targets, our goals or objectives? What are our strategies for being able to achieve them? And what are the action plans we're going to do over the next year? So that often seems overwhelming and how we fit them on a page. So when you meet with nonprofits, how do you get some insights into that storytelling topic? And how do you understand what their mission is and what they're trying to do? [00:30:16] Speaker C: Yeah, I mean, non profits are juggling mission. They're juggling programs, fundraising, compliance. There are so many different pieces that have to come together to keep a non profit on track, cohesive and in compliance. I mean, it is a privilege to be a non profit. And with that privilege comes a lot of, a lot of compliance parts. So I think oftentimes what we like to focus in on when we're working with a board or an executive director is how do the numbers support the mission? Right. Because of course, we want to bring in funds and we want to be able to spend them on the mission, but we also can't lose money. Right. So There's a bit of a push pull between wanting to. Wanting to spend your funds on your mission and let your donors know, hey, this is where the money's going, but also keeping it healthy because it is a business at the end of the day. So, Linda, I know that the one page business plan, you know, it, it's literally one page and it's very easy to digest. So I'd love to hear from you how you use this tool for all the different constituencies that a non profit has to serve. [00:31:27] Speaker B: Well, we start with. We start with like, what their purpose is. You know, the real difference between businesses or why you're. Well, we like to say, you know, operate a little bit like a business, but they are very different. Businesses are actually a function and a creation of the marketplace. You have something you want to sell, you maybe bring in investors or the owner puts in money, and then after that they can spend their money really as they please. But a nonprofit is actually a creation of the Internal Revenue Service. There are no investors, there are no partnerships. Even if you bring in, some people call a donor a partner, but they aren't right. There's no ownership in it. So the difference is you can't necessarily spend your money exactly as you please. So we have to first look at why the IRS allowed you to be created. Maybe it's early childhood education, or it might be feeding the homeless, or it might be. I know one organization has bicycles that people donate for the use of for people in other countries who don't have transportation. So we start there. Once you understand your mission, who you serve, because that's the only people you're allowed to serve, then you can say, okay, what are my goals for this year? How am I going to find money? There is competition for grants, gifts, donations. Right. So that's why cash flow is critical, because just because you sent out an invoice doesn't mean you're going to collect it. You've seen a lot of that. So let's say we. They have a grant coming in. I think when it comes to grants, you can't always spend it on operations. Isn't that something you've found with some of the clients you've worked with? [00:33:22] Speaker C: Yeah, grants are a big source of funding for nonprofits. And if it is what we call a restricted grant, that is a legaling, legally binding contract between you and whoever is giving you the grant, that that actually tells you what you can spend that money on. And you are quite limited depending on the terms of that grant. And it requires a lot of discipline within the organization, but also tracking right, you, you will need to turn around and report to the grantor how you've spent the money, but also to maybe your auditors. There are other parties who do need to know those numbers and be confident in them. So I think that's an area where getting the right resources in place, talking to the right professionals and making sure that your systems are set up to support something like grant writing. Because as you spoke to Sarah earlier, the grants are out there. It is a story that you tell and you just need to be able to back up that story with the actual numbers because that is going to allow you to go back to funders. I know a lot of grant making organizations. Once you're in the door and they see that you're a responsible steward of their funds, the relationship is warm and you can come back to them. And that's a great way to revisit your one page business plan, right? We talk about the fact that that's a living docum now. If you have a track record with an organization, you're able to sort of layer that into the strategy that you're, that you're outlining on a year to year basis. [00:35:04] Speaker B: Now you could actually, you know, take what you just said like you could do a one page business plan just for one program so that when you go to the funder, they can see how you've thought it out. You have strategies not only for how you'll spend the funds, but, but they will often want to know, well, what if we don't give you enough money to cover your overhead or your operations? How are you going to make sure that you can accomplish this program? And so those are some things we might put in. We might also say, okay, how many grants, how much money do we need this year to fund these programs? Put in your one page business plan. Well, perhaps I need to apply for five different grants. Where are those grants going to come from? And then what strategies you will use. Your storytelling or having not only a storytelling about why you want the funds, but maybe how you've been successful. And then an action plan would say, okay, where am I going to find these grants? Am I going to hire someone to help me? And that's where the power of this one page plan forces you to pull everything together on a page, to talk to foundations, to talk to your consultants or your accountants or your board. So that really is, it's such a powerful tool. And I'm happy to share a one page plan template for anyone listening who would like to understand, you know, to see what one looks like. Nonprofits often really, they juggle their mission and their fundraising of their programs. Right. They're busy. They have, they have volunteers that, you know, when you're talking about small nonprofits, they don't have resources just like their other small businesses in the market. So how can this one page plan help them? Everybody stay on the same page so they know what direction they're going in over the next 12 months. [00:36:58] Speaker C: Yeah, I mean, I think it's important to include the board from the beginning. Right. The board is ultimately responsible from a financial steward if perspective. So the board needs to understand what's on that business plan and how it, it needs to look because that's going to tie directly into the numbers. Right. And then I think having a version for your volunteers. Right. Helping your volunteers understand what are the objectives in that one page business plan. And, and how can volunteers help help meet them. And then a business plan is also an important grant making tool, grant application tool as well. Right. You're going a donor, a very well thought out plan. That's not just about the numbers. That goes into more detail really, about those objectives, which I think the numbers obviously tie to the objectives. But we're talking about impact, right? We're not just talking about financial impact. We're talking about how you're serving the community that's involved in your mission. So it is, you know, it's a, it's a wonderful tool because it's, it really lets you tap into all of those different areas. And those areas are resources. Right. Your board is a resource. [00:38:18] Speaker B: Very true. Alana, how can people find you online if they have questions? [00:38:25] Speaker A: Sure. [00:38:26] Speaker C: My name is Alana McNicol. You can reach out to me on LinkedIn. Alana McNichols, dpa and our firm website is www.lahcpas.com. [00:38:39] Speaker B: We'Ll be back in a moment. But I hope what you got out of this is a one page plan gives you clarity and focus. It's not about dumbing it down. It makes strategy accessible. So we hope you'll use this tool you can research. There's probably so much written about one page plans online because the book has been around for 20 years. Stay with us and we're going to talk about some cash flow and tech tips. Foreign welcome back to Balancing Acts. I'm your host, Linda Hamilton, a CPA, and we're talking with Alana McNicoll, a partner in my CPA firm. And we're talking about nonprofits. This segment is totally dedicated to nonprofits. We've talked with Sarah Oriana about storytelling, making an impact and creating programs that work. And now we can just talked about having a business plan. I want to now move into talking about your cash flow and technology tips, how these things can actually make it easier for you to run your nonprofit. You know, just because you have cash flow coming in doesn't necessarily mean that you're financially healthy. You may have a program coming up and a restricted grant that you can't spend on other things and you know, payroll to be made. So there are, there are a lot of reasons for a nonprofit as well as any other small business to be able to be on top of when cash will come in and when it has to go out because there are times when they're not many times when they're not in sync. Alana, let's talk about I like to call it cracking the code. Cash flow planning for nonprofits with technology tips. When you I know you work with a lot of nonprofits using QuickBooks and I think you've probably used some others, some Xero and other tools in the past to help them set up their records so that they are able to know one is their program actually having an impact and is it financially healthy? So what is one of the first things you do when you talk to a nonprofit who's considering working with you? [00:41:20] Speaker C: Yeah, it's it not cash flow is, is mission critical to just about every organization out there. And I think for nonprofits in particular, non profits are often reliant on big donors who don't necessarily have favorable accounts receivable terms. So there's an often, there's often an issue where that I see in nonprofits where they're waiting a long time for funds they know are coming in. But the big corporations of the world are accounts payable at 60 days or 90 days. So I think one of the number one tips that I have and your tech tool will absolutely help you with this is do you understand what your monthly run rate is? Right. So aside from any one off expenses, how much money do you need in the bank bank to continue operations on a month to month basis? And that should be a fairly simple thing to figure out, right. You've got your QuickBooks or your Xero or your other financial software up and running. You know what your recurring expenses are to keep the lights on. And so that is something that I will sit down with a non profit and really look at. Okay, how much money do we need in the bank to to fund operations? And I think from there, it's. It's easier to sort of work into, okay, how much cash flow should I plan on having, given that there are uncertainties about when donations may be actually coming in the door? [00:42:47] Speaker B: Thank you. And so some of what you were talking about made me think of, you know, sponsorships versus grants. And so grants have a very specific purpose. Right. They come from a private foundation or another type of nonprofit or government agency, but sponsorships often come from corporations, and you've promised them something in return. It might be, you know, recognizing their name in your program or in an email, but oftentimes, you know, there are two topics I want to go with on the sponsorship side or whether or not those things could ever be taxable. Non profits think they're always tax exempt, but there are times when sponsorship might be taxable. Can you talk a little bit about that? [00:43:36] Speaker C: Sure. So, I mean, the. The word that raises a flag for me is advertising. Right. When you talk about sponsorships, you can sell a sponsorship package, but if it could be construed that that package is advertised and you are encouraging your constituency to bank at that bank or buy that clothing line, that can trigger something called unrelated taxable income. Right. So your mission is not to advertise for corporations. Right. Your mission is whatever your mission is, and you're trying to further that. So the IRS gets very touchy around advertising in particular. And so what that means for you as a nonprofit is that you have to take the time to look at your sponsorship agreements and your contracts and understand what you're promising to these organizations and just sort of familiarize yourself with where those lines are. And that's not to scare you, but it is to make you aware that there are areas that the IRS feels you could have taxable income even though you're a tax exempt organization. [00:44:48] Speaker B: Right. And you would be taxed as a corporation. And one of the things to be aware of is most corporations might allow you to change the contract some. They're not necessarily, you know, that concerned that there might be terms in there that make it easier and kind of steer you away from advertising or endorsing them, you know, as recommending all your members go there. It's more, what would you say, a subtle kind of pr, name recognition only. Right. [00:45:16] Speaker C: You list their name on the website. You don't say, click here and buy. Right. And it's. That's a very easy distinction to make. [00:45:24] Speaker B: Right. So they can look at your corporation and why you're important or why they care about your statistics, your children or women's businesses or small businesses, but not necessarily buy here. And the other cash flow challenge for non profits that I think QuickBooks is very helpful is restricted versus unrestricted grants or even other gifts like a donor. I could say I'm going to donate $5,000 this year and I want to restrict that donation. It's not even a grant and you can only spend it on X program or, you know, or on certain types of expenses. If I restrict it, there are. It's legally tied up right. Until you spend that money. So how can you use QuickBooks to set that up and track it to make it easy? [00:46:11] Speaker C: Right. And it's very common right there. There are a lot of donations that come with restrictions and, and that's the right of a donor. And of course we want those funds and, and we will meet that challenge. So there are a couple of different ways to do this. I have seen some nonprofits just set up a separate bank account and say, okay, we're going to keep the money here and we're only going to transfer it and spend it. When we can tie that to an expense that meets those definitions that can be kind of cumbersome. But fortunately QuickBooks and I believe Xero has the equivalent. There is a module called Projects. And what you can do is you can set up a project and call it X Corporation Restricted grant. And then when the money comes in, you tie it to that project and when your expenses go out, you also tie it to that project. And then what you can do is run an income statement, profit and loss, statement of activities, whatever you're used to calling it, for that project only. So you can very easily see, okay, here's what's come in, here's what we've spent, here's what's remaining restricted. And that report, it can go to the grantor, obviously, but you can also use it when you're talking to your board. You can also use it when you're talking to an auditor, if your auditor needs to know about how much money has been restricted and released from restriction. And that's a categorization that means a lot on a financial statement. So it's definitely use. Use the software to your advantage. [00:47:41] Speaker B: Absolutely, yeah. And then actually if you're not sure how to use it, if your bookkeeper doesn't know, there's a lot of information online on YouTube, on, you know, on many websites to help you set up things properly and be able to use classes or jobs or tracking categories, projects. So different ways. And I don't think it's always One size fits all. It helps to have a conversation with a professional so they can help you because they'll get to understand your entity first and then help you set up something that makes sense for you and that your bookkeeper can manage. So I think that's really, really important. Let's talk a little bit about, you know, an annual budget for a non profit. How can they use QuickBooks or Xero or any other accounting program to set up a budget to set so they can compare actual results versus a budget? [00:48:42] Speaker C: Yeah, that's a great question. We know how important budgets are for nonprofits. Right. That's really the guiding financial document that anybody who's a decision maker in the organization is going to refer to. And so the great thing about QuickBooks Zero and almost every other software on the marketplace is that there is a budgeting feature. And for simple nonprofits, what we've found that can be really helpful is you can start your budget with last year's actual numbers. So you will be able to say, okay, I want to set up a 2025 budget. Show me 2024 and then you can plug in your variables. Okay, well I know my, I know my costs on rent are going to go up 10%. Right. So you can easily sort of start to build from last year's numbers rather than work from scratch. Right. That's going to be a time saver. And I think that is a time saver. But you need to be careful that you're thinking about what, what is actually in those numbers. Right. But the nice thing about that is that once you build that budget, it saves it into your software. And then it's very easy to just run a budget versus actual. So you can look at, you know, mid year, fourth quarter whenever your reporting cadence is to say, okay, where am I during the year? How close am I to budget? Oh gosh, that event was more expensive than I thought it was going to be. Let's make sure that our board knows about that at mid year. Right. Because whatever decisions are coming down the line, you really need to know where you are on your budget in order to order to steward the organization in the best way that you can. [00:50:16] Speaker B: Exactly. And you can do your budget both, like for cash, so you know when money's coming in and when you have to get it out. Or you can do it using accrual principles that recognize revenue before the cash comes in and the expenses before you pay them. You don't need to be a tech genius to, you know, to manage your non profit cash or to set up QuickBooks. Just be aware that these tools exist and to get some, you know, get a consultation or do some research online to find out how to make your technology serve you best. Alana, Please let us know how they can find you. And if they want to request a one page business plan template, we'll be happy to provide one. [00:50:59] Speaker C: Absolutely. So you can find me on LinkedIn. Alana McNichols, CPA Our firm website is www.la and you can also feel free to shoot us an [email protected] we'd love to talk more with you and your nonprofit accounting needs. [00:51:22] Speaker B: Thank you so much and thank you for staying with us today. I hope that Sarah, Alana, and I gave you some good tips for using strategy to help your nonprofits stay financially healthy and have great programs. Come back next week for another episode.