A Modern Nonprofit Podcast: 501(c)3 management

Good morning from a Modern Nonprofit Podcast! Today we have a financial professional & co-founder of Fairlight Advisors, Maya Tussing.

Maya and her team specialize in investing for nonprofit organizations. So, naturally our conversation today will include many topics from the viewpoint of the financial statements, those within the organization that Maya is working with directly, and so much more. Stay tuned for the conversations because you never know what you may need to hear! 

Organizational Roles 

When the conversation of finance comes about, many people pass over the topic because of its complexities. To make it simple, let’s begin with the ‘who?’ Who are Maya and her team working with directly within the 501c3 organization?

When Fairlight Advisors are brought into the conversation, they will typically see a large amount of cash sitting around, maybe in a bank account here or CD there. Common practice is for an organization to have a Director of Finance who oversees the financial health of the organization. Maya also sees this individual within the organization partnered with the board member who is over the finance committee. In essence, the director and board chair work hand in hand to assure the best steps are taken when considering the nonprofit’s finances. This can also many times be a great partnership because it allows for the board to be involved in the process, instead of hearing about it at the monthly/quarterly meetings. 

The expectation of these two roles, whether separate people, (or one person in smaller organizations) is to be able to communicate the financial health of the organization quickly and effectively while in a presentation or board meeting.  

Simply put, it’s important to know where everything is. Many organizations have relationships within the community, and because of this they decide to put a few dollars with a bank to maintain a relationship or have an outstanding dollar amount hiding elsewhere for a rainy day. The job of the Director of Finance, Treasurer, whatever title is given, is to be informed on what is going on in the organization financially and capable of speaking on it. On the flip side, if someone is asked to join the board of directors and potentially has financial experience, they may be asked to oversee the finance committee. 

This is wonderful! But, if that person’s job includes reading the financial statement that is given to them ever so often, they aren’t being used to their full capacity. Both the job of the Director and Board member are to dig deep into the finances of the organization in order to make a collective decision on how to move forward with the resources that are available. 

Asking the Right Questions

Moving right along, Tosha seeks out another great talking point with Maya. She inquires with Maya, ‘What are questions a treasurer should be asking executive leadership, or those running the organization?’ 

The answer may surprise you because they are actually rather simple questions. For example: 

• Where are all the banks that this organization uses?
• Are there certain ratios the organization focuses on?
• How much is in the bank account?
• Are there any brokerage accounts?
• Is there a reserve? How much is in the reserve?

Generally speaking, when wanting to get information and learn more about the topic, seeking first to understand is a great place to start. Putting a puzzle together only works if all the pieces are present. 

Expanding on this topic, discovering trends is also extremely important. 

• What has been the performance of these accounts?
• Do they go up? Down? Why?

All of these, Maya says, can help the individual asking the questions establish a baseline. They can also help raise awareness to potential issues that may otherwise not have been noticed or addressed. 

Without digging deep and understanding the nature of what is happening within the organization, many organizations can essentially become a ticking time bomb. Having a grasp on revenue sources and expenses are one thing, but as Treasurer this role needs to understand the effects of certain financial decisions and how they will ultimately impact the organization in the short and long run. 

Not to mention, an audit is helpful to reconcile potential mistakes, but what it’s not doing is asking the deeper questions that require intuitive thought and decision making. 

Planning for the Future 

Tosha and Maya close the conversation about ways organizations are planning for the future.  Endowments are one of Maya’s favorite tools, regardless of their size. 

These are resources for a 501c3, set aside for a specific purpose. In some cases, outside of its true purpose and intent, they can also be a valuable tool from an optics perspective. They can be perceived as the organization being on top of their planning. 

Some boards can also see investment into capital markets as a scary thing, especially as a non-profit organization. However, many many businesses utilize this space for employee retention, financial growth and group benefits. 

When it comes to planning for the future, it really comes down to the purpose of those dollars and when, where, and how they are needed. 

For example, Maya speaks of not investing in the stock market if the money is needed within the next year, or not putting dollars in a CD because they can be locked away for 5 to 10 years. So it truly does come down to the purpose and intention of those dollars. 

Ultimately, it comes down to being a good steward of the dollars and how the needs of the community are shaping up in the present day, especially for 501c3s. Putting dollars into a long term vessel may not be the most practical if the organization’s job is to provide XYZ benefit for the community. Suddenly, if an event occurs to where the community is now in need of that benefit, but the dollars are locked away, is the organization truly serving its purpose? 

The other side of the spectrum is applicable as well. Organizations aren’t building sustainability for the next 10, 15, 20 years but for generations beyond its current state. Businesses today grasp onto the phrase ‘doing business since XXXX’ year. Sustainability matters and speaks volumes to how a social impact can shape the public’s view of the nonprofit organization. 

And the Treasurer’s job is to be a financial steward of the organization for today’s purpose and tomorrow’s. 

For more resources from Maya and her team, you can visit their website, Fairlight Advisors.com. Here you can also find free nonprofit resources from blogs, a guide to start your endowment and high level information you may need to know. 

Please be sure to engage with the interview. Whether you enjoy listening to it, reading about it, or watching us on YouTube, make sure you review, share, and engage with A Modern Nonprofit Podcast. You can find Tosha and the Charity CFO team on Youtube or our website, thecharitycfo.com!

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