Episode 95: Reframing Costs As Investments with Alex Romero

When spending money on one’s organization, it’s pretty easy to fall into what I call the “cost trap”.

Particularly when one is a solopreneur, there’s a tendency to think of expenses as money coming out of one’s pocket instead of as an investment into one’s organization. It stems from adopting a scarcity mindset (rather than framing one’s experience from abundance) and also is seen quite a lot when one attaches oneself very closely to one’s occupation. (But that’s a whole other conversation.)

The problem is compounded when framing every investment opportunity against the direct revenue this allocation is likely to create.

So before introducing this week’s guest here on Relish THIS, I’ll relate a quick tale.

When I first started my life as an entrepreneur, I had a tendency to fall into this “cost trap”. I viewed every expense through the lens of “how does this make us money” and neglected the other benefits investing in support, resources, tools, etc. could bring to an organization. I know now that there are many intangible benefits to investment, including boosts in morale, comfort, and the like, as well as time savings (both direct and indirect saving accrued simply by no longer having to think about an activity needing to be accomplished).

For me, one of the first places this type of investment attitude paid off was in bookkeeping.

Every month I dreaded doing our books. I didn’t enjoy it and knew I wasn’t great at it. I tended to put it off until the last minute and then fret about it after I was done. Neither, any good bookkeeper will tell you, are good for the health of one’s books.

So I overcame the “this cost won’t make me money” demon in my head and hired a bookkeeper. Mischa has been helping us ever since and I don’t think I have once questioned the “cost” of her engagement. It freed up a ton of noise in my own head and I know our books get done correctly and on time each month. Now THAT was a great investment!

So coming back to my guest today on Relish THIS. Alex Romero is one of the financial masterminds (her “real” title is Virtual CFO) at Chris Hervoshon CPA. They are a virtual CPA team that helps nonprofits get their financial house in order so that they can confidently serve their constituents most effectively.

Alex is just great. She has been working in the nonprofit space for years and shared a TON of valuable information during our conversation to help your nonprofit navigate bringing on a CPA to help you stay compliant with state and federal regulations and have a healthier understanding of your nonprofit’s financial status.

Of course, we talked about the cost vs. investment conundrum as well as what you need to know before bringing on a CPA, ways to bridge the gap between DIY and hiring an expert,  and ways to get really proactive about your finances so that you can be able to run your organization most effectively. We dove into managing and tracking grants and donations as well, so there is a LOT of great information in this episode.

Whether you are just getting started with your organization or have been up and running for years, there’s something for you in this episode. I hope you have as much fun with it as I did.

Better Way CPA

Start a spreadsheet to track any money that you get through your door at your nonprofit. Just start tracking and keeping records.

Listen to the podcast here:

Alex: It’s better to be in the know it. It is. It can be really scary cuz you, you don’t know you. It may be that you are unable to sustain operations for so many years, or that you’re looking at having to close a location, but having that information and being able to look and try and plan and evaluate some different avenues.

It’s gonna be better in the end than just avoiding it until it’s too late.

Are you looking for ways to shorten your marketing learning curve and help your organization survive and thrive? Welcome to Relish This, the Purpose Marketing Podcast, a show for purpose focused leaders who want to use marketing techniques to fuel their organization’s growth. If you’re a returning listener and you haven’t subscribed already, we’d love to have you.

Also, please consider leaving a review wherever you listen to podcasts. Now, here’s your host, author, and marketing specialist, Stu Swineford.

Stu: Hey everybody. Stu here. I think that one of the challenges with most organiz. This idea about cost versus investment. And so many of us come to the table thinking, Oh, this is, this is gonna cost me so much.

Or, or you know, how is this actually gonna produce you know, revenue from our organization and. If we can have a bit of a shift in the way that we think about that we can recognize that almost everything that we put our energy into or invest actual money into is an investment in the health, wellbeing, and growth of our organizations and hiring a cpa.

Very, very important and very cost effective when one starts to think about how much time and energy and, and mind space, not having a cpa can create. My guest today is, A wonderful woman named Alex Romero and she is part of the Chris Heran cpa team. She’s a virtual cfo and you can find them@betterwaycpa.com.

To find out more, but they work with nonprofits in particular to help them navigate this crazy space that that re is required of nonprofits. There’s so much tracking and making sure that you are spending the the money that comes into your nonprofit appropriately. And that’s exactly what, what Alex and her firm do.

This is a fun episode. I learned so much. I hope you enjoy it. Here we go.

Good afternoon, Alex. How are you today? I am

Alex: doing well. How are you doing?

Stu: Doing super great. It’s a beautiful day up here in the mountains of Colorado. And you’re down in Pueblo, is that right?

Alex: I am. And it’s a super nice day. Very hot, about a hundred degrees outside, but it’s, it’s be.

Stu: Nice. Colorado is, is an amazing place to to live.

I think it has so much to offer in terms of, of great weather. And it’s really funny to me every year when we get kind of an extended either snow or rain period, help people lose their minds. , it’s just like, it’s gonna be, it’s gonna be gorgeous in like three days.

Alex: Relax. Yes, it’s very true. But you know, we have the 300 day plus days of sunshine a year, so we had to live up to that.

Stu: Yeah, that’s true. That’s true. Well, thank you so much for joining me today. I’m really excited to learn a lot more about finances, finances in the nonprofit world, and what you all are up to there at Chris Halverson CPA Services. So tell, tell me a little bit about, about your firm.

Alex: Yeah, so we are a firm of seven team members currently, and we are remote, so we’re scattered all across the United States, and we have one of our team members in the Philippines.

And so we have two niches within our firm. So we provide cloud accounting and advisory service. For marketing and advertising agencies and also nonprofits. And so that’s where our focus is right now, is really reaching out to those nonprofits and growing that side of our business. Oh,

Stu: fun. Those are two fairly distinct niches.

How did you guys end up in, in those kind of two, fairly disparate Areas of, of of, of focus.

Alex: Absolutely. So Chris, the firm owner, he had experience with marketing and advertising agencies. Most of his first clients were in that sector. And then when I came on board, I have a lot of non-profit experience and background, so it just made sense to also add that since I had been in that world for so long,

Stu: Nice.

Were you doing financial work for non-profits or were you running one, or what was your experience in the, in the space?

Alex: So I have kind of done it all in the non-profit area. I was in a non-profit almost couple years outside of school in a staff accounting position. And then on the internal side, Was all the way up to a chief financial officer at the local library district here in Pueblo.

And then externally I was an auditor and we specialized in government and non-profit audits. So I’ve done it internally and externally. Wow, that

Stu: sounds amazing. So you kind of know both sides of the spectrum, which is probably really valuable insight to, to be able to bring to the.

Alex: It is, and I actually was at the library district after I was in public accounting, so it was super helpful being the lead accountant there and knowing what we needed to do for compliance and to be audit ready and know all those rules in and out.

Stu: Yeah, it’s it’s pretty complex and, and I think that a lot of people think that running a nonprofit is, is, you know, either the same as, or, or, you know, very similar to running a for-profit business, which in, in some respects, I think it, it is. But, but they, they don’t really always understand the reporting and, and you know, some of that extra work that goes into running a nonprofit.

And, and you know, certainly accounting is a big piece of that.

Alex: Absolutely. And there’s a lot of differences between nonprofit and for profit accounting. And so really understanding those is gonna help your organization cuz one thing that you absolutely have to do maintain is. Being a non-profit, and part of that is making sure that you’re compliant with your taxes.

And so there’s just so many additional pieces that you really need to have somebody with non-profit accounting experience to make sure that everything is being done correctly.

Stu: Right. What are some of the more common challenges or, or problems that you’ve see nonprofits get into as they, as they maybe skip that step of the, the accounting piece?


Alex: So a lot of times they’ll get to the end of the year where they need to have an audit and they realize that they haven’t done proper documentation, and so they don’t know who gave them money and for what purpose. They have a mess of their records. They don’t know. Where where things need to be allocated to if things are restricted and it just runs all over the place.

I mean, if you have somebody that doesn’t understand how you recognize the revenue for grants, a lot of those, you recognize the entire thing when that money comes into the door. Mm. And that is sometimes difficult to be able to explain to an executive director and especially the board of directors. So you also need to really know about your cash flow and showing your financials and saying, This is what the financials say, but in actuality, this is the cash flow for the year.

So really getting into the nitty gritty and understanding how it all works together.

Stu: Right. I remember well, I, I’ve served on boards of nonprofits in, in the past, and I currently serving on the board of a nonprofit. And I, I do remember we had, you know, long discussions with our accountant pretty much every, every quarter.

And every time she would definitely explain kind of, you know, This is this bucket that makes this one look bigger, but it’s actually not that big because we have to defer payment or defer use of this, even though it’s in our account or, or whatever. I mean, there it can get really, really complex.

Mm-hmm. with, with someone starting out in the space, how do you, I mean, aside from, from hiring a cpa are there other. Tools or tricks that you, that you would recommend for people just getting started to, to better navigate all of the, the complexity of, of running a non-profit? From a financial perspective?

Alex: Yes. Oh, I would advise somebody that if they have a great idea and they’re ready to start a non-profit, they really should. Reach out and try and find someone that does understand nonprofit accounting, because there’s so many different aspects to it to make sure that you get your nonprofit status and get everything in line so that you’re doing things correctly, day one.

But to get a general understanding yourself. You can go online. There’s a lot of tools even on. Firm’s website. We have some blogs about the differences and what you need to be aware of with non-profit accounting. And then there’s also community college courses that are really good for just kind of non-profit 1 0 1.

So really tapping into other resources and networking and seeing who you know in that area and making sure that they understand that there’s a difference there. And if they could help you. Better equip yourself to be in the right space financially as you go through your first year.

Stu: Yeah, The Colorado is just such an amazing state in terms of, of in terms of non-profits, I know that we are.

You know, not necessarily one of the biggest states from a population standpoint, but, but we do have a, a very, very large number of non-profits here in the state. And, and so it sounds like what you’re, what you’re saying is go out there and network and find some other non-profit leaders who’ve maybe been through, been through some of this in the past and, and and kind of tap into that collective collective.

mind of, of the non-profit world for

Alex: sure. Yes. And that’s what you find in the non-profit area is that everybody wants to see everyone else succeed. Cause we all have different missions. And when you come to another nonprofit and you’re just starting out, if you are looking for just a little bit of advice, I’ve never seen a nonprofit say, No, we, we don’t wanna help you.

So it’s, it’s definitely, and people in that. Typically know of each other, they’ve volunteered or they’re on other boards with individuals that work at or sit on a board of a nonprofit. And so there’s really good ways to be able to look at who you know and who they could put you in touch with to make sure that all the finance pieces are laid out appropriately.

Stu: Yeah, that’s, that’s just really great advice, I think, and in any, in any respect actually, is to lean on, lean on others who’ve, who’ve maybe trodden that path in, in the past. So when, when you engage with a non-profit, what’s the process like? What, how do you, how do you get started? With a, with a non-profit or get them kind of moving in the right direction in terms of, of their financial.

Alex: Yes, so we have an onboarding process that we go through with all of our new clients, but specifically with nonprofits, it’s really understanding a little bit more about their story, knowing what their mission is, knowing what their vision is. Hearing about the board of directors, because nonprofits can be very complex.

There might be a lot of history there and you need to understand that. And sure, things can change and they might have new ideas, but it’s important to know if, say the founder is on the board of directors mm-hmm. it, you just need to be able to get in there. Become part of the team and really understand and be passionate about what they’re doing.

That’s one thing I can say about offering accounting and advisory services for non-profits. It’s gotta be a good fit. Both ways because nonprofit, the whole mission is to sustain community involvement and community impact and to fulfill your mission. And so if you have an accounting team that doesn’t believe in what you’re doing, , That’s, that’s a misalignment.

You, you need to be on the same page. So I think that’s the important first step. Before you even get into the finances, let’s talk about what you do, why you do it, who you do it for, and make sure that everybody’s on the same page and then can get really behind helping this nonprofit succeed. I think that’s great

Stu: advice.

Is, is there, I mean, aside from interviewing a bunch of accounting firms, is there a good way for non-profits to, to, to tee that up? Should they, like, what should they come to the table with when they’re starting this conversation?

Alex: So a lot of them come to the table with not much. Usually somebody that has had some accounting experience, probably not nonprofit experience, but somebody that maybe dabbled a little bit in QuickBooks has helped them out and they’ve gotten to a point where they either have.

Too many transactions or they got a large donation or a grant, and it’s gotten to the point that whoever was doing it either for a minimal fee or for free, they aren’t unable to do it at that point. It’s just gone beyond. what their capabilities are. Mm-hmm. . And so I think that’s a really great place to be at because then you can make sure that you set up everything and you don’t have a bunch of cleanup.

But for those that have, that have been churning and burning for a couple years, and then they look and they say, I don’t think we’re in a right place, or they come to a point where they have to have their first audit. That’s okay too. It’s never too late. You can always go back and work through everything and see how you can correct it, and that might be working with auditors or grantors or donors to make sure that you get everything in place.

As it was supposed to be, as they had restricted or requested. So really it’s, it’s nice when things are, are put together, but that’s usually not the reality. Usually they’re coming for services because they’ve gotten to a point where they’re like, Oh no, we can’t do this anymore.

Stu: Right. They’ve, they’ve figured out that they have a little bit of a, a problem that they need to, to, to to fix as opposed to being proactive about it and, and starting early in their, in their process.

Are there ways, you know, I know that, that most nonprofits start out kind of on, on very limited budgets and, and things of that nature, and it sounds like it. It, it would be best practice for, for pretty much everybody. To set things up, you know, correctly from the get go. Are, are there ways for non-profits to, to be able to, you know, minimize their investment in, in finance while still, you know, laying that, that solid foundation are there, are there things that, that they should do or could do that that’ll streamline the process of working with, with a firm like you guys?

Alex: Yes. And so when they’re first staring out, if they’re very small and. And aren’t bringing in income at that point. There are usually non-profit resources and organizations that are non-profits themselves within your state that you can reach out to, to just see how you can set things up. And then again, reaching out to people, you know, is a.

Great first step, and then what we’ve done at our firm is we have three tiers of services, and they’re based on the size and the complexity of the nonprofits. So our first tier is four small nonprofits, and that’s designed for those that. Starting to get income, starting to have that revenue coming in and have the need to have a more robust accounting department, but can’t necessarily afford to get a qualified or knowledgeable accountant on their own.

because a lot of nonprofits, they just don’t have the resources to be able to pay the a salary that’s competitive in our market to get who they need. And so we’ve designed our services so that it’s less than what you could typically even get a bookkeeper, a full-time bookkeeper for. And then you’re getting an accountant and a senior accountant and a CFO that’s gonna be working with you, and you don’t have to worry about.

Does fringe benefits and everything that comes along with trying to hire internally.

Stu: Yeah, it can be pretty cost prohibitive, particularly for smaller, smaller firms to try and bring someone on. And then the other component that’s always interesting is, is you, you, you know, you’re not necessarily keeping that person busy full time.

It’s not like they. Necessarily need 40 hours a week to get that, to get that work done mm-hmm. . So that’s cool that, that, that’s something that you, that you offer and then your tiers, I essentially just go up from, from there in terms of in terms of involvement and, and you know, based on the, the size and complexity of, of the

Alex: account.

Correct. So the first tier is for those smaller non-profits, and that really the services there include accounts payable, grant tracking, internal controls, and then as you move into the next tier, it’s for your mid-size non-profits. And so then you add in annual budgeting, donor tracking. Forecasting policies and procedures, and then our top tier, tier three is for non-profits that are at the point that they’re requiring an audit.

Mm-hmm. working with the external auditors, if they have any federal grants, helping them be compliant with that may be planning for capital expenditures if they were gonna need to build a building or renovate and planning those out. We’ve really designed it to fit the size and need as a nonprofit, either grows or where they are at, and where they’re gonna be staying at.

Stu: Nice. You, you’ve mentioned grants a couple times. I know that there’s some complexities with grants and, and I’m, I’m sure that most of most of our audience is pretty familiar with, with the grant writing process and, and what grants entail. But what are some of the pitfalls or, or some of the things that you would recommend people kind of have on their, on their on their radar when it comes to, to applying for and receiving?

Alex: Yes. And so number one, when you start off by applying for grants, it’s very important that if you are not the executive director or the CEO, that you’re communicating to that individual what grant you’re applying for and what it’s for. All too many times I’ve seen where somebody has applied for a grant and it was awarded after they’ve maybe left the organization mm-hmm.

and nobody knows. For or how to spend it. And so it’s always a good idea to make sure that. The executive director is in the know about every single time you’re gonna apply for a grant. And then you really need to have second a grant tracker, and this has to be something that you put grants in that you’ve applied for, but then also grants that you’ve received.

And within that you need to make sure that you have who the grant is from, what the grant period is. How much it was and the restrictions. That’s the number one thing, is the restrictions you have to have to make sure that you’re spending that money as the grantor restricted it to, and that’s gotcha.

That’s gotta be the number one thing that you see out there is that organizations. don’t understand, or they didn’t see it in the grant or there, there’s, there’s a piece that’s missing and they’re not spending the money as the grant was written. And when you, when you do receive a grant, you’ll get a letter that says, This grant is for the purpose of X, Y, Z.

Mm-hmm. . And so, Tracking that and putting it in a tracker so that anybody can see it and doesn’t have to go and find that document and find that exact verbiage in there. That’s key cuz then everybody is able to know what each grant is supposed to be spent for, and then within that you have to make sure that you’re tracking the expenses that you’re using against that.

Stu: Gotcha. What happens when, I mean I’m mis, I’m assuming there are fines in other. Even more harsh penalties for, for not not doing things correctly. What, what can nonprofits expect or what, what can they do if, if perhaps they’ve gotten outside of a of the of the guardrails a little bit on, on a grant?

Alex: Yeah. So really the biggest thing that happens is then the granter doesn’t wanna work with you anymore. Okay? And they are, they won’t wanna provide any grants in the future, or they’ve come to you at the end, cuz you’re supposed to have provided a report saying how you spent that money and you don’t have that information.

And sometimes Granters will ask for that money back. Okay. And so that’s no non-profit wants to do that. Give money, but give money back. You wanna make sure that you’re maintaining that money and so right. That’s why it has to be tracked, because if you don’t, you’re jeopardizing those funds and then the future of being able to apply for that grant or even other grants, because they might hear that you didn’t comply with one, and so then they won’t wanna use.

They don’t wanna use your organization for their grant money. So it’s, it’s really about trying to maintain and build those relationships, not only with the organization that gave you the grant specifically, but within the nonprofit world and making sure that you’re, you’re appropriately spending any money that comes in the.

Stu: Yeah, because donations can be restricted as well, correct?

Alex: That is true, yes. Yeah, and and so just with the same way as grants need to track those, you have to track those donations and make sure that really. Donations even have a stronger relationship because mm-hmm. those donors, or you’re usually working with them one on one to find out what the best fit is for what they wanna donate.

If they have a passion within your organization and they want to make sure that their money goes to building a playground. You need to be able to keep that relationship and be able to thank ’em. So that’s one of the things that you need to do within having your tracker is making sure that you’re sending thank you notes and telling them, Thank you so much for donating X, Y, and Z for the playground that’s gonna help the children in our community, or whatever it may be.

It can be fruit and sweet, but making sure that. , you identify who they are and that you know what they are wanting to grant you for, and then also making sure that you send tax letters at the end of the year so that right, if they, it’s a charitable contribution that they can deduct from their personal tax return, that they have that documentation.

So if you’re not tracking who’s giving you money? , that can be a complete mess if somebody comes later in the year and asks, Well, I need that letter for my taxes and Right. You have no record that they ever gave you money. . Right. . That’s just, they’re gonna go tell how many friends that, Well, I gave money to so and so and they didn’t even have me written down as doing that, so.

Right. It’s just always about making sure that you are compliant. But the relationships and the compliance piece really comes in when you’re doing audits. That’s one of the pieces that the auditors look at, is that you’re maintaining those restrictions that were put on any funds that came in to your organization.

Stu: Yeah. And so it sounds, I mean, some of this sounds like there’s a little bit of an overlap between kind of marketing and sales and, and you know, tracking for financial stuff in terms of mm-hmm. of what you, what you’re helping with. Are you, are you, in terms of your. Work with nonprofits, Are you helping them kind of set up some of these systems that, that do have some overlap or are, are, are, are they distinct from one another in terms of, of, you know, kind of these, these donor tracking and, and messaging?

Components and the financial pieces?

Alex: Yes. So with our firm, the services that we provide we’re set up so that we would have the letters that go out for the tax requirement. As far as any thank you notes and maintaining those relationships, that’s gonna be more of the organization and. The board and the executive director working with whomever is granting or donating any funds.

But in larger organizations that have full community relations departments and finance departments, they really do work together as a donation comes in making sure that the community relations department is doing the thank you. And that component, while the finance team is doing all of the regulatory aspects of having that money come in.

Stu: Yeah, it sounds like that there’s a, a need and, and maybe you have some recommendations for nonprofits out there who are, who are looking for tools. But if there, if this doesn’t exist, I’m sure that it’d be a, something to build. It, which is kind of this, you know, customer or, or I guess donor type relationship management tool that, that kind of houses a lot of this stuff in one spot so that so you can just generate.

Year end reports as well as as marketing materials kind of from the same, the same system. Is that something that you, that you have seen or that you have recommendations

Alex: for? Yes, so there are some that are out there that are large and therefore the bigger nonprofits and, and they’re pretty pricey software and cuz it, it’s more robust and it’s a whole tracking of.

Who and what, what campaigns they would be best fitted for. So really, when you’re looking at smaller non-profits, we have an app that integrates with our systems that tracks who the donors are, and then is able to prepare those donor letters so we have something that we can provide to our clients that.

A little less robust and not as large as some of those software packages out there on the market, but it’s, it’s still very much what the client would need for the type of donations and grants that they would be receiving. And if you’re just starting out, Excel is a great tool as well. And. It’s, it’s very simple, but it’ll get all the information in one spot and somewhere that can be accessible across your organization.

Stu: Yeah, absolutely. I think in the absence of a, of a specific, you know, a CRM or, or, you know, a different type of accounting system that that ties into one just having, you know, having things documented from the. And, and keeping up with it tends to be the, the thing that we recommend. Mm-hmm. You know, so even if you don’t have a, you know, a specific tool, leveraging spreadsheets and just making sure that you’re using them is, is, is the first step I would say.

Alex: Mm-hmm. . Yeah. And it doesn’t have to be complex. Just have a couple columns that names out who, when, how much and what for, and that at least gets you to step. , at least we have it all written down and we know where it’s at, and so we can look back upon.

Stu: Yeah, , it’s, it’s interesting how far just a little bit of organization can, can take take you in, in terms of, of reducing future headaches.

So it’s, it’s, it’s great to hear that, that you can, you can leverage very simple solutions to, to these challenge. .

Alex: Mm-hmm. . Yeah, Absolutely. Especially if you’re a smaller non-profit organization that doesn’t have a lot of grants or donors. You can get by with doing something really simple for a while, and then as you grow, then you’re gonna want to do something with more complexity, but Right.

Just having, just having a document that everything’s stored at that is, that’s key. It’s

Stu: definitely, Absolutely. Absolutely. When, when you see. nonprofits really starting to get to the point of, of really needing your assistance or, or, you know, I guess the, the better way to phrase that question is, is, is there typically kind of a, a tipping point for nonprofits where they really need to start thinking about getting outside help?

Or is it just all over the board depending upon the complexity and et cetera? Is there, is there kind of a. A general mm-hmm. idea of when, when nonprofits should really start looking for, for help in this, in this aspect of their, of their organizations.

Alex: Yes. So really if they’re able to do something right away that is best, but if it’s it,

I would say that once they start applying for grants, because grants are typically gonna want you to have audited financial statements, that’s just part of the grant application. And so in order to be able to have an audit conducted, you need to make sure that you have everything ready for an audit. And so that’s gonna be the point.

The expertise in that field is needed and where services for accounting and advisory would be a necessity for that nonprofit, and especially if they’re looking at any grant or federal funding. And that was really prevalent with the APA and the Coronavirus Relief Fund. Those are a little more complex in what their compliance are, and so you would need to have somebody that really understands.

those programs and is able to help you get to the point where you would be able to go through an audit.

Stu: Yeah, absolutely. It sounds like as, as things get more restrictive, that’s when, that’s when you really need to make sure you have all of your ducks lined up in order to not only show up.

Effectively for you know, for applying for, for these types of opportunities, but but also in, in managing them once, once perhaps you’ve received one. Mm-hmm. .

Alex: Yes. And really a lot of times nonprofits rely on board members that have accounting expertise or maybe a CPA that’s on the board. And while that can be very helpful for the time, Most of the time those are volunteers and so they will do it maybe for a year or so and then they’re off the board or life happens and so Right.

It’s just a really good idea that as soon as you’re able to, to get somebody that is skilled and knowledgeable around nonprofit accounting and get them as part of your team and have. Really there and they, So one of the services that we provide is making the board presentation, prac packages, and even giving those presentations.

and it’s just so important to make sure that you’re able to tell your story through your numbers to your board. Mm-hmm. , and then also to the public. Having annual reports and showing we brought in this much money and this is how we spent it according to the mission, and this is what the impact. And it, you just can’t get away from the finance aspect when it comes to nonprofit organizations.

Stu: Right, right. What are some of the success stories that you’ve seen in terms of, of, you know, a a, a firm or, I’m sorry, an organization that comes in and, and is in disarray? You know what, what’s. Some of the benefits that you’ve, that you’ve can share or, or have recognized or have seen that are just seem miraculous for, for people who have engaged with with a cpa?

Alex: Yes. So a lot of times what you see is that they come in and everything’s just a mess. Nothing is in the proper accounts. They don’t know what’s being spent. They don’t have any policies or procedures on how they do things. Reimbursements might just be somebody comes in and tells you, Hey, I spent 50 bucks and another person writes a check.

So what? What I’ve seen is a lot of times there’s just. The expertise from anybody that might be either on staff or at the board level to know how to put in policies and procedures. So really once you get to that piece and you say, Okay, we’re gonna have it so that you have to have a reimbursement policy, and this is how you go about making sure that you have receipts and everything.

And so really a lot of time it’s just cleaning things up and saying, , these are the rules that should be in place. And this isn’t just to have rules. To have rules. This is to predict not only the non-profit, but the individuals that are requesting or using the funds so that there’s a clear process and a path to how the money is brought in and how it’s spent.

And so usually when you clean this up, you see. Transition of the entire board now having less stress because they feel better because they know that. , there is more control and there’s less risk around the financial piece of the organization. They don’t have to worry as much about is somebody doing something that we’re unaware of?

Are we making sure that everything is in place and all those pieces? Once you finally get to a point where the policies and the procedures, and you have good internal controls, even in a very small nonprofit, It, you just, you can feel the difference in the room, especially with the board. They just feel at ease knowing that that burden is off their shoulders.

Stu: Yeah, I can imagine There’s just a real sense of relief in understanding that that not only is this being handled, Correctly, but, but that any messes are actually being addressed and, and adjusted for to, to, you know, make things, make things work more smoothly moving forward as

Alex: well. Mm-hmm. , Yes, it, it does and it’s just gonna help the organization become stronger and be able to bring in more funds.

And it’s just, it’s invaluable to make sure that your financial. Aspect in your organization is being maintained and somebody is over there making sure that everything is documented and that you’re adhering to the policies that you have in place.

Stu: Yeah, absolutely. One of the things we like to talk about over here at Relish is the idea.

That differentiates between an investment and a cost. And so many times we, we look at, you know, accounting services or marketing services or, you know, even a, even a van or whatever that your, that your organization, organization might need as a cost and, and just by, Really reframing that narrative and, and creating a opportunity for a mindset shift on that to understand that these are investments in your organization and that there should be some sort of, of, you know, return on that.

And you know, I know a lot of people kind of hesitate to you know, to hire people that aren’t billable, for example that aren’t, aren’t adding to that kind of Top line revenue piece. Mm-hmm. . However, when, when you can kind of reframe it and think of, of these types of engagements as investments that open up additional opportunity that, that reduce you know, reduce stress or reduce anxiety that just frees up so much time for, for example, an an executive director to really be focusing on those things that they’re most effective.

At doing and, and you know, I know for my organization, which is, is not a nonprofit you know, one of the first things I did was I, I sat down and I thought, Well, what, what am I, what do I know I’m not great at? And I know that I don’t like, And bookkeeping was one of those things that I was like, you know what?

I, I think this is something that, that would be better off handled by an expert. And you know, I don’t know that I’ve actually thought about. As, as a cost. Since then, it’s just, it’s always just an investment. It frees up a bunch of my time and it frees up a bunch of my head space. And it also just makes sure that we’re, we’re, you know, compliant that we’re doing things by the book and and in the nonprofit world.

I mean, our time is so valuable. You know, and particularly in those, those types of organizations that it’s, that any mm-hmm. , any time you can get back, I think is, is really incredibly powerful to to, to reframe and, and appreciate. So it’s, it’s just really, really cool to hear that you’ve, that you’ve focused on this part of, mm-hmm.

of of, of the world to, to To share your expertise with, Cuz I know that there are so many nonprofits out there that, that do need help. Mm-hmm. .

Alex: And that’s another aspect. Once you have everything in place and you’re in a good financial position with everything coming in and being allocated appropriately, then you can have the finance team so our firm can then focus on annual budget and planning for the future.

Looking at forecasting and so you can work with the executive director that has some ideas about maybe a future fundraiser or an event. And look, okay is does it make sense when we look at our forecast or our budget for next year, is this something that we can do next year? Is this something that we maybe put off a year or two?

And so. Once you have everything cleaned up initially, then it allows you to be able to really look into the future and it’s that advisory piece. And then, so you were speaking about if you need to buy a bus or a van, with having the board of directors understand and have a monthly presentation of the financials where you talk through, this is how much money we have available, and this grant would be able to purchase a van.

And then you have them have more buy-in because they feel like they can rely on what’s being presented to them. Mm-hmm. . And there’s not that fear. Well, if we buy this, are we not gonna be able to make payroll? Right? So you’re looking into the future and saying, No, we, this is, we’re at a point that we’re able to do this and really planning now.

And that’s part of the capital expenditure planning. If we wanna do a renovation in five years, we need to start thinking about that Now, what’s that mean? Do we need to. X amount every month. Do we need to start looking at grants? And so there’s, there’s so many more pieces that you can look at and really try and help your nonprofit grow and fulfill some of those other needs that might not be like a van, for instance.

It’s, it’s not something that is gonna be program focused where the public may see it. But it might be a super important piece that you can’t get the children to your program without the van. Right. So it, it just, it all intertwines with each other and just having a clarity of where you’re at financially and having that, that, like you said, the burden that’s no longer there to knowing.

We have looked at this, we’ve planned it, we have made sure that it makes sense that we aren’t being too risky. It just helps you be able to, again, fulfill that mission and yeah, the ultimate goal.

Stu: Yeah, it’s like proactive. There were a couple things that that came up for me, and one is the, a proactivity versus reactivity piece there.

Mm-hmm. . And, you know, I know someone who You know, is, is approaching retirement age, I suppose. However, they’ve never really done much financial planning for themselves or their family and they, and their, their. Really reluctant to, to do that. Mm-hmm. Because they’re scared of what, what they might see.

Mm-hmm. and, and you know, it, it’s, it’s an interesting concept to just kind of think, Well, if I don’t, if I don’t know what the answer is, then I’ll. , I’ll be okay. Versus, versus actually having that, that knowledge and that understanding and being able to then yeah. You know, come up with a plan around that and, and, you know, this person might be, might be just fine.

They, they, mm-hmm. don’t know, but they, they’re so scared of the, of, of the number or the, the answer that they that they don’t wanna have anything to do with the, with the question at all. Yes. . And, and so I think that, that having, having those, that planning in place and having access to you know, access to those resources that can help you just understand where you are and get a good snapshot.

And then, then you can make actually, you know, proactive type of decisions around that. Mm-hmm. And,

Alex: and yeah, it’s better to be in the know it, it is. It can be really scary cuz you, you don’t know you, It may be that you are unable to sustain operations for so many years, or that you’re looking at having to close a location, but having that information and being able to look and try and plan and evaluate some different avenues.

It’s gonna be better in the end than just avoiding it until it’s too late.

Stu: Yeah, for sure. How do you feel about this idea around kind of abundance thinking versus, versus Oh jeez. Spacing on the opposite of abundance. Cause I try to think about abundance all the time. Scarcity thinking in, in terms of, of financial planning.

Mm-hmm. You know, I’ve, I’ve actually had some, some guests on the show who, who really believe in coming at this from this abundance mindset where, where you say, this is where we wanna go and this is what we need to get there. And so go ahead and budget for that. Even in the absence of that. That funding to start knowing that you, that you can go out and just start fundraising against that new, that new number versus waiting until you have it all figured out.

How do, how do you guys handle those types of, of discussions or, or you know, I guess philosophical approaches to to. .

Alex: So I don’t think it’s bad to have those grandiose thoughts, and we’re gonna have this many grants come in and it’s gonna allow us to do so many more activities. That definitely can be part of your future plans and something that you’re trying to work towards.

But as far as looking at something, A budget or a financial forecast or a plan, financial plan within the next couple of years. I always try and do it so that you’re being realistic with your revenue. So if you, if you have a grant application out there and you’re pretty certain you’re going to get it, then.

Absolutely. You can put it on the budget and just maybe note on there that it hasn’t been awarded, but you’re, you’re sure that you’re going to, or you have an 85% chance that you think you’re gonna get that right. And then I, But on the other side, I also think it’s important to, with your expenses, To again, be very realistic and think about, okay, there’s been inflation, we’re gonna see that in any of the repairs and maintenance we’re gonna need, and, and billing that into your forecast.

So just being not, I mean, you always wanna have those goals and thinking about, Yes, we wanna grow. Yes, we wanna do more. , but it’s super important as you’re looking at planning for the future and what funds are gonna be available to have it be. This is really. As close as we can predict to where our revenue and where our expenditures are gonna be.

So being right more conservative with your revenue and then maybe almost overestimate your expenses. Not a lot. I mean, you know, building in this year is a little different because of the inflation figure, but typically building in a two to 3% increase on expenses so that you don’t get to a point where you’re not able to.

Fulfill those expenses. Mm-hmm. , and you can always adjust. And that’s part of it too. With a nonprofit, you can make adjustments, you can have the forecast that you update when you get a grant you didn’t expect, or unfortunately, if you don’t get a grant, then you can reevaluate. But it’s, it’s better to be realistic and have that mindset when you’re looking at the immediate future.

and have those goals, those big ideas. On a different spreadsheet or different area. . Yeah, .

Stu: Right. Have your have your aspirational,

Alex: Yeah. Spreadsheets. Your dream board over. Yeah. From your foot. That’s where we’re gonna be, But we also wanna make sure that we’re being realistic. Are we gonna be able to build a $2 million building next?

Maybe, I don’t know, but let’s, let’s look at it and not just say, Absolutely. We’re, we’re gonna hit every single one of our goals.

Stu: Right, right. That’s, that’s pretty good advice, I

Alex: think. Yeah. It’s just, you have to be realistic. It’s, it’s the best way to go through it. And then that also is gonna make your bill board feel better as well, knowing that okay, they, they are looking at this and they’re really thinking about it.

If you see something positive later, Oh, they didn’t have a grant in there. They had underestimated their revenue and now they’re adjusting it. That comes off a lot better than saying, Oh, so we are not going to make our budget by a million dollars cuz we put in these grants That Right. We didn’t really think we were gonna get

So that’s what you gotta think about too, is what is, what is the public gonna think and what’s your board gonna think? Yeah. You know, talk about what your dreams are. But when it comes down to the actual figures and making plans for the organization based on the revenue, you really need to evaluate.

those pieces.

Stu: Right, Right. What you guys are all virtual. Yes. What challenges or, or, or things should, should people who are hoping to work with you understand about a virtual financial kind of situation. Do you come in quarterly or do, are, are all of your interactions in the, in the cloud or , whatever we wanna call, Yes.

Alex: So we do all of our meetings through Zoom. Okay. But we really have quite a few touchpoints with our clients, and so every single one of our packages does include unlimited email support. So if you have a question, you just shoot it off to our support email and whoever sees that. And so the support goes to an entire team.

So if somebody’s on vacation, you don’t have to wait for them to come back. Somebody else can grab that and answer it for you. But then we have financial review meetings. And depending on the package that you go with, those can even be unlimited. But then we’re also gonna be there. So if we’re doing the annual budget, We’re gonna have additional meetings and we’d be able to dial in for any of the board meetings to give those board presentations.

And so, While we might not be physically in the next room, we can be a click away and up on video discussing what we need to handle in that moment.

Stu: Nice. I mean, we’ve, we’ve experienced pretty much the same thing over here. It’s you know, it’s just always interesting when, you know, particularly when financial, financial.

Financial components are involved, how people you know, get a little bit more interested in, in, you know, in a, across the desk, kind of a, kind of a relationship. But it’s amazing how you’ve been able to, to handle that. And I think it’s, it’s great cuz it allows you to, to really meet more people where they, where they need it.

Alex: Yes, and we have a lot of security around all of our applications and our software to be able to let the clients know that everything is secure. And we only have things go through our portal, so we don’t want documents and personal information coming through email, so we, we have it all. So it’s, and and I think a lot of organizations are used to that now, that have gone through audits.

A lot of the auditors are doing that remotely. So Nice. You know, there are a lot of different software out there now that is. more protected and secure so that you can guarantee that your information’s not gonna be hanging out there in cyberspace. .

Stu: Nice. That’s awesome. Mm-hmm. . So I, how can people find out more about, about you and your firm and, and what you guys are doing and, and maybe, you know, schedule a consultation if they’re looking for help with their, with their financial auditing and, and and cpa.

Alex: Yes, so I can be reached on Twitter, LinkedIn. So my Twitter handle is at Alex Romero, cpa. LinkedIn. I’m Alexandria Romero dash cpa, but the best place to get information about our firm is at. Better way. cpa.com. And there we have all of our packages and the pricing and what’s included in each of those.

And then some tidbits on differences between non-profits for profits, and also an area that you can click to schedule a meeting with myself or someone on our team to go through your specific needs.

Stu: Oh, that’s awesome. Thank you so much for being on the show today. I, I love having these conversations. I learned so much.

I hope it was super valuable for everybody listening. One of the things that I really also like to do is not just talk about things, but, but inspire people to take action. Mm-hmm. . And if there was one thing that you wanted people to do after listening to our conversation today, what would you have them do?

Alex: The one thing I would have them do is to start tracking any money that you get in the door at your non.

Stu: That sounds like very some advice based upon our conversation. Get a spreadsheet at least. Yes, if pen and paper if you have to. But

Alex: Yes, make sure you know who, who gave you what and for why


Stu: for sure. Thank you so much for being on the show today. I really had a great time chatting Alex. I hope to talk to you really soon. Yes, thank you so much. Sure. Bye-Bye. And there you have it. Another great episode of Relish This. Thanks again for listening. You can find past episodes of the show@relishthis.org.

And remember, if you liked what you heard today, please subscribe and leave a review wherever you listen to podcasts. For more information on purpose marketing, grab your free copy of my book Mission Uncomfortable, How Non-Profits Can Embrace Purpose Driven Marketing to Survive and Thrive. Get your copy now@missionuncomfortablebook.com.

Thanks again for listening. Come back next week, won’t ya.