Hey friends and fellow nonprofit nerds! Get ready for a super fun and informative chat with my buddy Raj Thakkar.
You may know Raj as the founding genius behind FOREsight Financial Services for Good. But did you also know he’s the author of a brand-new book called Fiscally Secure?! Raj knows his stuff when it comes to helping nonprofits get their financial ducks in a row. And let me tell you, it is WAY more interesting than it sounds. Who knew analytics could be so uplifting?
In this episode, we’re talking all things budgeting, fundraising, and shaking that scarcity mindset! Raj shares his 10-step framework for getting – and staying – fiscally fit. I know it sounds intimidating but I promise it’s way more empowering than it is scary.
We also dive into creative ways to build revenue that don’t involve emptying your bank account. Hint: the answer isn’t always hiring expensive development pros! Sometimes the best solutions are right under our quirky nonprofit noses.
So pour yourself something fun (I’m drinking sparkling water with lime today!) and get ready to geek out on numbers. I promise you’ll be feeling inspired, not stressed, by the time our chat is done.
Sound like your kind of episode? Then click play! Let’s get fiscally secure together, friends.
“What I realized was there was actually a method to our madness and ended up calling it “The Fiscal Responsibility Method” where there’s ten components to responsible financial management in the way we define it.” – Raj Thakkar
Important Links:
https://csbm.com/fiscally-secure/
https://www.linkedin.com/in/raj-thakkar-135b172/
Support this podcast: https://anchor.fm/nonprofitlowdown/support
Episode Transcript
RHEA 0:00
Welcome to Nonprofit Lowdown. I’m your host, Rhea Wong.
Hey podcast listeners, Rhea Wong with you once again with Nonprofit Lowdown. Today I’m speaking with my guest and friend, Raj Thakkar. He is the founder and CEO of Foresight Financial Services for Good, as well as the founder and CEO of Tartar School Business Management, and a recent author. His new book is called Fiscally Secure.
So today we are going to talk about being fiscally secure as a nonprofit. Raj, welcome to the show.
RAJ 0:36
Thanks so much for having me.
RHEA 0:38
You and I have known each other for many years, which is funny. We’ve reconnected. But for the folks who are new to you, who don’t know you, tell us a little bit about yourself and your company.
RAJ 0:47
Sure. So about 17 years ago, I first launched a charter school business management after having been the CFO of Explore Charter School in Brooklyn for four years. And I kept noticing how many school leaders were trying to launch their schools. But they were terrified of the financial side of things.
So I launched. Launched it to be initially professional development for finance and operations people as well as board members and school leaders and a lot of the people we were helping were like, you obviously know what you’re doing. Can we outsource this work to you? We gave this choice of do the work for you teach you how and then later.
In 2014, when Mayor Bloomberg was leaving, who was very pro charter school, Mayor de Blasio was coming into power, very anti charter school. I said hey, wait a second. Here’s a big risk facing our organization. Let’s create a doing business as we launched Foresight and we started helping other types of nonprofits beyond charter schools.
RHEA 1:47
It’s funny. I didn’t realize you’d started with Explorer. Morty Balan has been a guest on this podcast, so it feels like small world. Okay. Raj, to be honest, when you hear about being financially secure, I know a lot of nonprofit folks may think it’s maybe not the most exciting topic ever.
So talk to me a little bit about your philosophy when it comes to financial management and nonprofits.
RAJ 2:11
Sure. I’ll start with a personal story of why this matters so much to me. in 1994, my father had his first heart attack. And in 1999, he had his second heart attack and he was a small business owner for 20 years at that point.
And we essentially forced him to sell his home and business and they were feeling very financially insecure, you know They were just like how are we going to get by? My dad was a sole breadwinner. My mom was not working at the time and they had to retire 10 years earlier than anticipated so that created this obsession in me of I don’t want anybody to ever feel like this ever again.
So My professional life initially included being in the for profit world, working at a different startup organizations technology startups. And I happened to be in a place where they were on the brink of bankruptcy, which I did not know when I entered. So having helped them navigate that and saving that company, being part of the team that saved the company from bankruptcy, I was just like, wow, this really excites me.
I know it’s not exciting to everybody else, but it really excites me a lot. On the personal and the professional front, it created this obsession of how do I do this? How do we implement this properly?
RHEA 3:28
I think it’s such an important thing because look, if we’re talking about executive directors or founders, Nobody I know starts an organization with a real passion to look at spreadsheets, right?
A real passion to think about financial sustainability. And yet, it is the lifeblood. Without money coming in, without managing the money, we can’t do the work, we can’t pay our staff, we can’t buy the materials, etc. Talk to me a little bit about, from your perspective, what are the I know you have a framework.
That people should be thinking about as they start to think about their financial health?
RAJ 4:03
During the pandemic, this has been the big project is how do we take all we’ve been implementing for a few decades now and almost reverse engineer the methodology we’ve been using without having previously documented it.
What I realized was there was actually a method to our madness and ended up calling it the fiscal responsibility method where there’s 10. Components to responsible financial management in the way we define it. Whenever there’s 10 of anything, you need a framework to digest it. So like the framework that I came up with was yesterday, which is the accounting all about reconciling the past today, which is the finance, which is all about commanding the present.
And tomorrow, which is the management and governance, which is all about forecasting the future. Within those 10 components, if you could visualize. The first cure within this framework is to establish and evolve roles, responsibilities, policies, and procedures because you need clarity on who’s doing what, when, where, why, and how.
Then the first part of yesterday is to set up and maintain your accounting infrastructure because you need to preserve a solid financial foundation. From there, you have to process payroll precisely and promptly. Where you respect your workforce’s efforts. And how do you do that? Is by paying them on time and paying them accurately.
It’s the least we can do. They’re working really hard. And then the last part of yesterday is to ace the audit. Demonstrate that your financial house is in order. With all of your internal and external stakeholders cure number five is to build reality based budgets where you translate estimate and iterate your vision.
You’re literally taking the words of your vision and converting them into numbers. Cure six is to check against that budget by preparing and analyzing vital financial reports, forecasts and metrics. The goal there is to assess your fiscal health to make informed decisions. You can’t be like fingers crossed.
Let’s hope this works. It has to be based on real data. That proves that you can afford the different expenditures that you want to make. The last part of today is. Control cash carefully where you ensure that plenty of tomorrows can exist and then in the tomorrow column is grow wisely, know whether when and how to scale because every nonprofit should be growing to some degree cure nine is to mitigate risk proactively where you maximize stability and minimize disruptions.
And then last but not least, it’s valuing the invaluable talent and technology that’s getting all of this work done. And the goal there is to amplify your impact and reduce turnover. So again, I unloaded a whole lot. Help me unpack it.
RHEA 6:52
Yeah, no, we’re going to get into it, but I think I’m going to start like philosophically because I.
Thank you. Thank you. I had a very good relationship with my CFO and, I learned a lot from her. And I remember one of our first conversations, I said what are the numbers say? And she said what do you want them to say? And I was like, I don’t, we what are you talking about?
And so that was the first time I realized that a budget tells a story. Do you find that there’s a tension between finance and development sometimes?
RAJ 7:18
Definitely sometimes which is why I always recommend having some sort of alignment between the two because If the left hand doesn’t know what the right hand is doing, then there can be a lot of confusion.
Far too often when a budget doesn’t balance, the temptation is, oh, what’s the difference? Let’s plug that into development and make sure that they raise that money. And it’s no, that doesn’t work that way. You can’t just plug in 2 million and again, fingers crossed and hope that you raise that money.
So we need to know and be informed the accounting side and finance side needs to know what development is trying to raise money for and are there strings attached to those dollars in terms of time restrictions of, you got to use it between this date and that date versus purpose, you can only use it towards computers, but not towards salaries or vice versa.
Or both, cause sometimes the restrictions are there. When you have those two parties aligned, you position yourself best to not leave any money on the table because it’s hard enough to get the money. It’s a shame when we see Oh, you didn’t spend it in time. And we just lost 50, 000 because of that, be on top of that.
We always recommend as part of the monthly financial reports to have. A grant activity report where. You know how much you are allotted, what are the dates you have to use them between, what are the purposes, and how much has been used versus how much is left to use, and by what date does that money have to be spent by, so that you reduce the likelihood of leaving any money on the table.
RHEA 8:52
One of the things that I often run into with, Especially the smaller nonprofits is that they, when they don’t have enough revenue coming in the door, the default is like we should just hire a development director and I’m curious from your perspective, having seen lots of organizations and their cashflow, what are some of the ways that you’ve seen people build a revenue stream that may or may not involve hiring a development director?
RAJ 9:17
One of the lines that one of our teammates always says is the juice worth the squeeze, right? So if your development director costs you X, but only raises X divided by 2 then you’re losing money on the deal. So you have to make sure That that investment is worthwhile. The other thing is I like to make sure that you’re barking up the right trees, are you chasing money that is going to either drastically change the direction of your nonprofit or does it align with what you’re doing?
Because sometimes, even as an entrepreneur, you’re like, oh they’re willing to pay us to do this. Let’s just go do it. But then, if that takes you way off track, then you shouldn’t. And you have to make sure you’re asking the correct foundations and corporate organizations. pursuing the right dollars.
Another thought that comes to mind is having some sort of percentage of likelihood of these dollars coming in. Whenever we work with the development directors, we’ll say, Okay, you apply for 100, 000 for this. What’s the likelihood we’re going to get this? That’s a government grant. It’s 100 percent likely that we’re going to get it.
We just have to jump through all the right hoops. Great. Let’s make sure to jump all through the right hoops. This one, it’s a foundation. It’s our first time. I’ll say 30%. Okay. So that’s 200, 000 30%. Let’s say that 60, 000 of that is, is like the likelihood of what’s coming over. So if we can, Milled between the gap between development and finance.
There’s ways that we can be smart about the likelihood of the dollars that may be coming in. Instead of just, Oh, it came in. Guess what? Now we got to burn through it. Or we applied for the same dollars and we got all of it. Now we have to shift around and figure out which foundations allow us to do an amendment versus not.
There’s a really huge need for development and finance state to get along.
RHEA 11:12
Yeah. And actually, as you’re talking, I think that’s one of the central tensions that I always had to manage, which is because in the nonprofit world, we’re not selling widgets in the same way. So the predictability of revenue can swing pretty widely based on.
Is this foundation changing their priorities, et cetera? And I think that was the toughest thing for me with my board who were coming from the for profit was like why don’t we project out from the next year? And I was like cause money doesn’t come in evenly. And a lot of it is beyond our control.
So how do you mitigate against those kinds of wide swings?
RAJ 11:44
If you’re on top of those numbers and you know it’s coming from, then you can live within your means. So sometimes say it’s a multi year grant and you’d know that, it’s 300, 000. You had said you were going to use an average of 100, 000 each year. But it didn’t quite work out that way.
The first year you ended up spending 80 grand. Okay, great. That leaves an extra 20 grand for year two or year three. So if you stay on top of it and you also collaborate with your auditor, because we’ve also seen some swings in the interpretation of when to recognize those revenues, depending on what the language is in the, Grant letter once you receive it.
In one fiscal year, I saw two completely opposite interpretations. One auditor said there were implied restrictions when you applied for the money. So you haven’t fully earned it yet. And we’re going to leave it in, restricted dollars on the financial statements. And the same grant, one different auditor said, Oh, the letter just says this.
You recognize all of it as soon as you received it. And we’re like, what are you talking about? knowing the difference between cash and accrual accounting is also very important because on a cash basis, things may look amazing. And then on a cruel basis, they may show deficits and it’ll be very confusing to your board, especially if they’re not.
All financial people you’re like, what’s going on here? Bank shows a lot of money, but you’re telling us we had a loss. Explain this to me. So being able to explain this is really important.
RHEA 13:19
I’m getting my PTSD flashbacks of my board meetings. I want to talk about costing out programs for a second, because I think Eds and generally it’s program directors who are overseeing programs.
But I think that there is a little bit of a learning curve when it comes to understanding the true cost of a program. Can you walk us through how you might help people do that? Because I think Especially for program people, we get very involved in kind of the nuts and bolts of the program without kind of bigger picture understanding what is a, cost center versus a revenue generating center versus what we can raise money for versus what is operating at a loss.
RAJ 14:02
There’s a few different ways to slice and dice this. From the auditor’s perspective, they’d like to break things up because they’re required to for one of the statements that’s called the statement of functional expenses. They want to see
how much of your expenses are going towards the program? How much are going towards general and admin? And how much is going towards the fundraising? So that’s layer one because we talk about in the book, the need to satisfy all of your different stakeholders. Auditor wise accounting wise, they want to see that the bulk of your dollars is going towards the program and the minimal amount is going towards general and admin and however much fundraising you do.
That’s what you do. 3 percent 5 percent 10 percent depending on how much you need. So that’s 1 layer for your leadership team. They may define things completely differently. They may say, okay, for this program, we only want to see what the expenses are when it comes to supplies, materials, and equipment.
Another way may be what’s the cost of the people that are involved with running that program? So is it 75 percent of the program manager’s salary? Is it 100 percent of the program? Manager’s salary is it 10 percent of the executive director’s salary? Let’s try to figure out And again, you could, if you have a really detail oriented auditor, they may make you do timesheets to track your time instead of just these guesstimates that are good enough.
So you need to know your auditor of, how detailed you want to get. You can accurately track the cost of the people and it’s not only the salaries, it’s the FICA, the Social Security, Medicare, it’s their benefits, it’s their 401k match or 403b match, it’s really how detailed do you want to go to capture all those costs.
Then the board they may look at a completely different level. They may be saying at a high level, let’s look at our average days of cash. Let’s look at this ratio, that ratio, and they may have a completely different set of criteria because they may be wall street types that are used to this.
And the nonprofit team may be like, the hell do we need all this for? What I always recommend is it’s not this moving set of targets that you’re trying to please each one of the constituents and stakeholders. It’s, as best as you can say, let’s agree upon what metrics we’re going to report out on.
How do we make the auditors happy? How do we make the leadership team happy? How do we make the board happy? If you’re a charter school, how do you make the authorizer happy? If there’s other regulatory agencies that also need to be happy, if there’s a lender involved, if you have a bond issue or something, because they help you buy the building, do we have to make them happy with a certain number of days of cash or whatever other covenants are in the bond?
Just knowing. What everybody wants and making them all happy ideally.
RHEA 16:50
And you make such a good point, and I just want to underscore that for people, which is you should actually have a conversation with your auditors well in advance of your audit. They’re there to help you. They want to make your job easier and their job easier.
So if you can agree on the front end about what is the process, what are you tracking, what kind of record keeping do I need to do, you’re going to save yourself a huge headache. when it comes time for an audit. auditors are your friends, at least
RAJ 17:16
they’re there to find something, right? And, if they’re good, they’re going to find something, right?
And if you’re lucky, you can get through with not a single point on your management letter, not a single verbal recommendation. That’s the goal, which we always strive for, but they’re typically going to find something.
RHEA 17:32
Oh, I know when that management letter came out, I was like okay, guys Raj, as you’re talking about this, in my executive director brain, I’m like, Oh God, this sounds like so much, right?
And the truth is, there’s a little bit of a gap between the financial and regulatory requirements that we have to do as nonprofits and our budget and what we’re able to afford as far as, Services such as yours or a full time CFO. So what would your recommendation be for small nonprofits that really, let’s say under a million dollars, I don’t have the budget to sustain headcount.
RAJ 18:07
I’m a big fan of living within your means, right? Taking your budget and separating them out into knowns versus unknowns. If you know that On average, you’ve gotten 800, 000 a year in revenues, whether it’s government sources, foundation, individual giving, or otherwise on average, we have 800, 000.
Okay, how are we going to spend those dollars to remain fiscally responsible and if some unexpected source of dollars comes into play, we have a wish list that’s waiting, but make sure it stays as a wish list outside of the budget. Okay. If and only if you have a surplus and you truly need this these other items but what I always say is to be conservative with your revenues and aggressive with your expenses and balance the budget on that And then you’re typically in the business of having good news where the finance team says guess what?
We actually have an extra hundred thousand dollars. Should we hire that extra? Administrative person or a programmatic person, or do we want to give more to our constituents who were hoping instead of, Oh, geez, we’re in the whole 200, 000. Now we have to cut for positions and, bad news for constituents and all that kind of stuff like that’s just an awful place to be.
I much rather be in the business of good news than giving out bad news.
RHEA 19:26
I know that for most nonprofits, the biggest expense line is the salary, right? People are expensive. It’s usually about 80 ish percent of the budget for many, especially small nonprofits, the biggest expense for them after the executive director tends to be the development director and I.
In my experience, there’s a lot of uncertainty on a board level, on a, on an executive level okay, we’re about to make this big expense with essentially a gamble that this person is going to help bring in more revenue. So can you talk about how you help your clients think about managing that risk?
Because, the other thing that we know is that the average tenure of a development director is 18 months, so it feels like a very risky, potentially money losing hire for what is essentially an unproven. Risk, like we think that this person can help us bring in more money, based on their past record, et cetera, but we don’t really know.
RAJ 20:24
It’s very similar in a for profit organization of should we hire this salesperson? So it’s the demonstrated track record of the relationships that they have.
The experience that they have with either raising the dollars through foundations and say, yup, I’ve been working with so and so foundation for 10 years. And we’ve gotten money from the four different nonprofits that I worked in the last 10 years. Almost every time, or, I’ve led these massive fundraising events and I know how to coordinate everything.
I have the whole cast of characters and it’s going to cost a lot of money, but it’ll bring a lot of money in. And we just need the board members to produce on the high net worth individuals to come on in and get excited about our program. So I’m always looking at past. Results and then sometimes you have to take a chance on somebody.
I’ll give an example at Explore we had one gentleman who was a teaching assistant who was going back for his MPA at NYU Wagner, and, at the time, Morty was like, Oh, that’s a shame, he’s going back, and I said, I’m like, make him our part time development director, whatever title we gave him, this dude is so passionate about the school program. He knows the kids in and out, and he helped us out in a part time basis. It gave him some income that he needed and he produced results like through the roof because he just cared about the program so much. Again, this may be an anomaly, but we did a the Brooklyn half marathon and we had 20 staff members running it and raised a hundred thousand dollars that caught the council members.
Eyes and then they gave us 150, 000 towards the school’s first library. There were all these unintended positive results , that ended up happening because he came from the programmatic side, he was a great writer and he cared and it was part time work and he needed some money while he was getting his master’s, knowing when to take those calculated risks And then there’s some that will outsource the development side. There’s different firms that are out there. And sometimes it’s a little bit more expensive than an actual hire, but they can get to it quickly if it’s hourly fees, if it’s a fixed fee per month or other ways that people calculate how to cost this out.
What we say is you can fully outsource this work. You can partially outsource the work and have an in house person. That’s a more junior level person. There’s different ways to slice and dice all this work instead of assuming that full time hire is your only shot.
RHEA 22:58
Yeah, I love that so much. It actually led me to my next question, because I think especially for smaller nonprofits, you do have to get creative because you may not have a budget to sustain highly specialized employees, such as yourself or really sophisticated and experienced development director, because those are very expensive, right?
I also think that there’s a world where And I use it personally as an entrepreneur. Like I outsource stuff, on Fiverr on Upwork all the time, because I don’t necessarily need someone in house full time to produce certain projects. So I think, for those folks out there listening, there are, as I say, many ways to skin a cat.
So I think just being creative and thinking about what you need versus what you can hire out for. Raj, As I’m thinking about financial management, where do you recommend that people start if I’m listening to you and I’m like, okay, yes, Raj, like all of this is making sense.
Your 10 points make a lot of sense to me. If I don’t have a CFO, where do I begin?
RAJ 23:57
I would ask what’s at stake and for people to get really clear on a financial, like a board member or treasurer who can Explain these concepts in layperson’s terms. That’s the biggest thing because as soon as someone gets intimidated by the numbers, their eyes and ears shut off and forget it.
It’s not going to happen. And then it’s just a bunch of wishes, without any kind of reality involved. Finding someone who can really understand the numbers and explain them in ways that are clear. To remove that intimidation factor is huge. Then I would create a budget based on as many knowns as possible and see if this is financially feasible.
Because a lot of times people will do the exact opposite of what I recommend is they’re aggressive with the revenues and Oh yeah, we’re going to raise 5 million and then it’s only going to cost us a dollar and it’s yeah, then everybody would be doing it. And. It’s so hard to, to balance the budget.
So I always say that the finances show you your options and the CFO or the finance leader’s job is to not be the naysayer and not be the one that says no all the time. It’s their job to show how this is possible and present options to the board and leadership to saying, yes, that can work, but this is how we have to do it.
So the school example is, this is what your first iteration of your vision leads to, if you were a million dollars in the hole. However, if we add three kids per classroom in the school example, then we can balance the budget. No, but then that’s going to Students per classroom and then a couple of costs here and there and not have teaching assistants for every single classroom just for K to two, so it’s the iterative process between the programmatic leader and the financial leader to see if this can actually work otherwise.
Don’t do it because one day you’re going to have to share bad news.
RHEA 26:07
I wanted to reiterate this so strongly because I do think at least from my experience. The way that we budgeted was not necessarily, it was very conservative, right? But it didn’t necessarily sync up with the vision in the way that I wanted to, right?
So generally it was like, okay we think that we can increase expenses by 3 percent because we think that, we can increase revenue by that much, so we’re going to like back in the expenses to the revenue. And I think as a leader, I would have enjoyed going through a budget and process of what are we trying to achieve this year?
And then what do we need to do it? And then how do we make that work with the numbers? So I think going the other way feels a lot. Better. And yet there’s still that tension between the finance, but I don’t see how that works numerically and the program people be like, I see this big vision of the world and the stint that we’re going to make in the universe.
RAJ 27:01
That’s right. Yeah. And I’m not sure how you feel about volunteers, but there’s a lot of work that can be done by volunteers beyond just stuff and envelopes. I encourage people to look for hidden assets. There’s certain people who can do the job. Of five people and or three people and you’re getting a lot more return on that investment for that particular person.
So make sure that person stays going back to the volunteers like give them real responsibility the only Difference is it’s listen, this is a commitment that you’re making. We need you to be here Five days a week or three days a week or every Monday and Thursday whatever that is, but give them real responsibility and have some sort of process, just like with board members where they sign a contract and it’s very clear what they’re doing, do the same type of thing with volunteers so that they’re like, Oh, I want to come back to this.
I’m actually making a difference instead of just, I remember going to an event where they gave more importance to the volunteers than the actual people we were serving food to. And I’m like, this is backwards. We should give everybody name tags, not just, Oh, look at me.
I’m going off on a tangent on volunteers, but there’s different hidden assets that are all over your nonprofit that I would challenge you to find and make sure you engage them for the long haul.
RHEA 28:16
Often your best donors will be folks that started off as volunteers.
And really, especially for wealthy people, time is more valuable than money. So if they’re already giving up their time, they’re likely going to be willing to support you with their funds. I want to talk about board members for a second, because you mentioned this and I want to circle back to it. So in my experience, and again, and data point of one what I’ve seen is there often a couple people who are very financially savvy, usually, my wall street finance types and then the rest of the board that’s yeah, the finance committee okay, it looks good.
So on the finance end. With the folks who are very savvy I feel like there was a little bit of a disconnect for them between understanding the for profit and the not for profit world. So I think that’s 1 thing. And then I think, generally speaking, there seemed to be this kind of lack of overall financial literacy that kept people from digging into the numbers.
So what do we do here?
RAJ 29:08
How we’ve addressed that is impactful 1 pagers. Which I’m happy to send to you you can make them available to your listeners. We have this one that’s just your top 15 or 20 financial terms and it’s in the form of a quiz so that you match the vocabulary term with its definition so that you understand that and that’s a first pass at it.
But then you describe each one of those key financial terms. And related to real life. So your assets, your liabilities, it’s like, Oh, your assets, the cash that you have your home, your car or whatever, and making it applicable to their real life. We have another one pager that is all about how to get along with your finance committee where you have a fiscal calendar.
With all the deliverables and due dates and who’s responsible and who are you sending these things to? So there’s alignment from payroll to collecting your dollars from your different funding sources to, all the different large expenses that are going out. So you have alignment there.
And then there’s alignment on the reporting. What are the components of this financial report? Not only budget versus actuals, but forecasting on a cash basis when cash is tight, as well as on an accrual basis through fiscal year end. We’re not only where the numbers have been, but where the numbers are headed.
And then the grant activity report that I described before of where do you stand and all the funding sources and then the types of questions you can ask of your school of your nonprofit leader or school leader, whatever organization type it is of the key financial components of the program.
How is this going? Are we, per constituent that we’re helping? How much money we raising? How much money we spending? Is there a balance there? Is it in favor of one or the other? So that it demystifies and puts into lay person’s terms anything that your Wall Street type may overcomplicate unnecessarily.
And I would challenge the Wall Street type and say, listen, we have incredible board members, but they are not financial people. We need you to not intimidate them with all these crazy terms related and real person. But so challenge them to, to explain it. If you’re in house or outsourced, the finance team is not able
RHEA 31:34
Actually, I had exactly that problem. I had someone in private equity who really made it very intimidating for folks. And so I think they didn’t really dig into it. And honestly, the processes he designed was a bit too complicated for where we were as an organization. I was like, we’re not a fortune 500 company.
Like we don’t need this level of complexity. Let’s talk about your book for a second. Who’s it for?
RAJ 31:56
This first version is for charter school leaders the board members. And any stakeholders who want to really understand it better because the authorizers who open and close charter schools the auditors who may want to get into auditing charter schools, they get a better sense, but it’s really meant for the non financial leader of the school or leadership team and the board members.
I wanted to show. That the finances can really strengthen your charter schools and financial mismanagement is the number one reason why they get shut down. And, the epiphany that I had when I was at explore, I’m like, that’s a solvable problem. We can fix this by just sharing this information in relatable ways, instead of let’s hoard this information and.
For the right price, we’ll handle it for you. And it’s a black box that we’ll never describe what’s in it. It’s, and I was like, no, we have to empower people with the 10 components instead of keeping them in the dark.
RHEA 24:30
Yeah. I love that because actually I feel the same way about fundraising, right?
It’s something that people get very intimidated about thinking just happens by magic. Like you go over here and you like make your wife, your magic wand and money comes out. But I also think if you’re empowered to understand what the process is, how to do it. then you know you can do it yourself, right?
It’s almost like a magic superhero power of oh, this is actually not so scary. I, anyone can do it. I just have to understand the components. Now, for folks that are not running charter schools, who are running, smaller community based nonprofits, is this a book that can also help them?
RAJ 33:26
What I’m going to be doing next is I’m going to be converting the manuscript for nonprofits in general. The manuscript of the first book is locked and loaded, but now I just have to make it applicable to all nonprofits across the board. So I expect that sometime in 2024, that version will be ready and.
If you just hang on, another six months or so then that version will be out and, there’s plenty you can learn from the charter school version, but it’s very specific in that, vertical. But yeah, nonprofits, you hang on
Just like you’re passionate about the fundraising side. I’m very passionate about the financial side and really want to little conspiracy theorist than me says that government does not want people to be empowered by finance. They want to keep them in the dark. So they’re giving away their money with credit card debt and student debt and mortgage and all this type of stuff.
We’re all working hard and we want to be in control of this instead of. This money just leaking out of our pockets after working so hard to earn it in the first place.
RHEA 34:24
I don’t think that’s conspiracy theorists at all. I think it’s by design. I think the financial services industry and the government have designed it to make it feel intimidating to use words that make us feel dumb so that we’re not in control of our money and understanding where it goes.
So I agree with you one hundred percent. Is there anything else that we didn’t cover that we think? You think we should cover before we sign off?
RAJ 34:45
Just one of the thoughts that I had around working with your board there’s another one pager that I thought of afterwards, where we’ve laid out the top 12 financial responsibilities, and there’s columns for what should the finance team do, whether it’s an in house, outsourced, or a combination.
What should the leadership team do of the non profit? What should the finance committee of the board do and what should the full board of trustees board of directors do? so it’s it’s creating these boundaries between where does one team? begin and end and where does the next one, pick up or enforce what’s happening or bless what’s happening because through that type of education then people can really Have that intimidation factor reduce.
RHEA 35:31
And I just want to underscore that so strongly because at the end of the day, as a board member, you are legally and fiscally on the hook. So you better understand what the finances are. You better understand that budget. And because when you sign your name on it and like things go south.
They’re coming after you. That’s right. All right. Raj, I’m going to make sure that all of the handouts that you said are in the show notes for folks who want to learn more. I’ll make sure that your LinkedIn profile is also there. So if anyone wants to get in touch with you and your team for some financial services and advice, and for those of you who’ve enjoyed the show, please go to Apple podcasts or wherever you listen and give me a positive review.
It helps people learn more about the show. Thanks so much, everyone.
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