Nonprofit Finance That Actually Helps

Finance often feels like a part of nonprofit leadership to be tolerated rather than utilized until a cash crunch forces decisions into panic mode. In this episode, Ryan Alexander, founder of RA Partners and author of Protect Your Mission, discusses the financial infrastructure required to keep growing missions from getting derailed. The conversation covers the practicalities of cash flow forecasting, including how to model unpredictable revenue using timing and probability to avoid painful surprises. Additionally, the episode tackles the complexities of grants management, the distinction between revenue recognition and actual cash flow, and the "people side" of finance—from hiring a nonprofit CFO to evaluating audit readiness and Form 990 preparation. For leaders seeking financial best practices that protect their programs, staff, and credibility, this discussion provides a comprehensive and clear starting point.

Transcript

Donor Data Report Promo

SPEAKER_00 0:00

In 2025, donor behavior broke the assumptions most teams still used plan. FundraiseUp's pulse of the donor 2026 gives you benchmark data on what changed and what to do next. Download the free report today at fundraiseup.com. Welcome back to the Nonprofit Hub Radio Podcast. I'm your host, Megan Spear, joined today by Ryan Alexander, who's the founder of RA Partners. And we're going to be digging into, Ryan, and I hope you take no offense by this, we're going to be digging into one of my least favorite topics.

SPEAKER_01 0:35

You're not alone, Megan.

SPEAKER_00 0:36

I yeah, I tend to avoid the financial discussions as much as possible. I admit I am not a numbers girl, but it's so important, especially in nonprofit work. So as much as it is not necessarily my strongest suit or wheelhouse, it is Ryan's. So we're going to dig into all of the finance today. Ryan, welcome in. Thanks for being here.

SPEAKER_01 0:57

Yeah, thank you so much for having me on.

SPEAKER_00 0:59

Yeah, my pleasure. So tell the audience a little bit about yourself and your background that brought us to the conversation today.

SPEAKER_01 1:05

Sure. So as you mentioned, I'm founder of RA Partners, and I've spent slightly more than two decades uh working alongside nonprofit leaders and boards. And I kept seeing the same pattern over and over. The mission of those organizations was strong. Uh the people who worked at those organizations were extremely committed to the mission and the impact. But the financial infrastructure just wasn't keeping pace with the growth of those organizations. And that ultimately creates pressure and stress for the senior leadership team and just makes good it makes making good decisions difficult. And so my work is really focused on helping organizations move finance from simply a reporting and kind of compliance and back office function to finance as a leadership tool. And it's ultimately what led me to write Protect Your Mission. Um and it's really to give leaders a clear practical roadmap for building that structure.

SPEAKER_00 2:22

So good. So we are going to dig into the book in a little bit. But I'm curious when you start to work with an organization, when you first walk in and start to have these conversations, where's the first red flag for you of ooh, we're we are we're on the wrong track here? Like what is and I say that as like, what's something we should all make sure we're not doing? If this is the red flag that the finance professional finds.

SPEAKER_01 2:48

Yeah, that is a great question. And unfortunately, there are many different aspects of running kind of a high-performing, best-in-class finance and accounting team, a department. I would say that cornerstone and foundational for organizations is internal controls. And as much, Megan, as you don't like finance, you'll like internal controls even less because it revolves around ensuring that the structure is in place to allow the organization to scale. So that is fundamental and kind of cornerstone to ultimately being able to have a best-in-class finance team. The second item I would say of equal importance, albeit a slightly different perspective, is leaders and leadership and the board having perspective on cash and what projected cash looks like into the future. And that in turn allows just better decision making because they can anticipate and see what the future will look like. And it allows them to then make better decisions kind of in the present.

Internal Controls For Real-World Teams

SPEAKER_00 4:13

Okay, so I know within our audience here at Nonprofit Hub on the podcast, we do have a lot of folks who are startups. They are just starting their nonprofit journey. So let's go back to the internal controls for a second. If somebody was clean slate just starting from the jump and got to set those controls, in your opinion, like the best possible way. What are the pieces that they that you would want to see them have in place to start strong?

SPEAKER_01 4:45

Sure. So a couple of things. One is you want a level of hierarchical approval on expense as invoices are coming into the organization for payment, you want to ensure, for example, that the same person that is entering that invoice is not also releasing payment for that invoice. Because you want to prevent against fraud or what have you. And so if the same person were processing invoices as well as releasing payment on those invoices, there's not a check and balance. Ultimately, internal controls come down to a check and balance. And so you so that's one way of ensuring that happens. The other is ensuring kind of regular monitoring and oversight. So are financials being produced on a regular cadence? If you issue quarterly financials, are they coming out on a quarterly basis? Are you showing budget to actuals? And so you can see as an organization how you're doing relative to what you initially guided and had approval for from the board for the organization. If you're issuing kind of a monthly cash flow, is that coming out on a timely basis so that decisions can be made and updates can be had? The other is conflicts of interest, right? Are those disclosed appropriately from a board perspective and from a senior leadership perspective? You don't, you ideally will have on an annual basis a conflict of interest policy and agreement signed by your board members and your senior staff, ensuring that there's no self-dealing and that they're not hiring their cousin or their brother or what have you to provide services to the organization. So all of those types of examples are ways in which internal controls initially can kind of be formed as a startup organization.

SPEAKER_00 6:51

That's so good. And then let's talk to the folks who are going, yeah, we've been around a long time, but we're not doing a whole lot of that.

SPEAKER_01 7:01

Well, there's what do they say the best time to plant a tree is yesterday, the second best time is today? Today, yeah. Um, I don't think it's cause for alarm, but it is, but but those are areas in which you want to ensure that you're acknowledging there's a deficiency and moving towards closing those gaps. A lot of times technology solutions can help with the approval cues and what have you for invoices, for example. And so, yeah, in just ensuring that you have ultimately a checklist that you're kind of working through, I think is super important.

Cash Flow Forecasting That Works

SPEAKER_00 7:37

So good. Okay, so I'd like to start in the again, in this finance piece. I think something that can be really overwhelming, and you kind of touched on it in your earlier answer, because nonprofits have such a a fluctuating or can have such a fluctuating budget year, sometimes, uh especially for an executive director or or you know senior leader who might not necessarily have a finance background. When it comes to forecasting that cash flow, right, or understanding the cash policies around and how we plan for those type of events. Talk to us about what are the things that we should be looking for when we kind of look at that cash flow cycle and how do we manage that part well?

SPEAKER_01 8:27

Yeah, sure, of course. Generally, organizations will have an annual budget approved by their board. Um and oftentimes expenses in that equation are fairly predictable. Generally speaking, for most nonprofits, the bulk of their expenditure is personnel. So you've got salary, payroll, what have you, that's run on a monthly basis. Occasionally, organizations will have one-off events that they'll have a summer initiative or what have you that in a month or two will skew kind of their run rate expense level. So one piece of the cash flow is on the expense side. And that generally speaking should be pretty predictable. The other piece of the cash puzzle is revenue. And this is where it gets to be trickier and a bit more difficult. For the majority of organizations, they're funded through grants, donations, gifts. And a lot of times those can be a bit unpredictable. And that's where kind of the challenge of this exercise comes into plays. And so essentially for each month, you're starting with basically cash that you have in the bank, you're deducting expenses for that particular month, and then you're adding cash-in revenue for the month to end with a resulting cash. And you kind of do that over and over, you know, projecting that out over the course of 12 months is optimal. The art of this process really comes down to the revenue side. And so I encourage organizations, and when I'm doing this work, I really discount the timing on those contributions. So for every contribution, there is a timing component and there's a probability component. And so the probability component is how confident as an organization that funder ABC is really going to give us$50,000 or$100,000. And you know, those discussions are fluid. And sometimes we have a high degree of confidence, and sometimes we have a low degree of confidence. And so the timing and the confidence level for each one of those gifts should be modeled out throughout the course of the year. So you understand as a leader, as the board, when those funds will be coming into the organization. So to bring it kind of all together, Megan, you kind of put all of that in the spreadsheet and work through that. But ultimately, what that will do, and on the timing piece, I would encourage your listeners to be conservative. If a funder says, oh yeah, we'll fund in May, perhaps you don't anticipate those funds coming in until July, just to give yourself a bit of a buffer so that you, if they don't come in in May and you've projected that, you don't end up in a situation where you're short on cash or what have you. So it's a it's a series of kind of inputs that go into the calculation to ultimately end up in a situation where you provide visibility to the leaders and the leadership team so that they can make better decisions.

Grants Revenue Versus Cash Reality

SPEAKER_00 11:53

Okay, so uh and feel free to correct me if I wrong I'm wrong, because I am by no means the expert on this. But the way that you just explained all of that makes a ton of sense for me for organizations that are super donor-driven. But I feel like grant um correct me if I'm wrong again, but grant funding tends to look a little different, right? In terms of when you report it versus when you receive it and how that piece plays out, right? I feel like the grant side is a lot more complicated.

SPEAKER_01 12:26

So so this is a great question. And it really the delineation really is between how grants are recognized and cash in the door. So and then and then there's a dynamic of restricted and unrestricted. There's a lot of different variables at play. Ultimately, cash pays the bills. And so a good example could be you have a donor who is willing to give you, you know,$100,000 over two years. And from an accounting perspective, you're able to recognize that full$100,000 at the outset, but they're going to give you$50,000 a year. So in the second year, if you're doing your cash flow projections, you should include, even though that$50,000 has technically already been recognized as revenue, you should include that second$50,000 in your cash flow for year two because those dollars will be coming in the door. So you're right to point out that there's nuance in a lot of this. But at the end of the day, when you're doing your cash flow projections, it's important to anchor on cash and what's coming in the door.

Hiring A CFO You Can Trust

SPEAKER_00 13:47

In 2025, donor behavior shifted across channels, devices, and giving frequencies. Fundraise Up just released their 2026 Pulse of the Donor report that unpacks what happened. Your donation form is now your most valuable asset. Donors who trusted their experience gave more, gave again, and told others. Stop guessing what will work in 2026 and start using real data. Download FundraiseUp's free Pulse of the Donor report today at fundraiseup.com. I just recorded an episode last week with somebody who was talking about, also used the phrase cash pays the bills, but it was in terms of a kind of a marketing perspective of everybody wanting to talk about vanity metrics around likes and impressions, but impressions don't keep the lights on. So it's funny how one phrase can have two very different applications in the course of the podcast in the last couple of weeks. Okay, so again, as this is not my strongest suit, but I feel like there are a lot of executive directors who are in my same boat, right? We're running the organization because we're really passionate about the mission. And so we have to rely on other people for the finance piece, whether that be internally with a CFO or director of finance, or if we outsource that. I'm gonna be real honest with you and say if I were to be interviewing a new candidate for a CFO, I mean, first of all, shout out Jan. We have the best CFO. I don't have to worry about that. But if I was interviewing somebody for that position or thinking about outsourcing that position, I'm not sure that I would even know what questions to ask to make sure that I am finding the right person who's really gonna be diligent about all of the pieces that you've laid out in your framework. So if somebody's in that position, I'm curious, are there interview questions that you would say, this is gonna separate the wheat from the traff, so to say, that's gonna really give you the person that you want and then be someone that you can trust? Because I do feel like there are entirely too many stories out there of nonprofits who have kind of you know outsourced accounting and gotten taken for tens of thousands of dollars because they didn't know, didn't know what questions to ask, weren't reading the reports appropriately. And I would hate to see that happen to any other organization. So I'm curious your thoughts on, you know, these are the skills you're looking for, these are the questions you might want to ask if you're looking to outsource that to somebody so you know you can trust them.

SPEAKER_01 16:35

Sure. So I think one of the first and most important boxes to check is to ensure that individual has prior nonprofit experience, finance experience.

SPEAKER_00 16:54

Because I would think it's pretty different than a for-profit context, right?

SPEAKER_01 16:58

Yes. And I've I've seen situations throughout my career where an organization has hired an extremely competent individual to oversee their finance team and department, yet has no nonprofit experience. And to a point you made earlier about the just intricacies and uniqueness of grants management, that's oftentimes an area where not having that expertise to rely on becomes quite challenging. I would also suggest, depending on the size of the organization, I want to have the individual bringing a set of expertise to the organization that they have already experienced and seen. I would rather them not be learning on my dime, but have built experience at a larger organization, more complex organization previously. And so when they join my organization, they have that experience that they can rely on and bring to the table. I think that in terms of reporting cadence, that's another important piece, and really provides the infrastructure that ultimately organizations want to establish so that senior leaders can make good, strong decisions. And so understanding their approach to building that aspect of the organization out, I think is extremely important too. You know, again, kind of going back to having nonprofit experience, also having experience with the kind of formal reporting capabilities of a nonprofit. So many nonprofits will go through an auditing process. What's their experience level with going through an audit? Have they consistently achieved clean audits for the organizations where they've been and worked at? And also familiarity around the 990 tax filing, which is a required tax filing for organizations. It's very, very different filing for nonprofits than it is for corporations, for-profit corporations. And so it is almost half finance, half disclosure. And so being able to navigate that that filing effectively is also important. I could probably go on and on, Megan, but those are a few uh highlights that um I think are worth considering.

In-House Versus Outsourced Finance

SPEAKER_00 19:43

Yeah, no, that I think that's super helpful. I want to ask a follow-up though about something that you had mentioned, and that is when we're talking about like the size of an organization. I'm curious, in your opinion, at what point does a full-time in-person or like in-house finance director or CFO make sense versus when do we outsource versus when do we have maybe a part-time where we're sharing services? Do you have some thoughts on on kind of where that lies and what the best choice is for folks or how to decide that?

SPEAKER_01 20:21

Sure. I do think that an organization reaches a point where having an internal team makes a lot of sense. I'm not sure there's necessarily a line in the sand for what that budget size is, but I would say that as organizations get into the eight-figure size, oftentimes there is value in having kind of an internal member, uh, you know, if a CFO who's part of, you know, the management team and overseeing a team internally. Up until that point, I do think it's important for an organization to have the right team in place. And I think that can look different based on the organization. But having the level of expertise that we've discussed in-house or accessible, whether that's in-house or outsourced, I believe is really what organizations should be after versus necessarily the decision between is it in-sourced or is it outsourced? Because both work, Megan. It's just a function of do you have that level of expertise in-house that can provide finances and infrastructure versus a compliance and reporting solution.

The IMPACT Framework And Resources

SPEAKER_00 21:45

So good. Okay, so Ryan, tell us a little bit more about RA partners. As we're talking about, I know, certainly as outsourced vendors or but talk to us a little bit about the work that you do uh within your organization and there and kind of the types of organizations that you work with. With but also how folks can connect with you and learn more about what you guys do.

SPEAKER_01 22:04

Sure. So RA Partners really was created to house the impact framework that I created and provide resources and guides to nonprofits that are looking to build out an ecosystem that will support their mission at the end of the day. I wrote Protect Your Mission, which goes through the impact framework in great detail. And at ra.partners the website, there are additional resources that folks can access in order to help them kind of on their way of building out what I believe to be is a you know a robust ecosystem kind of internally so that finance can support the mission of the organization.

SPEAKER_00 22:59

So good. Give us that website one more time.

SPEAKER_01 23:01

It's ra.partners.

SPEAKER_00 23:04

Perfect. And we'll go ahead and link that in the show notes as well. So as we kind of move to close, the question I've been asking everybody, and I think I know your answer. So I'm excited to dig into that a little bit more. But the question that I've been asking everyone is what's a book that you would put on your recommended reading list for everyone at this particular year? As we if we look at 2026 as the year of learning, what would you encourage us to learn? What would be on your must-read list?

SPEAKER_01 23:33

Sure. Well, uh for for those of your listeners who have stuck with us through the end of this, I would shamelessly encourage them to read Protect Your Mission. Um and they are able to go to RA.partners and download the book for free as a resource. Um it's available on Amazon as well if they prefer a hard copy of it. But um I I spent a bunch of time kind of thinking through and incorporating the experience that I've had over my career into a framework that I really believe will set organizations up for success from a finance perspective. It kind of walks through each letter of impact stands for a different subject. And then there's tools within each subject that uh leaders can use to hopefully get them on the right track.

SPEAKER_00 24:29

Nice. Would it be too much of a spoiler alert to tell us what the letters stand for?

SPEAKER_01 24:34

No, of course not. I is internal controls, your favorite. Um is management of grants, um, P is planning and budgeting, A is accounting and reporting, C is cash management, and T is tax returns and audit.

SPEAKER_00 24:55

Okay. I feel very confident in my podcast hosting abilities that we managed without even pushing the book too hard. I managed to ask you about most of those.

SPEAKER_01 25:06

Yeah, you did. You did a great job.

SPEAKER_00 25:08

So I feel very confident about that. Um I feel like the one we might have missed is that tax piece. Was there anything about there that you wanted to make sure that we get it across?

SPEAKER_01 25:20

I mean, there's there's two things that come to mind immediately. One is plan for your audit throughout the entire year. This is not an end-of-year activity where it's a scramble in the 11th hour to pull everything together for an audit. Plan throughout the year. And if you do the right things throughout the year, your audit should come. Yes, it'll be a little hectic, but it basically should kind of come and go without much fanfare.

SPEAKER_00 25:48

Okay.

SPEAKER_01 25:48

In terms of the 990, sometimes there's state filings as well. Allow enough time to prepare that filing. If this is your first time as an organization filing that, it is wildly more complicated and complex than you anticipate. Most often you will need multiple stakeholders in order to help complete the document. You may need to consult with an outside attorney. You may need to consult with board members. It's very involved. And the and ultimately that document becomes a public document for the whole world to see. So you want to be particularly attentive to completing it. Yeah. And so those would be kind of my two suggestions as it pertains to both of those processes.

Final Takeaways And Closing

SPEAKER_00 26:37

Very good. Well, for more, definitely go check out the book. Give us the title and how to find it one more time.

SPEAKER_01 26:42

Yeah, it's called Protect Your Mission, and um, you can download it for free at ra.partners.

SPEAKER_00 26:49

Fantastic. Ryan, thank you so much for joining us. I appreciate all of the insight. You kept me entertained and interested in a topic that I normally do not find interesting. So major kudos to you.

SPEAKER_01 27:01

Well, thank you so much for the opportunity. It was great to spend some time with you.

SPEAKER_00 27:04

Absolutely. So my guest was Ryan Alexander, who's the founder of RA Partners. Definitely go check out their website and their book. This has been another episode of the Nonprofit Hub Radio Podcast. I'm your host, Megan Speer, and we'll see you next time.