Hi, welcome to valuation podcast.com, a podcast and video series about all things related to business and valuation. My name is Melissa Gragg, and I own a valuation company in St. Louis, Missouri. I have the privilege of discussing nonprofit organization, accounting, strategic planning, and management today with Tasha Anderson, a CPA and nonprofit accounting expert in St. Louis, Missouri. Welcome Tasha, how are you?
Tosha Anderson:I'm great. Thanks so much for having me today.
Melissa Gragg:Awesome. So you started your accounting firm, the charity CFO in order to focus on accounting services for nonprofit organizations. So let's just start with something basic, which is kind of explaining some of these simple concepts for our listeners, such as what is a nonprofit organization, and is it the same as a nonprofit foundation or association or are we getting them all confused?
Tosha Anderson:So I think in a very basic way, we can describe a nonprofit organization. Is it designation that the state or the feds will give you it's a type of business? And I like to joke that nonprofit is a tax status, not a business model, but that's really what it is. It's really just a tax status, much like you might consider a C corporation or an S corporation, a partnership, a sole proprietor, and underneath the title of nonprofit organization, you will actually have different types of businesses, including foundations associations, or what a lot of people think about nonprofit organizations are those that fall into the five Oh one C three that are public charity, but you might also underneath that have different things that, um, you might not think about. So for example, churches or houses of worship could technically be a five, a one C three. So that is technically a nonprofit, but the words get a little bit confusing, but ultimately a nonprofit organization is really just a tax status and a designation. And underneath that, you're going to have different types of organizations, depending on what the purpose or operations of your organization, what specifically it does. The IRS has different designations for different types of missions.
Melissa Gragg:And so I think that some people, when they think of nonprofits, they don't necessarily understand the concept. So because they're like, well, some of these nonprofits are actually making money, so isn't that a profit organization. And so can you help us kind of, you know, these nonprofits are getting money, but it, what does that really mean in that space?
Tosha Anderson:I get that question a lot, a lot of times from donors, should they be making a profit or have surpluses at the end of the year and also from founders or CEOs of a nonprofit, how much profit should I be able to make? How much should I be able to retain? And frankly, especially now in this economic uncertainty, many of my clients, if they're, I would say better than other types of small businesses, for example, restaurants, because they are encourage and it is best to operate at least for a period of time with a surplus to build what we call a reserve. So in the absence of surpluses or profits, we don't accumulate a savings. So it's just, just like any other business or, you know, your personal income. If you spend more than you take in, you're never going to be able to save. And if you don't save, then you can't weather economic hardships, like a loss of a significant contract, a loss of a particular donor, um, additional increases in expenses that maybe you didn't plan for. And in most cases, most charity watchdogs, including the better business Bureau, um, charity navigator, or even funders like United way have set best practice standards to say a minimum of 25% of their operations. So if they're at a million dollar organization, they should have$250,000 sitting in a reserve or savings account to weather, some of those uncertainties and without a surplus, this is what I tell people without a surplus. You're never going to be able to do that. And interestingly, um, I've did an entire analysis earlier this year in response to some of the economic volatility with either the stock market or just in general. And most of my clients, I had about 65 clients at the time. And I think all the 10 had an excess of 90 days of cash. And frankly, I don't know that many small businesses that operate in that way. And although we did experience hardships with loss of funding or the volatility with stock market, for those organizations that have investments, but because they had that savings account, they were able to retain staff. They were able to continue programming in spite of temporary losses and funding, which, which has been really great.
Melissa Gragg:It has been a really important piece of this, you know, going through this kind of economic cycle, if you will. Um, but I think another thing that people get a little bit confused on and they think that nonprofits are only focused on fundraising, but what do you see as some of the, you know, an additional biggest concern in this nonprofit sector?
Tosha Anderson:Yeah. I think we think about fundraising in the sense of thinking about that public charity, that everybody makes donations, crowd fundraising. And since I've been working with nonprofits, which has been about 15 years now, more and more nonprofits are operating with an entrepreneurial mindset, meaning they're looking for ways to earn revenue and not simply rely on fundraising dollars, as you would imagine, losing funders or with the stock market changing pretty significantly, um, to the, to the positive or the negative. It can create a lot of volatility in their ability to continue their programming. So more organizations have focused on diversifying their revenue, oftentimes with earned revenue, uh, some have received contracts or competed with contracts for, for profit businesses, particularly government contracts for different public services. Uh, they've created either special events or they've diversified their marketing to not simply being the, the, you know, the mailers or the annual reports that they sent out with. You know, what essentially looks like an offering envelope that you have to send back many are targeting digital marketing. They're looking for crowd fundraising, they're looking for sponsorships, they're really diversifying what they're doing. So of course revenue is really important, but also being really intentional on their expenses. And one of the things that I do, some of my favorite clients are those that are really entrepreneurial in the sense of how can we work as efficiently as possible. So investing in things that are going to save a tremendous amount of man hours, time, energy, and, and it's kind of interesting how much automation and integration some of my nonprofit clients have had or use within their ongoing operations and how that might be different. Um, certainly different from some of their government sources, you know, just comparing what they prepare internally with what, how they have to report. It's so significantly different because nonprofits know in order to compete, they have to stay relevant. They have to use technology, they have to integrate things. So they're managing to the expenses and finding the smartest way to do things, uh, and being resourceful as possible. So I think they're focused on a lot of things right now, in addition to just the normal operations of how do you bring money in and how do you spend money more and more donors are asking for quality outcomes. And that's something that I think people underestimate what that looks like. I used to be a CFO of a nonprofit, and we put together all of the contracts that we had, which were 14 different government contracts. And we listed all of the outcomes that we had to report on at some point during the year. And we had four pages front and back with them with the reasonable font size to have different outcomes that we had to report on four pages front and back of the different outcomes. So I think people don't realize the level of accountability. I know that we're transparency is a buzzword right now in the industry, but really it's not just transparency on the numbers. It's also transparency on the programs of what are they doing, what are they expecting to do? So nonprofits are really trying to juggle all of the known and standard, you know, compliance and reporting requirements that they're subject to, but how do they constantly pivot and adapt to the, the significant changes in the outcome? Reporting. Everybody wants something different. They want to report in a different way. And the best way to do that is through technology. So we've seen a huge shift in that space too well. And I think that as I, cause one of it is bringing the money in the second is how you spend it and how you're efficient with it. And, you know, for a firm like yours or any accounting firm, you can come in and just do the simple, you know, check this box and okay, here's your tax return and, and go on your way. But you guys offer a little bit more in helping really these nonprofits be successful, which is a little different than just offering accounting services. Right. So what are some of the other ways that you help these firms kind of be more efficient or do you go in and give them some strategic planning or strategic suggestions of how to run the company? Yeah. I like to joke that on my website, it says I do accounting services for nonprofits, but what I tell my clients actually an it company that happens to do accounting services for nonprofits. So in addition to, you know, being, as I mentioned, a CFO at one point, and now I like to say I'm a CFO for many. I was an auditor for many years in public accounting and I get audited. I think I've been audited every week since the third week of January. And I think I have an audit going on this week as well. So consistently since that third week of January, we're under audit. So for my survival and, um, the benefit of my employee's mental health, we have to put plans and processes in place to make sure that with any level of confidence we can get through those things. So some of the things that we look at is what is the most efficient from a, not just dollars, but man hours, right? Efficiency and, and, and the employees effort both on my side and their side. And then what is the technology that's going to be consistent, accurate, and timely for the benefit of getting through any of these particular audits? For example, if we have the requirement that every single invoice has to be approved by two different signatures, how can we use technology to capture that signature digitally, and then file that in a place that can be retrieved with just a few clicks rather than the old way of doing it. And by, by old way, I mean, five years ago, when I used to be a CFO of a nonprofit where you have to shuffle the paper all around the office, you have to hunt down a board member outside of your four walls and hope that they're not traveling in or out of town. And then you have to, you know, cut the manual, check, mail it, and then you have to file it. And at the end of the year, then you have to move those files out of your file cabinet and into storage. And then when the auditors come out and want you to retrieve some, some bills, then they will require you to go back to the storage shed and pull all the stuff out. It's just such a manual process. And frankly, those processes, when you're just trying to survive and get the check out the door, you forgot one of those signatures. And then of course the auditors are going to dig you for that. So how can we create systems that are just full proof and focusing more on systems and the efficiency of those systems, that's really what accounting is, right? Systems. And if you could develop what that flow of information can look like, it could not just for the nonprofit space, but the, for profit. I think the challenge of the nonprofit, we don't have the time capacity or money, oftentimes in those resources to invest in how do we work smarter and more proactively, I will confess I didn't have the time capacity or money back when I was running an accounting department at a nonprofit. Even if you know, there's better solutions, you don't have the time to research them. And even if you do know what they, the solution should be, you certainly don't have time to implement them. So the number one thing that we do, we go in, we assess what is the flow of information? Where can we improve it? And my team is the integrator. My team is the one implementing it and say, okay, this is a system we agree on. And you have to trust that this is the best way to do it for the benefit of us completing an audit or for anyone to come in and question, do we have, you know, do we have receipts? Do we have documentation? Do we have signed contracts? We have our house in order. We do, because we have a system for that. And so that's what my team does. And that's what I advise any nonprofit, whether they choose to work with us or otherwise that they develop workflows and systems that will help them be consistent with any requirement, regardless of who comes in and when they come in, we're ready for it at any time.
Melissa Gragg:Well, and I think that those are some of the, you know, people don't quite understand how much technology can help you save hours and the whole process, you know, if you're relying on one piece of paper or several pieces of papers with the original signatures, that's just crazy. You know, there are so many things that can help do things different, but that's just kind of one example that I think is really helpful. Another thing, you know, let's talk about some of the differences in accounting for a nonprofit organization, as opposed to a, for profit business. I mean, are they, is it basically the same type of accounting? Are, are there some like unique differences?
Tosha Anderson:Yeah. In some ways they're very similar. So before I focused a lot of energy working in the nonprofit space, I used to spend a lot of time in the construction space and nonprofits. If I were to compare it to anything like a for profit business, imagine a business that tracks all of their revenues and expenses by individual project construction is a great example by job, right? Or a creative firm that has to check revenues and expenses by client to make sure they're assessing what the profitability is by that client. The nonprofit has to do that in a very similar way, but they do it by grant. So not necessarily managing the profitability, but how much of those dollars that we received are still eligible for spending. Right. And we have to track that. So balancing how much revenue do we still have to spend by funders? So very similar to like a construction company or anyone else who would manage it by project, but then also are you carrying it over for the next fiscal year? Are we going to be spending it, should we budget to spend it? So we're really kind of morphine this idea of project or job costing combined with crossing fiscal years. And also not just you spend it in a certain time period, but you must spend it on purple pins rather than red pins. So tracking not just the timing of things, but the purpose of things and then who the individual donors are. And then also reporting on that, which of course the reporting requirements for funders are generally all different as well. They like to look at them in different ways. So it's a little bit of a balancing act in many ways, but for the most part, it seems complex because you have so many different types of jobs you're trying to track at any given time. And frankly, the nonprofits be struggles on that more than they would probably like to admit. It's just really difficult and not because conceptually it's difficult, it's designing the system and having the right person skilled and how to use that system. And by system, I'm truly talking about the accounting software at this time, how to set it up the right way and how to consistently apply things the right way. And once you do that, it becomes much, much easier. But going back to my point before many nonprofit organizations lack the experience, the skill set, or just the time or money available to properly set that up. And oftentimes it's a training issue or it's just a funding issue and an reinvestment issue, but it's just like any other for-profit business that has to track on a really granular level.
Melissa Gragg:Well, and I think if I'm a nonprofit and I'm looking at Tasha Anderson and her company, and I'm like, Oh my gosh, I can't afford this. Like, I don't barely have enough money to do what I need to do. Like what do you say to some of those? Because obviously you're doing a tremendous amount of work in this space. And so it's not just like, Oh, I'm only working for the nonprofits that have this huge cashflow. Um, you know, what do you say to some of those people that are like, I don't know if I can afford to have an account.
Tosha Anderson:Yeah. And I think this probably applies with, for profit businesses as well. I, as I mentioned, I used to work in different industries besides just nonprofit. But I think accounting is just an area that a lot of people in the nonprofit space just don't understand. They generally come through the programmatic side, whether it's healthcare education or social services, right. They don't have a business background and they certainly don't have a specialty in accounting. And so if people are telling you, you know, we can't do XYZ or we can't create this reporting, or we can't have this tracking because of a limitation of the system and the system that we use as QuickBooks, it's an out of the box solution. It's really inexpensive, it's affordable. It's not proprietary. It can be built in a number of different ways and, and utilized. And oftentimes it's under utilized. And so what nonprofits do, and I suspect this is true for for-profits that because you don't understand what the solution should be. We assume it's a capacity issue. So what a lot of nonprofits will then do, and I'm sure for-profits too, because I've seen this in practice, they will hire more people thinking it's a capacity issue. It's generally not a capacity issue. It's a workflow, it's a systems, it's a technology issue. And if you have the right person with the right workflows and you really kind of re-engineered that you can save a lot of time and then subsequently save a lot of money. And just kind of an example, there was an organization we were working with that has consistently struggled with invoicing. They did the services, they had a source of revenue. They simply had to compile information and send it to the funder. And then if the funder kicked it back then to troubleshoot it and resubmit it much like healthcare, right? I mean, you have to submit invoices and troubleshoot for insurance billing. They had two full time people that they were paying upwards of$250 a year to do this. And they were consistently behind. So if they're not getting cash, what's happening, they're in a cashflow crisis or laying people off they're, you know, reducing programs because they didn't have the cash to employ the people that the resources were out there. They just had no way to get it. And we came in and reduced their accounting budget by a fifth. So we're charged 50,000 rather than 250,000. And they have no collectivity issues at all. And their cashflow is higher than it's been in probably five years and we'd saved them money. So a lot of times it's not, I can't afford it. It's you have to hire the right person. And I'm not saying I'm the right person for everyone, but if someone's telling you it can't be done, I would get a second opinion because more likely than not, it's just a limitation on their skillset and their training and their usability of the system, maybe how the system's set up rather than we just need hire more people. Well, and I think that, that, you know, in general, even tech savvy, even business savvy people kind of always default to like how it's been done before. And this is how it's always been done. We send out these pretty little invoices and the actual mail and, and as opposed to using something that's online that sends automated updates, that requests the information that it pays online, goes directly. You know, those types of things I think are just the default, um, for most. Um, but once you get past the accounting, do you also get involved in the strategic planning for these nonprofit organizations? Or do you work with management to advance any of their leadership skills? Is that something, you know, I would imagine you kind of get pulled into in some capacity, um, because a lot of accounting firms, um, also do some management consulting. So is this an area you get involved in? Yeah, it's not one that I publicly, uh, advertise, uh, in a sense of, we don't do one off consulting work, but for our existing clients, uh, you know, I structured my firm a little bit differently in the sense that all of my clients, whether they like it or not are getting kind of a CFO service, right. We're going to share our opinions and our thoughts and our recommendations and observations. Regardless if you thought you were just hiring a bookkeeper, that kind of comes by default. Uh, so oftentimes we'll get involved in the strategic planning, particularly as it relates to budgeting and planning for future years. That's a very busy time for us right now that we're doing that. And we also look at other, for example, I have one client right now that's, uh, rebuilding their fundraising program, you know, their whole department from the ground up and we're running different numbers and scenarios for who should we have in place. Um, what should the ROI be on the investment of fundraising? Um, and also the same with HR, you know, at what point do we need to hire an HR person? So constantly reevaluating strategic decisions that a business is gonna make. Um, for example, some of our clients are evaluating, should we go into government billing, particularly Medicaid? And if so, what does that look like from an administrative perspective? And is it worthwhile to pursue those types of funding sources or not? And then of course, many of my clients, they just come from all different spaces with respect to understanding how the business of a nonprofit runs, because again, it really is a business and many of my clients are very savvy and they understand, uh, the finances particularly, uh, how they impact all of the areas of the business. And some just don't, like I mentioned earlier, they come from more of a programmatic background. And because of that, we do a lot of kind of coaching and advisory services on, this is what we're looking at. This is what's on our radar. This is what you should be looking at. These are the things you should understand in the event, you're asked by a funder or a board member, anyone, um, you know, why this area is struggling. I don't like to be surprised as the CEO of my business. Um, and I don't want my clients to be surprised or caught off guard in any way. So those are certainly things that we include just ongoing with the store, with the scope of work that we offer. Well, and I think that that's a very interesting nuance that you just said is that every time you're not really coming from a bookkeeper standpoint, you're coming from a CFO and that's even more important. Um, but in that capacity, you know, traditionally I've seen that the accounting firm or the consultants are hired by the board of directors. And so usually they go through a vetting process or, you know, the board of directors will just know a few accounting firms that they work with, but nonprofit accounting is different than for-profit accounting. And so let's talk a little bit, like how do you get involved with the board of directors as well? Yeah, most of our clients have a pretty active finance committee, including board members. And we meet with them on a fairly regular basis, especially new clients that are hiring us for one reason or another. Right? Generally it's, we're replacing an employee that was either part time or full time. Um, some are planned transition, some are much more abrupt, as you can imagine. Sometimes we're brought in, in the case, I mentioned before with the struggling accounting department, they were paying a lot of money to triage and do some financial crisis management. And so certainly the board members are involved in that level, but we generally have ongoing conversations, um, especially in the beginning, but ongoing once we take a little bit more of a backseat and we get into a nice rhythm and groove, uh, we provide pretty extensive financial reports that include an executive summary. And if you've ever sat on a board, um, you'll notice kind of a theme at board meetings. Everybody will kind of sit quiet. The treasurer might do a brief overview on the financial position. Are there any questions there's rarely any questions? And then they move on to the next agenda item. And what I realized is it's not that people don't care, they're oftentimes intimidated by all of the numbers on the pages, and frankly, they don't spend enough time to try to interpret what the Doe's mean. And more importantly, they don't understand the context behind the numbers. So we give a written narrative to be shared with the board members that give the story behind the numbers. This is up or down because of this change in programming, this is up or down because of the seasonal nature of this event. This is up or down because of, you know, timing of when we budgeted it would be spending. And when it's actually being spent, right, that's going to give them more information to ask educated questions and feel more confident in asking those questions. So that's made a tremendous difference for our clients. Um, and I think they're much more involved in the budgeting process and ongoing reporting because of it.
Melissa Gragg:Well, it seems like a more proactive way to look at finances as opposed to reactive, because if they're not paying attention and then at the end of the year or something, it's like, well, wait, how did we not have this money? Or why did this project get sideways? You know, I agree a lot of times, even in the valuation world, we have to give a descriptive, you know, the numbers tell a story to us, you know, so you work with numbers. I work with numbers and we see numbers different. We see the story in the numbers, but not everybody is capable of doing that. You know, a lot of times they just see numbers and they all look like some foreign code. Um, but that's, that's a great point. Um, so a couple other things. What if you, if you are seeing so many nonprofits, can you give any like one of your best accounting tips or advice for somebody who either wanted to start into this space, or maybe they want to just get to the next level and have a CFO, you know, what would be some of your, uh, best accounting tips?
Tosha Anderson:So probably made for somebody that's getting started, know that there's a lot of information out there that's of low cost or free. There's some really great YouTube videos. And I know that sounds funny, but you can teach yourself anything with some YouTube videos. You can get some proprietary software, you don't have to get a fancy software, you can get QuickBooks. That's what we use for most of our clients. You can watch some YouTube videos to understand how your supposed to be doing the bookkeeping. Um, but certainly once you start feeling a little uncomfortable with keeping up with the volume of transactions or keeping copies of the receipts and just making sure all your I's are dotted, the T's are crossed. Accounting is one of those things. I call it an insurance policy for reputation management. I've seen too many nonprofits lose credibility and had their reputation damage because some innocent missteps, they not intend to do anything maliciously, but once you tarnish that reputation, it's really difficult to rewrite that narrative and that dialogue about what your organization is doing it to distract from the program that you're doing. So I recommend to people to hire accountants proactively to keep you in good standing with all of those folks. And I do have a fair amount of people that reach out to us proactively, um, that maybe have outgrown their existing accountant, or maybe they've been doing it themselves, or they have a volunteer bookkeeper and they know that's not sustainable, especially if the volume has grown. Um, but then I also have certainly people that reach out to me very reactively. The IRS has been sending them notices. They realize they've been out of compliance with their state. And once you make too many missteps like that, the course of correction is just so difficult, time consuming, and often it's pretty costly. So to get started, um, there's some really good books on Amazon. If you just, you know, get on there and search for, you know, nonprofit, accounting books, there's a woman named Lisa London. I don't know her. I have no affiliation with her at all. She sprayed some really nice books intended for non accountants. So it's written for non accountants for the benefit of CEOs or founders of nonprofits. She uses QuickBooks. It's called QuickBooks for small nonprofits and churches. I think Lisa London is her name. So that's a good supplemental resource. Um, what I like about QuickBooks too, there's so many free. Like I said, YouTube is a great place, but QuickBooks themselves have really great free training. Um, and you can find just about anybody can figure out QuickBooks. It's designed to be very user friendly and it's designed for a small business owner. It's not designed for an accountant, so it's very intuitive, no pun intended. It isn't an Intuit program. Um, but just start there, just start there. And then once you get to a place of,
Speaker 3:I'm not able to keep up with it,
Tosha Anderson:Start looking to hire someone. Um, and also, I guess most importantly understand the best piece of advice if you've been designated from the IRS as a nonprofit, regardless if you have activity or not, the IRS does not care. You still have an obligation to file a tax return. And a lot of people don't realize that, well, Tasha, I only brought in a couple of thousand dollars last year. It does not matter. It's not that, you know, I think some people think of it as a personal tax return. Well, if I don't file that, I'm just not going to get the refund and the IRS gets my money. So it's not a big deal. Not that case. In fact, if you fail to file three years in a row, they will revoke your status and you have to start all over again. So get informed. Every state of course is different. Um, so get informed about what your state requires you to file and know that the IRS regardless, um, requires you to file a tax return. And if you do less than 50,000 a year, it takes about five minutes to submit the tax return to the, to the, and I don't mean that because I'm an accountant. I mean, it's like five or six fields that you go on the IRS website and you populate, you know, what's your street address? You know, your total assets or revenue, but less than 50,000 yes or no. It's very, very simple. It's like five fields you have to populate. You don't have to pay money
Melissa Gragg:To do that. I mean, you can do that yourself.
Tosha Anderson:There's some nice instructions on there too. So it's just a few minutes, but don't lose sight of what the state requires and what the IRS requires.
Melissa Gragg:Well, and a lot of these things are, um, you know, I mean, I think that the way we learn in general is changing because a lot of this information is available for free. And QuickBooks is now online, which I know a lot of people who in the past have always had it on their desktop, you know, are a little bit, um, frustrated with that fact. But I think the reality is if you get used to using technology, which means you need to practice and you need to, you know, like dive into it, then I think that it can really, um, cut some costs. So you have given us so much information, but we don't know as much about you. So can you tell us kind of what your path to becoming an accountant was? And then you obviously have a passion for focusing on nonprofit organizations. So maybe we can talk about how how'd you get to that space.
Tosha Anderson:Yeah, so the accounting was a little of a practical decision. Uh, I was in business school and the economy was suffering. Um, back in 2006, 2007, I was in, I was in college when nine 11 happened. And you can imagine all the economic downturn from, from that, that effect. And I liked business and I really enjoyed marketing and I really enjoyed, uh, the international business idea. And I knew I would be in business, but I went into accounting because I realized I could probably do a lot of things within business with an accounting background, but I couldn't necessarily do accounting or finance, um, or make, you know, accounting and finance decisions without a lot of training if I were to chose choose some other degree programs. So it was purely practical. Um, I didn't know what I was going to do with my life. So I ended up in public accounting. I did that for about seven years and it's kind of a funny story. Um, nonprofits very much. I think it's, it's, I think it's still very much true are very much the stepchildren of professional services. Uh, people do it because we have bleeding hearts and they do it to help out a nonprofit, but most professionals understanding that the accounting for nonprofits is a little bit more challenging and they don't come from that background. Generally, don't prefer to work with that industry, particularly because they don't have a lot of money to pay you. So there are a few people want to do more work for less money. Um, I'm a glutton for punishment, I guess in that way. And me like every other person that finds themselves a nonprofit, you never plan it. It just happens. One of the things I realized when I would go in and try to audit these clients, they were just a mess. They were a disaster and it wasn't that they were trying to be difficult or noncompliant. They just didn't know. And then I realized how many people disliked serving this particular industry, but how much they needed and to what a much higher standard that they have to be held to. So I realized, listen, somebody got to devote more of their time to this space. Um, and it might as well be me. So I left public accounting. I took a job as a CFO for one nonprofit. Um, I did that for four years and I realized, I thought it was difficult. Then as an auditor, I had no idea what I was walking into the four pages of outcomes, as I mentioned. And I out of survival figured out a way to get their accounting down to just about 10 to 15 hours a week, and then about$6 million a year. So this is not a small organization. And, um, you know, I learned so much about the operational side of the business. So not just accounting, but HR risk management facilities. Um, I have a funny story where I went into a client and she was giving me a tour and I thought, wow, those gallery light bulbs must be really expensive. Aren't they? And she looked at me and said, we can't afford to replace them. That's why they're not eliminated. And I said, why do I ask these questions? Why do I see these things? And it's because of the operational side of it is so much more difficult, I think, than we ever realized. So that's where I kept having people come to me and say, Tasha, do you know anybody that can do accounting? I know you're working with this one organization, but do you know anyone else? And the truth is they just didn't. Um, and not at a level of price that most nonprofits can afford. So I always had this vision of applying all of the things I've learned in these different roles to a space that was committed to doing it as efficiently as possible and charging a fair price. And so four and a half years ago, I started this firm. I plan to have no employees. I plan to have no office. I plan on having a couple clients. We now have 69 clients nationwide. I have a team of 10, so that didn't work out so well for me, but we're able to really help a lot of people in almost all of our business comes through referrals, which has been incredible. Um, but I think people like that combination of, yes, you are a very black and white accountant and there's certain things we have to do, but we also understand the operational challenges and understanding that what do we have to do, but how can we get there? That's not going to be administratively burdensome for, for our clients. So that's why I got into space. It was kind of accidental, um, and a little strategic, but it's, it's really awesome to be able to help others that I think many people have kind of given up on or, or felt like they couldn't be successful in. Uh, and we're just here to continue to solve that problem.
Melissa Gragg:So, um, I think that, that I had intended that to be the last question, but I do have one more question what you said, because I think a big piece that people have to understand is that you have the perspective from the other side, the auditor that comes in now, one thing that I know are our listeners and our population loves to know about is that what if you're a nonprofit and you do receive a notice from the IRS, either about getting audited or maybe some tax deficiency or something like that, can you, you know, obviously you don't know how to solve the problem, but what would be their next step? Like assuming that they don't, they don't even know what to do at that point. Like what's kind of the first or second step that they should do in that capacity, from your experience, um, kind of being in all different forms of the auditing process.
Tosha Anderson:Yeah. So the IRS in my 15 years of working in the nonprofit space, I've yet to see the IRS come in and actually audit a nonprofit. Now they will revoke status as they might challenge your status and say, you're not really a public charity or a foundation or something to that effect. They might revoke your status. I've never actually seen the IRS coming in audit. That's what I have seen department of labor coming in audit. I've seen the IRS knock on your door because you failed to pay your payroll taxes. Certainly I've seen that. So if you get a notice, you likely have a CPA you've been working with because they file your tax returns. Start there if nothing else, or if you have a board member, that's an attorney start there and just ask those questions. Now the audits come in place because a couple of reasons, first step your state, not all States, some States require an audit. Once you hit a certain threshold and a nonprofit might cross that threshold and not even realize that their state requires an audit. For example, I think the state of Illinois, once you cross$300,000, they require an audit. The state of Missouri has no threshold. They will never require an audit, right? So generally an audit is mandated by your bank or a funder. So read your contracts closely when you get those dollars to see if it's not going to trigger you to have an audit first and foremost, um, or stay informed about what your state requires. Um, but like I said, engage with the CPA. Um, generally, like I said, the IRS, I've not seen an IRS come in and actually audit, but they would audit, you know, like I said, payroll taxes, or they might challenge your designation, your, your nonprofit status. Um, those are the main things, but reach out to a CPA or an attorney, if nothing else quickly, please don't delay on that because you will get fines, penalties, or possibly have your status revoked if you turn a blind eye to that.
Melissa Gragg:Well, and that I think is a very good piece of advice, because again, I'm just assuming, you know that, Oh, these audits and, Oh my gosh, what did I, whatever. I mean, the devil's in the details. You know, this is something that a traditional accountant may not understand about the state of Illinois, about the state of Missouri. Now you're operating in Tennessee, what's going to happen now. And I think that that's a very important, not that it's the answer to everything, but knowing your state specifics and what could maybe lose your capability of operating nonprofit is a huge deal. And so I think that that alone is kind of why you should reach out somebody that
Tosha Anderson:Has experience in that sector. Um, is there anything that we didn't cover that you thought that nonprofits really should know or do you think we've hit on a lot of different topics here? I think we've covered all of it. Um, you know, I think my biggest piece of advice is stay organized and keep your, you know, paperwork house, if you will, together and in order and understand what you're signing up for. Um, and if you're not a details person, as many of the people in the nonprofit space, aren't there, they're more of a creative or people focused individuals and not necessarily the detailed brain, um, you know, recruit someone who has helped assist with those things. And if you are working on, or if you're volunteering on a board, understand the basic requirements as well. And if nothing else ask those questions or at least do a little bit of research, there's some great websites out there. Um, I can share the link. Uh, it's just a summary of all of the state requirements. So every time I get on the phone with a client, I immediately say, Oh, you're registered in Tennessee. This is what you're subject to. Um, we know what the IRS already requires the feds, but the state is where it varies. So I can share that link with you all. And it's a really easy resource and you can get informed really quickly. Well, and again, to remind people that they may want to staff up and hire an internal bookkeeper, internal CFO or something like that, but there may be more economical ways of getting the same advice or better advice. And having somebody like your firm, really stepping in and doing those things, we're going to provide all the information about how to contact you. Um, if you give us some links to those resources, we'll certainly include them, but we really appreciate it Tasha, uh, for you sharing all your knowledge today. Thanks so much. Thank you. It's been fun, right?