Episode 85: The Nonprofit Success Roadmap: Stage 5 - Build Your Systems
How to qualify for grants? Funders request financial statements to help determine eligibility. How do you produce the financial statements? You need systems in place that track, monitor, and produce reports both the IRS and Funders need. Learn what they are and how to create them.
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This week's episode highlights the nonprofit "Justice for My Sister".
Check out Justice for My Sister! 👇🏿👇🏿👇🏿
Website: http://justiceformysister.com/
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Podcast Transcript
Speaker 1 (00:02):
Hey fam, it's your girl, Amber Wynn, Philanthrepreneur, and I'm excited about 2024. A lot of changes are in store here on air with Amber Wynn, and as I wrap up with new episodes and some new additions to the format, I wanted to revisit probably the most important episodes on the show, the nonprofit success roadmap, because when you stage your nonprofit, you save yourself hundreds of hours in sweat equity and thousands of dollars out of your pocket because you're not focusing on work, your organization isn't ready for it. Here's the thing, you have to be honest. If you've been self-funding your organization for the past 5, 10, 15, 20 years, don't say, oh, I have an accurate budget, or I have a clear mission. Because if you did, you wouldn't still be self-funding your organization do something different to get a different result. Okay? So take a look at the seven stages of the nonprofit success roadmap to determine where your organization is and work to move toward the next stage and look out for new episodes.
Speaker 2 (01:11):
Welcome to On Air with Amber Wynn, where nonprofit leaders learned fuse passion and commitment with proven business strategies to create long-term funding impact and sustainability. And now here's your host and resident, Philanthrepreneur, Amber Wynn.
Speaker 3 (01:31):
Hey fam, it's Amber Wynn, your residential. Philanthrepreneur. I'm so excited about today's session because of all of the things that I have to tell you. Listen to me. Today's session is the most important. We are talking about the nonprofit success roadmap and we're on stage five. Stage five is build your systems. If I can tell you one reason why nonprofits don't qualify for grants have been unsuccessful with getting funding, this is the reason. It's because they don't have an infrastructure. And when I say infrastructure, you may say, Amber, what's infrastructure? We're going to dive into all of that later today, but just know that this is the most important session that you could possibly listen to the infrastructure of your organizations. The foundation is all about systems and this whole program, this podcast is specifically created to support the most important people in the world. My nonprofit leaders, I'm your girl and I got you. And at the end of the day, it's all about being successful. It's all about making an impact in your community. And when we come back from this sponsor break, we're going to talk about how you're going to do that. We're going to talk about how you're going to fund your organization. We're going to talk about sustainability, and it all starts with building your system. So when we come back, we're going to jump right into that.
Speaker 4 (03:10):
Do you have a tool that organizes your company's paperwork and takes care of all your record keeping? Does your current record keeping systems send you 90 day alerts to remind you that your key documents are about to expire and need to be renewed? Can you find contracts and procurement opportunities in seconds from any of the 50 United States so you can grow your business?
(03:36):
It is your business organized so that you can tell which key documents are needed to efficiently run the business. How about woman owned small business or disadvantaged business enterprise certifications? You have a checklist of all the key documents you need to become certified. Does your current system allow you to conduct market research from multiple sources and provide you industry and market data in seconds? Well, small BizPro does all of that and more small BizPro is the number one business management, compliance, procurement assistance and market research assistance tool on the market today. Download the app now and you will be amazed. It's like having three additional employees working for you, but you don't have to pay them. What are you waiting for?
Speaker 3 (04:23):
Welcome back today's session. For those of you just joining us, you're on air with your girl, Amber Wynn, Philanthrepreneur, where I fuse 30 years of nonprofit passion and commitment with proven business strategies to create consistent that's important long-term sustainability for nonprofit organizations. I am your I got you girl because I got you. I got you. Because at the end of the day, running a nonprofit is not easy. It's difficult. I would say it's more difficult than running a for-profit, but that's just my opinion. But no worries because I'm your girl and I got you. And today we are talking about building your systems and before we went to the commercial break, I was saying that this is the most important episode that you can possibly listen to because this is the area that most nonprofits miss, and this is the area that will keep you from obtaining funding If you don't have systems, if you don't have an infrastructure, people will say, oh yeah, you need to create your infrastructure.
(05:35):
You may say, well, what is that? Your infrastructure or your systems? So the purpose of your systems, if I can just keep it real and that's what I'm going to do for you, is to help you look the part. If you think about relationship, we go into things very superficially, right? If a person that you see on the street looks a certain way, you may or may not be attracted to them, but they look a certain part that you are looking for, right? For some people it could be someone who's super tall and athletic build for other people, they can be sin or whatever, but at the end of the day, they look a certain way that attracts you to them. The same thing goes for a nonprofit funding agency, except they have rules and regulations that they have to follow. So you need to look the part I have founders say to me, I can't get funding because they keep asking me for three years of financial statements.
(06:35):
I don't have three years of financial statements. I just got started, so I'm not sure how I'm ever going to get funding. And I'm here to tell you, you have to create your systems. If you had three fish fries for the last three years and it netted $350, you can provide that to that funding agency. Why? Because it's money coming in. It's money that's going towards some type of expenses in your organization, and then you should be able to spit out some type of financial statement that shows the money came in, the money was spent on something and now I can document it. It's just that simple. They're not saying you have to have a financial statement that shows you have $3,500 million in your account. They're saying, I need a financial statement demonstrating that you're operating as a business. So at the end of the day, they're looking for an organization that looks the part.
(07:34):
So your systems will help you do that. So if you pay attention to my sponsors, I've got wave apps, I've got Small Biz Pro, I've got nonprofit elite, I've got nonprofit ready. These sponsors are the companies that are going to help you to build your infrastructure. I pick them intentionally. I want to provide you with resources that's going to help you strengthen your nonprofit. Having the fundamental elements is what's going to make you succeed. So when we talk about looking the part funders are looking for, it's called GAP, generally accepted accounting practices. Nonprofits should follow generally accepted accounting practices. What does that mean? That means that number one, you have a business banking account. I've had people say to me, well, if I don't have any money, why am I going to spend waste money? Is what they say. Waste money opening a banking account because it is the generally accepted accounting practice that your funder is looking for so that you can look the part of a bonafide nonprofit organization.
(08:42):
Do you see what I'm saying? You've got to look the part. So when you get that fish fry money, you deposit it into that account. Now you've got statements proving that you have money coming into your account. If they ask you for three years of financial statements, you use that wave app. That wave app can create your balance sheet. It can create your chart of accounts and whatever financial statement that your funder is asking for, you can produce. You don't have to have go gobs of money in your account, but you do have to be able to track it. And so your systems talk about your bank account. It also, one of your most important financial statements is your annual budget. And a lot of founders, because they just don't know, don't realize that, but your annual budget says a lot about your organization. It is the fiscal representation of your organization.
(09:45):
So having a system in place that tracks the monies that come in and that pays for those budget line items that are allocated for your budget is huge. That is what your nonprofit funding source is looking for. So when I tell you that building your systems is important, it's important. It's also going to help you when you do get your money so that you can be compliance ready. Compliance means they've given you the money, you've spent the money, and now you've got to demonstrate to them that you spent the money on what it is you said you were going to spend it on. If they gave you $250,000 to go towards programs, specifically swim programs, they're going to look at your financial statements. They're going to look at the monies going out and see what you spent your dollars on. Yes, that's what they're asking for it for.
(10:41):
This is one of the reasons why I tell people paying for a grant writer with somebody's grant after it's been awarded is mismanagement of funds. This is why they're asking you for your financial statements. Nowhere in that proposal did they say that they were going to pay for a grant writer who wrote a grant a year before you even got the award. That's mismanagement of funds. So these systems help funders to make sure that you are doing what you promise you're going to say with their money. Because at the end of the day, these funders aren't just giving away money for the sake of giving away money. They want to accomplish their funding goals. They want to help reduce the opportunity gap in education. So they're giving you money because you said, oh, we've got this amazing program that's going to increase literacy and increase academic achievement.
(11:30):
So they're going to use your program to prove that they are investing in communities to close the opportunity gap. It's a partnership. It's not just some free money that wealthy people are giving away. And I think people going into the nonprofit field need to understand that the return on their investment, the RO OI is seeing the proof that you've done the work that you've promised you're going to do for this grant. And so when we talk about building systems, we need to make it so where it's easy, number one, for you to receive the money. So that's having a banking account, having some type of accounting system that can monitor the comings and goings of your money, having a chart of accounts that shows a funder what your priorities are, where your money's being allocated. All of that comes down to having a solid infrastructure, right?
(12:28):
And as a leader of your organization, you need to be able to say, listen, we got this grant for $250,000 in January. Here we are in August. How much money is still left in the account? Why do you need to know that? Well, because the funder may ask you for a quarterly report, and if you don't have a system in place, you can't show them so far how much of their money they've spent. And the reason why they're asking you for quarterly is because if you are mismanaging their funds, they're going to cut you off. Or let me put it this way. They want to step in and help you. They want to help you to get things on track. That's how they're going to say it. But if you're doing egregious things with their money, they're going to cut you off, and that's not what we want.
(13:20):
We want you to have systems in place so that you can look at any moment in time to see where you are with your funds. For example, let's just say you are midway into your fiscal year and you realize that because of covid, you had to adjust and do some other things that required you to expend monies you didn't anticipate on expending, right? So now you're about $50,000 short. Having systems in place will allow you to see that not only would it allow you to see that, it will allow you to prove that to funders. So you may need to go to or your board, your board may need to go to another funding source and say, Hey, because of covid, we had to pivot. That required us to spend money that we didn't anticipate spending in order to meet the needs of our community.
(14:12):
Can you support us with a $50,000 grant? Here's the financial statement that shows you this is what we allocated for our budget. This is how much we've spent. This is how much of a gap we have, and we need you to fill it. So a lot of people get squirmish when talking about financial statements, but financial statements are your friends, because they are numbers, it's proof that you're doing the work. It's proof that you need the help. If it's an accounting form, a financial statement that they're asking for, they're just looking for something tangible versus all of this that their money's being used or can be used with the intention that it's given. So the other thing is that your systems will allow you to generate reports, right?
(15:12):
When someone gives you money and they like what you do, they need to be able to go back to their board. They need to be able to go to their funders and say, Hey, our money is doing amazing job. They've got 15, 20, a hundred agencies that they're funding. They're not there in the space. They don't know the impact that you're making. So they realize they're relying on your reports. They get the reports during the board meeting. This is what they're saying. We see here that our $250,000 going to the Amber Wynn Foundation has served over 50 young girls. We see here that they've been partnered with the top entrepreneurial organizations in Southern California. They get to report out on that. So that is the purpose of your reports so that they can justify the money that they're giving to you, and let's not get it twisted.
(16:11):
If you're giving them two or three sentences that doesn't inspire or demonstrate where that money was going, they're not going to fund you the next year. So I always look at reports as my opportunity to continue getting funding from another organization. So I'm going to lay it on thick. I'm going to let them know exactly where their money went. I'm going to let them know what things I discovered. This is one thing that I learned from one of my mentors. Sometimes you think that a program is going to go the way that it should go, and then life happens. When I was working at Community Construction Training Center, my mentor at the time was Mary Scott, and I was like the program coordinator for this youth program over in Avalon Gardens, and I'm like, oh my goodness, Mary, we didn't hit our target. What are we going to do?
(17:06):
Of course, I'm type A, right? I'm always going to hit my marks. She's like, well, what happened? I said, well, we didn't have as many programs because we had shootings in the area, and so we took the kids inside and so we couldn't do those things. She's like, well, then that's what we'll tell them. Life happens. So maybe we'll ask them for money so that we can take the girls or the kids to another location that's safer. So sometimes your reports help to reveal how you can improve your programs. It's not always it everything's so perfect. Sometimes it's like, this is how we can shift to improve our programs, but you don't know it and they don't know it unless you have a report that's saying it. So having systems in place so that you can, number one, count the number of people that you're servicing in your report, you need to let them know of the 250 students we said we would service this year, we're in quarter one.
(18:05):
We've serviced 75. So that lets them know that you're on track. I'm saying all this to say that your systems are in place to help you, help you with managing your money, help you with managing your program, help you with demonstrating your impact, help you with proving that you're doing everything that you say you're going to do in your systems. You're gathering all of this information, and then they're spitting all of this information out, and then you're taking this information and you're using it to strategize with. You're using it to tell your story. You're using it to toot your horn, and you're also using it to identify gaps. This is what you're going to share with your board guys. We realize that the youth that we're serving are in this community. We want to get them to this swim class because we're seeing a high rise in deaths because our kids don't know how to swim, but they can't traverse these communities because of the gang activity.
(19:09):
So we need a van. That only happens when you have information coming in that you can track your systems. So all of this can't be stored in your head. It can't be jotted down on a piece of paper. You need to have it all in one area or multiple areas, and you need to be able to gather information from here and here and here. Put it together in a chart, put it together in a table, put it together with a narrative and information so that you can tell your story. Systems are key, and this is where a lot of people miss out. They're in the community, they're doing the work, but they're not tracking it. They're in the community, they're doing the work, but they're not tracking all of the money that's coming out of their pocket. They're spending it. You're spending it and you're spending it because there's a need.
(20:00):
But if you had a system in place that said, okay, here's this receipt and it went for this, here's this receipt, and it went for this, and at the end of the quarter when you reconcile, you'd say, and I've had this happen. Oh my goodness, I've spent $14,000 of my own money. I had an amazing young lady when I helped her put together her systems. That's what she said. What I've spent $14,000 of my own money. She didn't even know it because she was just giving and giving and giving. She's working her full-time job during the day, not even realizing that she's just giving, giving. But now that she has this system in place, she can say, I need $14,000 from somebody to cover these expenses and not out of her pocket. But it wasn't until she put her system in place, her generally accepted accounting practice, where she tracked her receipts and her expenses that she could tell this story.
(20:56):
So when I say to you that this is the most important episode, and I got a lot of episodes and I have a lot of information and I have a lot of important stuff, but if you don't have your systems, if you don't have a bank account, if you don't have some type of accounting system that's tracking your finances, if you don't have some kind of system that's going to help you with your reports and your compliance, you will never be successful. You will never reach that level of sustainability because you're going to have this big, huge gaping hole in your foundation. This is what you're going to need to give those nonprofit funding agencies when they request it, your financial statements, your reports, your compliance, whatever they're asking for. So when I tell you that this is the most important episode, I'm not exaggerating.
(21:47):
That's not to say that somewhere down in the future, I won't say this is the most important thing because there's so many things that are important. But this I'm going in saying is the most important piece of information that I can share with you. A nonprofit can only be successful, and I define successful as having consistent streams of revenue. If you have your infrastructure, your infrastructure consists of having systems. Alright? Yeah, I've been yapping. I get excited about this stuff because I know that this is going to get you to where you need to be, right? We're on stage five, and in order for you to get to stage six and stage seven, you've got to have your foundation in place. All right, so right now we are going to pause and go to a sponsor and I'm going to come back and we'll pick back up. All right, let's pause for a second.
Speaker 5 (22:48):
This is you and this is your business. From invoicing your first client to your 10th client, to your hundredth client, you'll need to get paid quickly. Pretty soon you'll be ready to hire some help and you'll need to pay them. As your business grows, wave is there to grow with you.
Speaker 3 (23:20):
Hey, we're back, and today we are talking about the most important stage in the whole nonprofit success roadmap. Stage five, which is building your systems. I've been talking to you about what that is. In a nutshell, it's having a business bank account. It's having an accounting software, a financial tracking system, a compliance and monitoring system, and a payroll system. Now, you may say to me, Amber, I'm not even getting paid, but you need to have the payroll system in place so that when you get that grant, when you get the corporate sponsorship, you have the system in place so that you can go out and make those payments. And what I'm going to give you today are 10 free or low cost resources to build out your nonprofit systems. We got to start where you are and you may not have money coming in, so you may not have money to invest in into your systems, but it's important.
(24:22):
You got to be ready. You can't get ready. So I'm going to share with you some resources that I've secured. Wave Apps being one of them, that's a free resource. Small Biz Pro is a low investment resource that you can use to help build your infrastructure so that you can get to where you need to be. Alright, so at this point we go to Ask Amber, and this is where you get to ask me any of the pressing questions that you have, something that you're thinking about. If you've had information that you're not sure is accurate or any of that, I am here to share with you all of my 30 years of experience as a grant writer and executive director as a funder so that you can get your questions answered. So today's question is about systems. What's the most important system that I need to start off with as a startup?
(25:32):
If you're just starting your nonprofit organization, you really need all of your systems. You need a bank account for one, because you need to be able to deposit your money into that account. Your funding agency can ask you for bank statements, and what you don't want them to see is you paying money to get your hair done and you're paying for money for groceries and car repairs while they may be yours. You just don't want that confusion. Now they're going to ask you for a certified audit and all of that stuff. So have your own banking account. Is there an investment with that? Yes, there is. There's money for starting a bank account. You have to put money into the account, just make that commitment. But I would say there are two systems you need to have for sure. Number one is you need to have an accounting system.
(26:23):
I promote Wave Apps because I use it number one, but it's free. And on this app you can go in and you connect it to your bank so it can track all of your debits and your credits. When a funder asks you for a statement of accounts, when they ask you for a balance sheet, you go in, you put the date, the range, the time, you press a button, you get a financial statement, you get a balance sheet, you get a statement of accounts, you get year to date. I will almost cried. Your girl is not a numbers person. I'm just going to admit to, yes, I've done grant writing and when I've done it, I've had to check it like six times because it's just not my forte. It is what it is. So to find Wave Apps and to see that it's free and to go in and to be able to push a button that says balance sheet that says whatever the financial statement, it was just a godsend.
(27:27):
So I'm telling you it's free. And then for Small Biz Pro, this is actually a portal that I have in the back of my mind, been thinking about creating for quite some time. A place where nonprofit organizations can store all of their previous proposals, can store their 501(c)(3) tax exempt status, their certificates, everything in one place. This particular app not only stores it safely, it's encrypted, but they also have it. So where they send you reminders May 15th, it'll be like Bing, 90 days before it's time for you to file your nine 90 Bing. It's time for you to register Bing. So these alerts are helpful so that you don't miss the times that you're supposed to submit to your funder. Bing, all of that information is there in one location. It has templates. If you're at a certain level, it has everything that you need as a nonprofit to manage your infrastructure, to manage your systems. So again, I'm going to provide you with the link for my 10 free or low cost resources to build your nonprofit systems, which is your nonprofit infrastructure.
(28:51):
And some of my sponsors are in there just to let you know. But yeah, I think it's really, really, really important that you understand that. And right now, I just want you to focus on just building your infrastructure, building your systems so that you can be effective. Alright, I know I get on my little soap box, but having been on the other side as a funder, I know what's important, and I just really want you to understand that sometimes when you're not in it, and I admit it before I was on the funding side, I'm like, they don't have nothing else better to do than to make me fill out this information. That is not the case. Your funders have to report to the IRS, and these are the systems. These are the documents that they use to do that. So today in this episode, I'm going to share with you this amazing program.
(29:46):
It's a nonprofit. It's actually a project of community partners. A little bit later we're going to talk about fiscal sponsorship. And this organization decided to leverage that. They have a fiscal sponsor, so they are a project of community partners, and it's called Justice for My Sister, and I'm going to share with you just a little snippet of some of the work that they're doing. And it started off as a movie, right? It's a documentary of this young lady trying to get justice for her sister in Guatemala who was killed, and it morphed into this amazing program now under Community Partners that deals with gender-based violence and fide feminine side, I can't pronounce it, I apologize. And it's public arts program and a video production training for women of color, L-G-B-T-Q, young adults. And so let's take just a little look at some of the work that they did.
Speaker 6 (30:50):
I'm Kimberly Walta, the director producer of Justice for My Sister, an award-winning documentary about violence against women in Guatemala. The story follows Rebecca ez, a woman who struggles through her country's notoriously corrupt justice system to hold her sister's killer accountable. Despite tremendous odds, she emerges as a leader in her community. By breaking the silence, she encourages others to do the same. Rebecca has encouraged me to share my own story of survival, and in so doing, I've been able to work through the stigma, sense of blame and silence that sexual assault creates. We need to form leaders, women and men, so that we transform our culture from one that enables and justifies violence against women to one that holds people accountable for the harm that they cause.
Speaker 3 (32:00):
So yeah, as I said before, it's an amazing project and the work that they do aims to train young professionals of color, LGBT, and other historically underrepresented voices in video production to change the face of Hollywood so that it centers voices of diverse advocates for gender equality, who vested interest in ending all forms of gender-based violence. Consider supporting Justice for my sister, a Community partners project@wwwnevasnovellas.com. That's N-U-E-V-A-S-N-O vs.com. Or make your checks payable to Community Partners for Justice for My Sister Collective and mail it to Community partners, 100 North Alameda Street, suite two 40, Los Angeles, California 90012. Thank you Justice for my sister, for advocating for Voices of Women who goes silence every year. I think that's extremely important. All right, so we're going to wrap up today's session with a mindset minute. And I think it's really, really important because it's something that I tell nonprofit leaders every day, and that is you have to invest in your business.
(33:26):
I have nonprofit founders trying hard, like the hardest not to spend money because they believe as a nonprofit, they shouldn't have to. And so they spend so much energy trying to get things donated, trying to get people to volunteer that their organization never thrives. You're not supposed to self-fund your organization, but at the same time, it's a business and you need to realize that a business has business expenses and that you need to invest in your business in order for it to thrive. So if you're expecting people to just give to you and to volunteer, that's the wrong mindset. The right mindset is to understand that the nonprofit that you founded is a business. It's just a business with a philanthropic purpose. And in that space, you get certain benefits, right? People get certain write offs for donating to your organization, but you as the founder, you as the executive director, have to understand that this business has business expenses that you are responsible for covering.
(34:32):
So these business systems that I've been talking about today, that's the organization's responsibility. It's not the responsibility of a funder to pay for your banking and your accounting and your compliance system. That's why you have a board. So they can help you fundraise for unrestricted funds. That's why you are the executive director, so that you can fundraise for unrestricted funds so that you can purchase the things that you need to run your organization. If I were to say anything from this mindset minute is to embrace the fact that as a business, there are business expenses and that you need to invest in your business. All right? It can be challenging. I mean, I'm a consultant and I have to invest in my business, and sometimes I'm like, my goodness, there's more money going out than coming in. But it's what you do when you take on starting a business.
(35:28):
And a nonprofit is a business. It is a business that is making a difference in your communities. And I want to personally thank each and every one of you because we don't get thanked all the time, right? It's a thankless job. People need your support and people need your help, but sometimes they're a little thoughtless. So I'm here, your biggest cheerleader thanking you for all the work that you're doing. I'm here. I got you. I'm going to support you in building in a strong nonprofit so that you're not self-funding it, and so that you're making the impact that you want to make in your community. So thank you for joining me. I hope you join me next week. We've got some more amazing information to share with you. We're actually on stage five. We've got two more stages that we have to go stage six and stage seven, and then we're going to start getting granular diving into the specific topics.
(36:22):
Me giving you trade secrets, me giving you actual solutions to some of the problems that you're having. But I wanted to lay the foundation with the nonprofit success roadmap so that as a founder, you can stage yourself, you can get rid of some of that overwhelm thinking you have to do everything. No, you don't. Find out what stage you're in so that you know what you need to do to complete and that particular stage, get that done, move on to the next stage. Alright, so thank you for joining me this week, and I'll see you on the flip side.
Speaker 2 (36:59):
Thanks for listening. If you enjoyed this episode, subscribe and leave a review on iTunes. Head over to www.amberwynn.net/podcast for the links and resources mentioned in today's podcast. See you next time.
