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
Turning Big Visions Into Fundable Plans
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You can run an inspiring nonprofit and still feel lost the moment a P&L hits your inbox. In this episode, Michael Baldree, founder of Crosswind CFO Advisory, breaks down how executive directors who came up through the program side can build a true partnership with finance. We unpack what a healthy relationship with your CFO or finance lead actually looks like: one where finance understands the heart of your mission, respects your vision, and works alongside you to turn ambitious goals into fundable, step-by-step realities without being the "wet blanket."
We also dig into practical strategies for long-term sustainability, clearing up common myths around revenue diversification and earned income. Michael breaks down what nonprofit tax status actually allows, how to choose earned revenue streams that match your core strengths, and the simple monthly report checks and internal controls that protect small teams from fraud. Whether you're looking to transition from backward-looking financial reports to forward-looking cash flow planning or wondering if fractional CFO services fit your budget, this conversation delivers actionable tools to move your mission forward.
Get free nonprofit professional development resources, connections to cause work peers, and more at https://nonprofithub.org
Sponsor Message And Welcome
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Michael’s Story And Finance Perspective
SPEAKER_03Welcome back to the Nonprofit Hub Radio Podcast. I'm your host, Megan Speer, joined today by Michael Baldry, who's the fractional CFO with Crosswind CFO Advisory. Guys, I'm excited about this. I think we're going to dig into a piece of running a nonprofit that we don't talk about enough from someone who has experiences on both sides of the coin when it comes to finance and executive director work. So, Michael, welcome in. Thanks for joining me today. I'm really excited to be here.
SPEAKER_01Yeah. Thank you so much, Megan. I appreciate the opportunity and looking forward to the conversation.
SPEAKER_03Yeah. Okay. So when I say that you have experience on both sides of the coin, right? You have you are certainly now the CFO, but you've spent some time in that executive director seat. Tell the audience a little bit about your background that kind of got you to the work that you're doing today that brought us to the conversation.
SPEAKER_01Yeah, absolutely. I started out in my career in the mortgage banking industry. I was in that space for about 10 years and then shifted over to nonprofit. And my family and I moved to Turkey in a city called Antalya, which is southwest part of Turkey, lived there for almost 10 years, started a cultural center, got nonprofit status with the Turkish government, and brought Christians and Muslim Muslims together in conversations and ran a variety of different programs. So from the executive director standpoint, I understand how to run programs and the difficulty of navigating those programs with limited resources and how to staff those and how to make sure the funding is still coming in. And during COVID, my family and I transitioned back to the US. And during that time, I began to go back to school and got my MBA and went through the CPA process and was the CFO for a larger nonprofit and just realized numbers has kind of always been what energizes me, but also really enjoy the nonprofit space and want to help nonprofit leaders with finances and getting them from point A to point B and helping them navigate that that growth with the financial aspect. So that's a little bit about me. So I uh yeah, started a fractional CFO firm helping specifically and exclusively nonprofit organizations.
SPEAKER_03That's great. I will tell you up front, the finance isn't not my skill set. My business partner and I have been working together since 2018, and we very clearly stay in our lanes. And if it has to do with math and numbers, that is on his side of the house.
SPEAKER_00Yep. Yeah.
SPEAKER_03So coming at this, I think actually, I think I'm coming at this like most executive directors, right? Maybe more on the programmatic side of the house came up that way. Um and we find ourselves very quickly out of our depth when it comes to the financials. For a lot of us, I know for a lot of our listening audience, that's not our background educationally. And so when we start to have to either meet with our CFO or meet with maybe the accounting firm that we've outsourced to, a lot of times I think it can be a real stumbling block for leaders where we don't we don't even know what questions to ask. At least I don't. I'll I won't put that on anyone else. I'll give it to myself. And so I want to kind of talk today to that specific executive director, right? Who maybe came up through the program side, not the business side of nonprofit and just is maybe feeling out of their depth and out of their skill set when it comes to the finance piece. So I think because the obviously an executive director is top of the chain leaning strategy, right? Talk to me about first and foremost, that executive director role and the relationship with that you would love to have them have in an ideal world. What does that communication look like? What are some things that as an executive director you want to make sure you're getting from your finance folks every week? And as the CFO, what are the things that you need back from the executive director to help guide what you're doing as well?
SPEAKER_01Yeah. Yeah, great
What Great ED Finance Communication Looks Like
SPEAKER_01questions. I think it's really important for the finance director or the fractional CFO to really understand the executive director's vision and to really understand, hey, this is the direction that we're going and where we want to see the organization one year, three years, five years from now. And the finance director or fractional CFO then can help align capital and finances to those strategic goals to help the organization get there. And so I think it's really understanding where the uh executive director wants to go, what their values are, where they see the organization heading, and really beginning to understand how we can plan for that growth and how to align the finances with those strategic priorities. And so I think there has to be really good close communication between the finance director and the executive director, and they really have to understand the executive director's heart for the organization and helping them map out financially how we get from point A to point B.
SPEAKER_03So, okay, so let's let's break that down,
From Big Vision To A Real Plan
SPEAKER_03right? Because I do think sometimes it's very easy for an executive director to say, here's my big vision. But I think sometimes we get a little, and I again I'm gonna put this on myself. This is I'm not speaking for everyone, but we can get a little maybe pie in the sky about the reality of what that would take to do what we want to do, right?
SPEAKER_00Yeah.
SPEAKER_03So to me, and I mean no disrespect to Michael in in my sentence at all, I think sometimes to me the finance guy comes in and it almost can sometimes feel like a wet blanket of like, no, I'm really excited, we're gonna do this, and then they're like, Yeah. Realistically, no, we're not.
SPEAKER_00Yeah.
SPEAKER_03How do you how how do you navigate that that dynamic of not wanting to like of because by nature, then you have to be the realist in the situation.
SPEAKER_00Yep.
SPEAKER_03Which it has to put be at some point has to be a hard dynamic to navigate. So talk to me about that a little bit.
SPEAKER_01Yeah, I think that's a really good um dichotomy that you have to uh keep in mind as you're uh leading an organization and as a finance director or a fractional CFO, you definitely do have to be real and you have to be able to say, hey, this is reality. At the same time, though, I think for me, anyways, it's really important to understand the dreams the executive director has, understand the vision the the executive director has, and then be able to figure out how we can get to yes. Um I think that's really important for a good fractional CFO is not only only to be looking at the compliance side and saying, you know, no, no, no, but saying yes, we have to be compliant, but also here's how we could get to yes. So looking at, you know, right now we may not have the revenue streams to be able to fund this program, but let's think creatively of how we could add an additional revenue stream, whether that's a grant that we could begin to look for, or whether it's adding a revenue stream of major, a major gift or a legacy program or even earned income and and figuring out this is how we could get to yes on that. So I think it's a for me, it's a balance between saying, you know, maybe we can't get there next year, but we could certainly create a plan to get there and um strive for that goal.
SPEAKER_03Yeah.
Finding A Path To Yes
SPEAKER_03I want to okay, so I want to piggyback off something that you just said, because I think there's a lot of discussion in the nonprofit sector right now around diversifying funding.
SPEAKER_00Right?
SPEAKER_03Obviously, a lot of orgs took a hit in the last year or so with the grants that they have come to rely on. Um and so there's a big there's a lot of discussion. And for a moment there was this, and I think it's still there a little bit, around this idea of earned income and what nonprofits can and can't do around charging fees or having a revenue source that might be looked at as more commercial. Um one, I'd love your take on what a healthy diversification of of revenue looks like for a nonprofit. And then can you kind of clear up some of those myths about what we can and can't do when it comes to earned revenue as with nonprofit status?
SPEAKER_01Yeah, I think that's a a a really important avenue that more and more nonprofits need to be exploring. Yeah. And um, I'll give just you know the first caveat that you always want to make sure that you're talking with your who's doing your 990, making sure that you're compliant with tax laws. But I do believe that there's way more leeway than most organizations realize in terms of being able to earn prop nonprofit status is a tax status. Uh, it does not mean that you can't be profitable and you fact, in fact, should be profitable. And in terms of the earned income um strategies, I think it's an excellent way for nonprofits to be able to grow and to be able to protect themselves and um be able to add you know an additional revenue stream. So looking at, you know, for instance, I have one organization that I'm helping with now that they began doing consulting for various for-profit organizations in the area that their nonprofit is uh in, and they have been able to do earn quite a bit of earned revenue from that prior
Revenue Diversification And Earned Income
SPEAKER_01to establishing that program. You know, they didn't have that revenue stream, and that they didn't think they would be able to have that. But understanding that it's okay to add an earned income stream like that, and that the IRS allows you to do that, enabled them to be much more diversified. And so you had asked, you know, what would be a good target to shoot for? I would say if you have just one or two revenue streams, you're you're way too concentrated. So you want to look at you know, at least four to five, if possible, revenue streams. And if any one of those revenue streams is making up more than 35, 40 percent of your total revenue, that's uh kind of a cautionary flag, and you want to begin to diversify there. And often it, you know, when when people when organizations think if I'm talking to executive director and they think we have to diversify, often they think you know, we have to do like five different referee revenue streams all at once. I would caution against that and say, hey, let's just start with one and get really good and and um deep within that. And then once we feel like that is that revenue stream is strong and sustainable, then we could move on to the third one and then over a long period begin to diversify. So that those would be some strategies I would recommend in terms of diversification of revenue.
SPEAKER_03Yeah. Okay, so I'm curious about that because I think oftentimes we look at like the the standards of revenue, right? So you've got grants, you've got major donors, you've got your annual fund, it's all very donor-based or you know, donor-centric. Is there if we get into like, you know, maybe we're charging for consulting or we have a store that or cafe that we're running that the proceeds benefit the organization, um are there any rules around how much of that income or like how much of your total income can be from a for-profit? Or not for-profit, I suppose, but from a a more paid entity?
SPEAKER_01Yeah, the there are um, in terms of the IRS rules and in terms of the all the specifics, it would be really hard to kind of go into all of those, but some of them is called U-Bit rules, so you would want to, you know, look into that to make sure that you're not falling into that that type of category. But often the the executive directors or CEOs are thinking we we can't have very much of a profit or or earned income is contrary to nonprofit status, and that that is not the case at all. And I would say if they took the time to do the research and talked to the um organizations that's preparing their 990, they would find they have way more leeway than they currently think they do. Um and that would really allow them to um do way more than they think they're able to do.
SPEAKER_03Yeah. I'm curious where you where else you've seen that work well. Because I do think that's maybe a thing that the executive directors are a little hesitant to think about because it feels like, oh, we're starting starting a business within an organization, or they're man, my my staff is already so stretched thin. The idea of expanding to something else to bring in that revenue can sometimes feel overwhelming. Are there specific types of that earned income that you've seen work really well for organizations that maybe someone could consider?
SPEAKER_01Yeah, I think that it often makes sense when it's kind of within the wheelhouse of the overall mission. So for instance, if I'm serving a church, I find often that they will have earned income with daycare. Or if I have working with an organization that's focused on diversity and inclusion, they often will have earned income with consulting, where they're going to schools and doing some consulting on how you can create a better atmosphere that's more inclusive of a variety of individuals. So I think if uh what with whatever your nonprofit's mission is, there should be within that space something that just makes sense and that is not way outside of your skills, way way outside of the resources you have, because then um it can get difficult to have a positive return on the investment.
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Earned Income Ideas That Fit Mission
SPEAKER_03Unfortunately, though, I was talking to an organization who went through a situation where they had outsourced their accounting. So bookkeeping and payroll was had been outsourced to a vendor. And the executive director, in her own words, said, They sent me reports every month, but I didn't even know what I was looking at. So I just assumed everything was fine until that organization closed out of nowhere, and they came to find that they it was a fraud issue, and they had been taken for tens of thousands of dollars in extra fees that the accounting firm was charging to these organizations. And unfortunately, that is not a one-off scenario, right? So I'm I would love your input and thought. If an executive
Sponsor Break
SPEAKER_03director has outsourced, or even if they're using an internal an internal person who's handling those things and giving them those reports every month, what are maybe the top three things that you would suggest they keep an eye on in the PL or in those overall monthly reports to make sure that their organization is staying healthy? What are the what would you say are the top recommendations of these are the things you want to look at and here's why?
SPEAKER_01Yeah, that's another great question. I think, you know, when you're choosing an outsource accounting firm, I think it's really important to understand, you know, who the owner is, understand who their history is, and to understand um maybe talk to a few of the uh other organizations that they serve and hear from them and be able to talk to them about the service they've been receiving. But then once that relationship is in place and you feel like you've done the due diligence to go into a relationship with that firm, I think it's really important to have um really solid internal controls in place. And so the segregation of duties between the re reporting of the cash and the actual depositing
Internal Controls Every Nonprofit Needs
SPEAKER_01of cash, all those, you know, keeping separate, obviously. And then, you know, even like in that situation that you're talking about, being able just to look at the reconciliation reports to have an executive director at least look at those monthly to kind of see how that those were handled, and um being able to really keep keep tight controls on the internal controls is really important. So yeah, I think you know, uh looking at the the history of the of the firm and then once that's relationship established, really coming up with the internal controls that will work for that organization. If it's a smaller organization, you may not be able to have you know what the AI CPA would recommend in terms of segregation of duties, but you can still have controls regardless of what size your organization is.
SPEAKER_03And when those reports come through, what are the top things that an executive director should be looking at?
Three Things To Review Monthly
SPEAKER_01Yeah, I think um, you know, uh looking for any expenses that seem out of place, um, those amounts, also looking for any vendors that that don't seem to be ones that you have used in the past. I mean, anytime you see you're seeing a vendor that's being paid that you don't know what's for, that would be something really to look into. And having a process for how vendors are added to your accounting system is is really important. Um, that way there can't be fraud in that regard. And then any you know, large variance within the budget is something to to look at as well.
SPEAKER_03So those are is that like a variance year over year, quarter over quarter, all of the above?
Budget Variances And Year To Date Trends
SPEAKER_03What are we what should we be comparing to?
SPEAKER_01Yeah, I I mean I like to be going over that monthly. That way the budget is more of a dynamic tool rather than a static tool because anytime the budget is just put in place in the beginning of the year and not looked at for three, six months, it's harder to see negative trends. It's better to be looking at on a on a monthly basis. So, really, yeah, I I would encourage executive directors to have their fractional CFO or their finance director talk to them about variances that happened in the last month and why and how to begin to correct those problems earlier than later.
SPEAKER_03When it comes to so one of the things that I have learned to find helpful, again, finance is not my my bailiwick, but one of the things that I have learned to find helpful is that comparison of year to date versus last year. Right? Because that's the that's the part where I can start to see, uh, we're running behind here, we're running over there. Yeah, that's that has always been a helpful piece in understanding the bigger picture of where we are. Yeah. I don't know if that's a great strategy, but it's mine.
SPEAKER_01So yeah, no, I think it's it's well, it's one helpful strategy for sure, and it's it's one that is kind of like more from a 10,000-foot view that that helps you kind of see those trends. And and what we've kind of been talking about so far is more just kind of like the backward view of accounting of of past events that
Using Cash Flow To Look Forward
SPEAKER_01have already occurred. And I think there's value in looking at those, but I think there's equally, if not more value to begin to look forward as you look at uh where are we going, how we're gonna get there, and that's where kind of like cash flow comes into play and being able to take the data that the accounting is giving you and begin to take that data and figure out you know, what do we need to do with that, what adjustments do we need to make so that next quarter is better than last quarter?
SPEAKER_03That's good. So okay, so Michael, you've mentioned a couple of times this idea of the fractional CFO.
When A Fractional CFO Fits
SPEAKER_03And I I want to give you a chance to talk about that because I know that's the work that you do. Yeah. At what point, uh, before we dig into specifically what Crosswind does, at what point is it is it a good place organizationally to think about that fractional versus maybe some of our folks are startups and they're smaller and that's we're not there yet, or some of them maybe it makes sense to have a full-time person in in-house. What is that line of where does it make sense to start thinking about taking advantage of a service like that?
SPEAKER_01Yeah, I think that um what I see is usually organizations that are 10 million or above in in revenues typically have someone in place full time that's not only looking at the backward view of accounting, the historical compliant piece, but they have somebody that's helping plan for the future and and diversify revenue and come up with a financial plan. Below that, I think as soon as You can afford to, and I think that's the benefit of fractional, is that you're not having to pay for a full-time CFO who has that price tag, but you can do it on a fractional basis, they can really help you look at the data from the accounting, from the bookkeeping, and then be able to plan forward on where you want to go. And so I think that's the value of a fractional CFO is that they're not just looking at the past, they're helping you look into the future. So the example I always get is I have three sons who are involved in a lot of basketball. Bookkeeping and accounting is really your scoreboard. And what a fractional CFO does is they're kind of like the coach who helps you take the data from that scoreboard at halftime and say, what modifications do we need to make to our game plan so that the second half, you know, we do we're best positioned to win the game.
SPEAKER_03So
Crosswind Services And How To Connect
SPEAKER_03good. Okay, so to that end, tell us a little bit about Crosswind, the types of work that you guys do with with organizations and how folks can find out more.
SPEAKER_01Yeah, so Crosswind CFO Advisory um serves only nonprofits, and we can do um just the backward end of accounting and um bookkeeping for organizations who are you know at 100,000 to 400,000, 500,000, and then organizations that are in a place where they're growing and need more than just um the bookkeeping and accounting and need support with diversifying revenue, coming up with a financial plan, that's where we offer the fractional CFO for those individuals. So we do both, kind of just depends on where the organization uh where their current needs are. But all we do is work with nonprofits, so that's kind of our specialty.
SPEAKER_03Nice. And if folks wanted to learn more or connect with you, what's the best way to go about that?
SPEAKER_01Yeah, you can connect with me on uh LinkedIn. So I'm on LinkedIn as a Michael Baldry, and then uh also my website for Crosswind CFO advisory is www.crosswindcfo.com.
SPEAKER_03Perfect.
Book Recommendation On Authentic Leadership
SPEAKER_03All right, so as we move to close today, I do want to ask, we have dubbed 2026 as the year of learning here on the Nonprofit Hub Podcast. So I'm curious, what's a book that you would add to everyone's must-read list? Could be certainly could be financial or not. It's up to you, but what's a book that's maybe impacted you that you would recommend everyone check out?
SPEAKER_01Yeah, a book that I recently read is called Leading Becomes You, and it's by Dr. Natalie Pickering. And it really talks about uh it's a framework for how you lead from a more authentic self. Um, so I think the subtitle of her book is Leading from the Inside Out, and it really um guides you through understanding how to align your leadership values with how you're leading your team. And she has kind of like four different frameworks in the book that leaders often find themselves in. So, like one is like the uh swamp, and another is the wasteland, another's the petrified forest, and one is the flourishing meadow. And so you want to eventually get to the flourishing meadow, but the other three are where your connectivity with other leaders and clarity surrounding your identity are not really aligned well, and so you find yourself in the swamp or you find yourself in the wasteland. And what really stood out to me in the book is I often viewed burnout as something externally that creates that burnout. But she points out that those misalignments in leadership with our identity can create burnouts, and so when leaders don't have a real congruency with how they lead, that can just lead to a lot of exhaustion and burnout. And so uh from you know, in the nonprofit space, we have a lot of burnout in the last uh year, two years specifically. I think that some of that could be you know misalignment with leadership, and so being able to learn how to lead more authentically, I really found a lot of value in the book. So it's called uh Leading Becomes You by Dr. Natalie Pickering.
Final Takeaways And Closing
SPEAKER_03I love it. So good. That is definitely one that I will be checking out.
SPEAKER_00Yeah, yeah.
SPEAKER_03I am always for more leadership books. So that's great. Michael, thank you so much. I think this has been a fantastic conversation, and I think super helpful for some executive directors who, like myself, might say that this is an area that's maybe a little weaker in the skill set, but I feel like you gave everybody some really good tools to think about and some directions to build that bridge a little better with their CFO and move forward. So thank you so much. I really appreciate all that wisdom.
SPEAKER_01Yeah, thank you, uh Megan, for the opportunity to be on the show, and thank you for what you do and the uh benefit the podcast gives to so many leaders.
SPEAKER_03Yeah, it's my pleasure. Again, my guest has been Michael Baldry, who's the founder of Crosswind CFO Advisory and a fractional CFO to nonprofits. This has been another episode of the Nonprofit Hub Radio Podcast. I'm your host, Megan Speer, and we'll see you next time.