.png)
Nonprofit Hub Radio
Whether starting a nonprofit or taking an existing cause to the next level, The Nonprofit Hub Radio Podcast is about breaking down how nonprofits can grow. Each episode features an interview with a sector star with insight, stories, or ideas that can take your nonprofit from good to excellence. Join host Meghan Speer every week to make your good go further!
Nonprofit Hub Radio
The Essential Guide to Financial Stewardship During Changing Times
When nonprofit funding landscapes shift dramatically—as they have in recent months—the organizations that survive and thrive are those with impeccable financial stewardship practices. Dayna Sear, founder and CEO of Sear Growth Solutions, brings her wealth of experience to this crucial conversation about compliance, transparency, and strategic financial management. Sear addresses the fundamental paradox facing nonprofits: they're expected to tackle society's most complex challenges while operating under strict administrative spending caps that limit their ability to invest in proper compliance systems. "We want you to solve the hardest problems of the world, but yet we cap the amount that you can spend on your admin costs," Sear explains, pointing out that this restriction makes it difficult to attract and retain the talent needed for effective management. For nonprofit leaders wondering where to start improving their compliance practices, Sear offers practical advice: begin by creating a comprehensive inventory of all funding sources, understand where each dollar originates (federal funds often trickle down through state or local entities), familiarize yourself with specific spending restrictions, and get all reporting deadlines on your calendar. These seemingly simple steps can prevent major compliance headaches later. Ready to strengthen your organization's financial stewardship? Visit smartgrantsolutions.com to learn how technology can simplify compliance while helping you demonstrate clear return on investment for every donor dollar.
Get free nonprofit professional development resources, connections to cause work peers, and more at https://nonprofithub.org
Marketing Support Network is proud to serve the nonprofit community by offering full-service contact center fulfillment, digital marketing and fundraising services. Your vision is our mission and we can't wait to partner with you. Visit marketingsupportnetworkcom for more information.
Speaker 2:Welcome back to the Nonprofit Hub Podcast. I'm your host, megan Spear, and joining me today is Dana Sear, who's the founder and CEO of Sear Growth Solutions. We're going to dig into a topic that I don't know, that I've talked about yet with anyone on the podcast, specifically around some stewardship and compliance issues for nonprofits Kind of getting into the nitty gritty tactical here today. Really excited to dig into that, dana. Welcome to the show. Thank you for having me. I appreciate that. Dig into that, dana. Welcome to the show. Thank you for having me. I appreciate that. Yeah, it's great to have you here. So tell our audience a little bit about yourself and your nonprofit journey. I've always liked to hear folks' stories about how they got into the industry and a little bit of your experience that led us here today.
Speaker 3:Sure.
Speaker 3:So my experience and pathway has not been a direct one, but I started out in the art actually, and I have a degree in business because my father was sort of the old school saying you know, you have to have a plan B and you can't be in the art.
Speaker 3:And although I had an early career in the arts, in the nonprofit industry and the for-profit side Also had a degree in nonprofit management, and over time a lot of my friends were artists who were starting businesses and I started consulting with them because I have this business degree about how they automate their accounting and one thing led to another and before I knew it I was in the nonprofit sort of development side. I have been a CEO, a CFO, a fractional CFO. I've sort of sat in all the seats in the nonprofit sector and over time really just became specialized as a consultant in how do nonprofits manage their money, set up their processes around managing their money, how do they set up their systems and how do they really become good stewards of their money so that when their grant funding or their audits come knocking at the door, that they are in compliance and don't have any problems.
Speaker 2:I love that. So that actually is what's going to lead us into our conversation here today, because and there's a statement that you had made as we were chatting before we even hopped onto the recording here about the fact that this is the season not for nonprofits to get complacent, but to really focus on stewardship and compliance. And I think you know, as we sit here, beginning of March, it has been a crazy couple weeks in the nonprofit sector. We've seen all sorts of executive orders and changes to grant funding. All of the pieces tend to be in a little bit of upheaval at the moment, and I think you're right. It would be really easy to just pull back into our shell, stick our head in the sand and ignore it right, that would be lovely. But talk to me a little bit. When you talk about this is a time for good stewardship. I think that's a surprising statement to a lot of folks, right? So talk to me a little bit about what that means and what that looks like from your perspective.
Speaker 3:Right. So you know you're right. Over the come the middle of January, things kind of exploded and there's chaos. Right now. Many people don't know if their funding will exist in the short term, in the long term, if it's coming from the government, trickling through the state. And I think this conversation around compliance, accountability, stewardship, outcomes you know what are you doing with this money has been a conversation that has been evolving over the past 25 years. Different things in place, such as uniform guidance If you get federal funding, talking about outcomes, tying your outcomes to your finances, all new conversations, and I think what has happened in the past couple of months is that, although these conversations have been happening, all of a sudden, boom, we're there, right, aside from the fact that the executive orders are targeting certain funding sources, and we can talk about that later this general idea of compliance you're hearing.
Speaker 3:You know, how are you spending the money? Are you spending it? Is there waste? Is there fraud?
Speaker 3:And I think, although nobody goes into spending their money thinking we're going to be wasteful or not going to be good stewards, I think thinking through what that actually means, how are we spending the money? Does that money align to what we said we were going to do? Are we spending it in a timely manner? What we said we were going to do? Are we spending it in a timely manner? Are all of our processes in place and our budgeting and our scenario planning in place so that we can communicate how we actually spent that money and that we did what we said we were going to do and that we're making outcomes? I think when you can align your spending with your outcomes and say, look, we did exactly what we said we were doing, here's the return on the investment, Then I think you begin to help to insulate yourself from some of the problems that others may have. And now is the time to start thinking about that.
Speaker 3:And if you haven't been doing that, you should start to think about how you put those processes in place to be able to communicate in that way in the future.
Speaker 2:I think that's a great point. I was talking to you just at a networking event yesterday and I shared who I am and what I do and he was like, oh, nonprofits are really getting a bad rep right now. I'm like, okay, but yes, yes, there are. There are some nonprofits that are the bad actors who might not be doing what they say they're going to do, in the same way that there are some companies and corporations that are bad actors. Right, there's going to be some of that everywhere.
Speaker 2:But I appreciate what you had to say so much, because that transparency that comes with good stewardship is honestly what we're seeing, especially younger donors crave. Right, we're not blind loyalty folks anymore. Right, and to function in that manner is, I think, a call for better compliance, a call for better stewardship. A better transparency is actually long overdue in this space because it impacts the way that donors view us. Correct, right, and I think that's important. Agree or disagree, I know there are some people who are like, no, everybody needs to be hands off. We should do what we want. There should be no system that governs that. I disagree. I think there should be transparency in the system.
Speaker 3:Well, absolutely, I think, at least from my perspective using the money in a way in which is creating outcomes. After all, if you're using government money, you're using taxpayer dollars, so you are accountable to everyone and how you spend that money. You know, I think we've all seen times where you've received a grant. You said you were going to do something and then time got away from you and then there might be some spend down and you know, these things sometimes happen. But that's the point we need to be planning and aligning our objectives so that doesn't happen. And that's where you need good tools and processes. And in nonprofits, defense you defense. There's a multitude of different grant-funded organizations out there and there is a lot of money. It's a huge economic driver yet there are no tools and processes in place for particularly nonprofits to be able to manage the money in which the expectation is set. So I, if we, if we want to be good stewards of the dollar and you're right, especially young people drive that. They see what they care about and they want their money to do that and they want to right say you know, did you do what you say you do and not just oh, we do good work anymore, right, like what did Right, tools and technology that allow nonprofits to get there.
Speaker 3:I mean, there's so much missing in. We want you to solve the hardest problems of the world, but yet we cap the amount that you can spend on your admin costs. So it inherently moved from being able to pull the best and the brightest into the conversation because you spent too much. But if we want to solve those problems, we need to bring smart people and pay them what they're worth. So that's a problem in the first place. But then how do you show this accountability? It's hard, and if you're capped in your admin, how do you find the tools and the processes to be able to do that? And really that's been over the last three or four years. My passion is about how do I develop a tool and how do I develop processes that make compliance, accountability and stewardship easier for nonprofits.
Speaker 2:I love that and I want to piggyback off what you just said, because I do think it's interesting timing for both things.
Speaker 2:Right, because we do have a call for accountability, we have a call for transparency, but being able to prove those outcomes does take more manpower.
Speaker 2:Right, we have to be able to report on them in some way and at the same time, there is kind of that Well, we don't, we don't want you to spend this money on admin. We're going to give you a grant for the outcome, but it doesn't go towards the people who are doing the outcome. Right, yeah, and I'm wondering if and I'm not asking you to predict the future, I won't, I won't hold you to it but is this maybe a moment where, as we're, as as an industry, non-profit in general, across the board because I just heard a stat that, as an industry, non-profits are the third largest employer in the country right, so it's we're not talking about an insignificant number of people that this impacts as the call for higher transparency, higher uh governance, higher stewardship comes, is it time to have that conversation hand in hand, like it is now the moment where we could turn the tide on some of those overhead stipulations that we've put? Do those two things have to go hand in hand, or is one the cart before the horse?
Speaker 3:I think you bring up a great point. I think everything that's happening today although you know it happened in a second and maybe we would have liked a moment to think about it I've had an opportunity, and I think that's what you're getting at is that there's an opportunity to take a situation that could be very bad and start to not only get your house in order, but to start to mobilize, to have the conversations with the people who are listening about. We want to do these things. I've not met a single leader in a nonprofit that doesn't want to do this, but their hands are tied sometimes. So how can we change the structure? How do you start to use this sector in a way that empowers them to do what they need to do?
Speaker 3:If you want to solve the homelessness problem, then you have to have really bright people coming in to think about how to do that, and they want to be paid a living wage, and sometimes the leader of an organization, the leader of an organization and multi-million dollar organizations it doesn't matter if it's a non-profit or a for-profit, everyone should be paid the same wage. But there's this feeling that somehow, if you're a non-profit, you should be this do-gooder at heart that's willing to work for weaker wages and that's just really not going to cut it anymore. Particularly as you start talking about meeting leaders that are professional business that have business acumen. You know and I think that's part of being good stewards and being able to be compliant and be transparent is having nonprofit leaders that are educated, have all the technology, all the tools that other businesses have, and so there has to be a movement towards reaching out and saying these are the tools that we need. And so, you know, I actually have built a software called Mission Granted.
Speaker 3:That also it's about empowering nonprofits to be able to budget and scenario plan quickly while managing multiple funding sources. Also, for-profits don't have to worry about having maybe 50 different funding sources all cobbled together to make a $3 million operating budget and then every single one of those funding sources requires different reporting, different rules, and I would challenge any for-profit company to be able to account financially, account for that money, with some 5% or 10% admin cap on the ability to hire people to do that and to have tools to help them do that. And so I think that is definitely now is the time to not be complacent and, like you said, I think, put your head in the sand and just wait for what's going to happen. Now's the time to be thinking about how do we get our house in order, how do we start to be able to plan for the changing landscape? Because I think the landscape is going to continue to change very rapidly over at least the next four years, and you have to be able to be nimble and move with that.
Speaker 1:At Marketing Support Network, we are proud to support nonprofits by providing top-tier customer service solutions for your donors. Live US-based agents are able to assist your callers by phone, email, website, live chat or social media response 24 hours a day, 7 days a week, 365 days a year. From taking donations to updating records, answering questions to placing orders, let Marketing Support Network help you take donor care to the next level.
Speaker 2:A lot of our listening audience are nonprofit leaders, a lot of executive directors, a lot of founder, ceo kind of roles. If they're listening to this conversation and they're thinking, yeah, you know, we haven't been particularly nimble in this, we haven't. I'm not sure that we've always been the most transparent. Maybe we haven't been the good stewards. If somebody wanted to, to use your phrase, get their house in order, where do we start? What's the first? What would be your advice on the first step that someone would take in that process to really make sure that they are following all of the rules first, but also being good stewards of those finances and really showing that accountability?
Speaker 3:funding, which is sort of the positioning of this conversation today around what is happening in the country. I would say that you want to start at the beginning and sort of put a checklist together. There are many out there, but I would start at the beginning and really understand. I talk to a lot of people when they either get in trouble with a federal government or a state government and now they need to reorganize and understand. Start now to understand. Go back to your compliance and to your guidance and all your grants and read it again. And what are the requirements first, in spending those dollars, what are the requirements in terms of what is allowable and what is not allowable in that grant? And I would start familiarizing myself or re-familiarizing myself with those things. I would make sure, because I think a lot of non-compliance starts with these easy things. You've got to assume that this is okay, and so I would say go back and really understand your guidance, what is allowed, what is not allowable, and start with that.
Speaker 3:And then what are the rules around reporting, both in terms of deadline I mean, so many people are dealing with many, many deadlines.
Speaker 3:Program reports are due multiple times throughout monthly, quarterly, semi-annual and, if they have 50 different grants, these reporting deadlines alone can be just a handful to deal with. Program deadlines are different than financial deadlines, so get them on your calendar, because the government watches and has a scoring tier and if you are late in your reporting you go up the risk category. So that's something simple that helps keep you as low risk. Understand your allowability and then start to get yourself together on what did you say you're doing. Are you running cost allocations? Are you using your indirect cost rate? And understand how that works and make sure that that process is working smoothly. And if you're not sure, reach out to a professional to get some guidance on that. It would be worth investing a little bit of money now to save a lot of time and headache later. Lot of time and headache later, and that's sort of what I mean by getting your house in order, understand every single funding source and make sure that you are doing what you say and saying what you do.
Speaker 2:Yeah, and I think what's interesting, a lot of folks, I think, are waking up to this fact. As you had said, the federal government has their checklist but that does have trickle-down effect, right? That grant that you think might be from your state or from your city or your local, those are trickle-down pieces and so it sometimes is more than a full-time job just to track that. You're right. Like I, I've just talked to an organization last week who said we don't have any federal funding, and then we were talking about some of their grants and, as you start to chase it back, oh no, that does come from federal and we have the trickle down in that. But each layer of that trickle down comes with its own set of tracking as well.
Speaker 3:That is such a good point. When I work with people, when they call me, I'm saying let's just get an inventory of all of your grants, first and foremost, let's get them all in a list, one place. Where do they come from? Are they federal, state, local, foundation? What are the rules? Are they reimbursement? Are they restricted? How are we recognizing this revenue? All these different questions, and very often, like you said, people do not even have these things in a list that they can go to and say these are exactly my funding sources. And so that is an excellent point. Start by putting a list together and making sure that you understand where your money originates, because it is not who is giving it to you, it's not who you're reporting to it. Where does it originate?
Speaker 3:And I find the same thing, just like you said, people usually have federal funds and they don't even know it, and then that is a huge problem, because you are required to comply with federal guidelines when you are using federal funds and if you don't even know that you have them, you are certainly not applying those guidelines. And understanding those guidelines and what that means for yourself can be very overwhelming if you didn't even know. Even know, because what the federal government requires in terms of compliance and uniform guidance is very much different than other. Although uniform guidance is meant to be consistent across all funding sources, unfortunately it is not. Every department at the federal government can make that guidance harder. If it trickles to the state, the state can add more rules on top of that and then if it goes to the local government before you get it, they can add more rules and more restrictions on that, and you have to understand what those are in order to be compliant. And that's why I say start with understanding what funding do you have and what are the rules around it.
Speaker 2:Yeah, I mean that's a great place to start for sure, because I do think a lot of times we miss the boat on understanding all of it. So it's a really great reminder, dana, if somebody wanted to tell us a little bit about that platform that you are launching, because I do think that that might be a helpful tool for folks. Tell us a little bit about that.
Speaker 3:Thank you, I would love to. So we're launching a platform. It's a web-based application called Mission Granted and it is all about managing your grants to automate some of these financial reporting requirements and help you stay in compliance, because all of the things that we talked about just now, and then more, are difficult for people, and particularly in the beginning, when we talked about being able to be nimble and move with the changing landscape. That is very hard for traditional nonprofits that have these budgets that they must comply with. If you have 50 grants, you have 50 budgets, all with different rules that you have to comply with, and as I work with nonprofits about how to do this, I realized that there was only spreadsheets. There's a lot of tools out there that say they help you with compliance, but they might only do one or two things. But in reality, understanding those budgets, how to comply with those budgets, being able to create scenario plans for modifications when life changes there's nothing out there that did that.
Speaker 3:I was just trying to find a tool and then I couldn't find one, and then somebody said well, you should build it. And so today I am an unexpected founder of a tech company called Smart Grant. See all their different funding sources in one place, because most people say, well, this grant covers this and this grant covers that and this grant covers yet a third thing. But they don't see the effect of how all these things work together and the effect of taking some money. So if you take some government money that has this cap on admin, you take it but you actually incur more expenses because now you have to raise more money to cover the administrative costs of running that program that grant will not cover. So this tool allows you to see that all in one place and be more strategic and understand the impact on your overall organization when you take different money. It also allows you to set up your allowability of cost that we talked about. It allows you to put all of your different reporting categories in so you know when the time of month or quarter comes that you have to report or you have to file an invoice for reimbursement.
Speaker 3:It saves you tons of time by automating that reporting and automating that compliance, particularly for smaller nonprofits that struggle with understanding how their allocations work you know allocating their overhead to their different grants.
Speaker 3:It automates that process and allows them to learn, and for large organizations with great teams, it helps them save a lot of time.
Speaker 3:And then it'll help with your actuals and bring your actuals in and lay them over your budget so that in real time you can see where you are and understand how you're spending and where you might be able to pivot. Oftentimes people it's too late, it's the last three months of the grant and they're like, oh my gosh, we should have pivoted, but they didn't really realize they needed to pivot and now it's maybe a little too late to be super strategic. This warns you and gives you information about hey, you should maybe I'm speaking in the software you should probably consider doing something different with this grant right now because maybe you're spending too slow. So I just think for me it's an actual tool around financial compliance and accountability, but it's really about for me and empowering leaders and finance teams to work together to really be strategic, to manage those goals and outcomes and be able to say, look, we did exactly what we say, because we now can see what we're doing and that's what we mean at the end of the day what it's all about.
Speaker 2:Yeah, I love that. Some of my favorite tech tools on the market are the ones that have this story just like yours. Like I couldn't find what I was looking for, but I've been in this space and I understand it as a leader, and so I'm just going to go ahead and make it and make it actually work for what nonprofits need. So that's always one of my favorite stories to hear. Is that accidental founder? Yeah, I love the passion that you all bring to that. So if somebody wanted to find out more about that, about some of the solutions that you offer, what's the best way to connect with you?
Speaker 3:Well, thank you. You can go to our website, which is smartgrantsolutionscom. You can email us at info at smartgrantsolutionscom, and we'd love to hear from you and show you a little bit about the product and how we can help you. Right now too, given the landscape, we are in sort of an early user phase, as we're a startup and we're looking for people this month of March who want to use the product, who want to be informed how the product will work in the future. We're interested in connecting with people who want to really be good stewards and can help us as well. If you're one of those people that really wants to get your house in order and understand how to be more strategic, we would love to partner with you.
Speaker 2:That's great. I love it, dana. Thank you so much for joining me. Really appreciate the conversation and the call for all of us to make sure that we're paying attention at leading well, stewarding well and providing that transparency within our organizations. Some great reminders. Thank you so much for joining us. Thank you for having me. This has been another episode of the Nonprofit Hub podcast. Thanks so much for joining us and we'll see you next time.