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Mentoring: It’s Not Just for Kids Anymore

By | Grant Management, Mentoring, Nonprofit | No Comments

If the term “mentoring” calls to mind programs for children and teens, then it’s time to rethink the term. Mentoring is an important activity for all, including executives and managers.

Although mentoring as a concept has been around a long time so that young people could develop their business skills, the concept has now expanded to include managers and executives who seek to improve their skills even at an advanced stage of their career.

Here’s why mentoring is important at all levels of a professional career and how you can embrace a mentoring mindset – and become a mentor or mentee in your profession.

Benefits of Mentoring for Senior-Level Executives

Climbing the corporate ladder of success means mastering challenges on each run before proceeding to the next level. But as you rise to the top, there are fewer peers to share ideas, ask for guidance or clarification, or gather feedback. The expression “it’s lonely at the top” comes to mind.

Mentoring pairs you with someone at or above your level of expertise so that you’re no longer alone. You now have a seasoned professional upon which to bounce ideas, seek input, or ask for help.

Many executives dislike asking for help from their peers within an organization. They may be afraid that asking for help means they are showing weakness as a leader. When your mentor is at the same leadership level as you but works for another organization, the fear of appearing weak evaporates.

Priorities for Executive Mentoring

“But wait,” you may ask, “if I’m an executive, doesn’t that mean that I have mastered the skills I need to do a good job?” Yes, and no.

Executives have clearly mastered many of the skills needed to lead an organization and have gained the trust of others. They may still have blind spots, however. Most executives need help with three areas: delegating, time management, and running effective meetings.

Delegating tasks is a skill many top workers struggle with. They feel it is easier to do a task themselves than to explain and delegate it to others. The problem with this attitude is that you can quickly become overwhelmed with work if you do not have good delegation skills.

Time management is another area many executives need coaching on because they spread themselves too thin. They overbook their schedules or burn out because they do not book any personal or ‘down time’ into their schedules.

Lastly, executives aren’t alone in the struggle to run effective meetings. Running a good meeting is a skill that can be learned. A mentor can coach you through the steps needed to improve your skills in these areas.

Finding a Mentor and Building a Relationship

Mentors can be found among professional associations, business groups, and other groups in which you already participate. Seek someone whose skills you admire and who you believe you can learn from on a regular basis.

Mentors and mentees should meet regularly, such as once a month. Mentors and mentees should establish clear goals, timelines, and milestones to achieve the goals. Expectations and accountabilities should be set for the relationship so that the time spent working together is focused and practical.

A specific plan, especially a written plan of action, helps with accountability issues. So too does meeting face to face. Schedule time to meet together so that it’s in your planner or calendar.

Lastly, be open and receptive to feedback from your mentor. Growth can be painful, and hearing feedback even if it is couched in gentle terms can be difficult.

 

Mentors are no longer relegated to college graduates entering the workplace. Today, executives at all levels know that having a mentor can make all the difference to their careers.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information

Are You Ready for the FASB Accounting Standards Update (ASU) No. 2014-09?

By | Abila, Accounting, Audit, CPA, FASB, Nonprofit | No Comments

By now you’ve probably heard of FASB Topic 606. This is an accounting standards update that seeks to provide greater clarity to organizations on how to report revenue. After the initial release of the update, several clarification statements have been issued to help organizations and companies prepare for the new guidelines. As you’re getting ready to implement the new standards (they go into effect for certain not for profits starting December 15, 2017, and for most others December 15, 2018), it’s important to understand both the gist of the update as well as the clarifying statements that have been issued.

What Is FASB Topic 606?

FASB 606 deals with revenue from contracts with customers. FASB Accounting Standards Update No. 2014-09 seeks to streamline statement preparation, as well as provide better disclosure to the public and to others. Clear, transparent reporting is essential for nonprofits; it helps build trust between nonprofits and their constituents. With FASB Topic 606 and Accounting Standards Update No. 2014-09, the revised guidelines are intended to help nonprofits clearly disclose their relationship with their customers and the revenues such relationships and contracts provide.

Another reporting area that FASB No. 2014-09 seeks to improve is the ability for people to compare financial statements. If revenue is reported differently, it makes it harder to compare them across entities. If revenues follow a consistent reporting pattern, they can be compared more easily.

Clarifications on the Original Statement

Accounting professionals charged with the implementation of this revised standard have asked for, and received, clarification on several items. First, intellectual property issues required several clarifying statements. Organizations who license their IP needed information on how to record revenues. A nonprofit health association, for example, who licenses a special ‘badge’ that packaged food companies can put on their products to indicate they meet specific dietary guidelines needs to understand whether they should record revenues at once or over time as they occur.

So far, FASB has issued four clarifications:

  1. ASU No. 2016-08, which addressed principal versus agent considerations.
  2. ASU No. 2016-10 identified performance obligations and licensing
  3. ASU No. 2016-12, clarified a narrow scope improvements and practical expedients directed at items such as the reporting of noncash consideration, contract modification and completed contracts at transition, collectability matters, and similar matters.
  4. ASU No. 2016-20 which correct loan guarantees, contract costs—impairment testing, and provision for losses on construction-type and production-type contracts. Because this area is so complex, interested people should keep up to date with any further changes on 2016-20.

Caution: Implementation Ahead

With all of the clarifications and updates, it’s difficult to say whether or not organizations are truly ready to implement the new rule. Although many indicate that they are, it may be wishful thinking.

A few other cautions have come above. The new rule indicates that transaction prices should be allocated to each performance obligation based on the stand-alone price. Software companies are paying particular note of this requirement since it may accelerate revenue recognition for their products.

Another area where this may impact revenue recognition is on bundled items. Revenue recognition for bundled, package items may now be considered one item instead of many.

Lastly, revenues must be recorded when it appears probable that they can be collected. For nonprofits, this means that they cannot record as donations or revenues money left to them with conditions attached unless it becomes very clear that those conditions will be met.

Confused? Let Welter Consulting Help

If you’re confused about all the FASB changes and the implementation of these new guidelines, Welter Consulting can help. Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

How Data Visualization Improves Your Nonprofit Organization

By | Abila, Accounting, Data, MIP Fund Accounting, Nonprofit | No Comments

Think about the reasons why bestselling authors like Dr. Seuss are prevalent and successful.  Is it because of the carefully selected words that grab your child’s attention?  Or could it be because of the bright, colorful images that leapt from the pages as you turned them?

In children’s books, illustrations are as central to the story as the text. They help little ones focus on the most important elements of the tale. They get readers enthusiastic about the material being read. They validate emotions and experiences; convey meaning; carry information; and help young children better understand the written words.

You may not be an Eric Carle (remember The Hungry Little Caterpillar?), but as a nonprofit or association financial professional you have an important story to tell. And, your audience – whether that’s your board, fellow executives, professional peers, donors, or other key constituents – may not want, need, or understand some of the financial complexities you deal with on a regular basis. So, providing them with data that’s presented visually will give you similar benefits to book illustrations.

Data visualization will help you, your team, and your audience:

  • Focus on the information that’s most important
  • Identify patterns and trends in your organization’s finances
  • Illustrate cause and effect
  • Pinpoint any details
  • De-emphasize unnecessary/superfluous data
  • Draw faster conclusions

The good news is you don’t have to be an expert in graphic or information design to effectively present your data visually. A modern true fund accounting system should do the work for you.

When considering financial software, look for a system that offers you:

  • Real-time financial data, so you’re telling an up-to-the-minute story
  • Dashboards that present clean, clear graphical representations of your data
  • Intuitive features and tools so staff members can get up and running with minimal training and can self-serve, going forward
  • Easy-to-use, drill-down capabilities for greater insight into the numbers
  • Operability on mobile devices, like tablets, for on-the-go access to your financial picture

In today’s all accessible and information overloaded world, you must be an effective storyteller. And your story – as a nonprofit or association financial professional – is essential, because your financial status and agency health ultimately determines your organization’s strategic opportunities.

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

Challenges and Solutions for Allocating Indirect Costs

By | Abila, Accounting, Audit, Grant Management, MIP Fund Accounting, Nonprofit | No Comments

Accurate nonprofit financial reporting relies upon proper allocation of indirect costs. Indirect costs can be challenging to place properly, but once they are, they can make a significant impact on your overall budget. More importantly, they add an extra dimension to all reports reviewed by your Board and executive team and can help with budgeting, staffing, and other critical decisions.

Classifying Expenses

Although nonprofits may have multiple expense categories, many expenses actually fall into one of three simple classifications. These include:

  1. Administration: Management and General Administration
  2. Programs: Any programs that support the organization’s mission
  3. Fundraising: The cost of raising funds

Your organization may call them by different names, but upon closer examination, the major expense categories should fit into these areas. Those expenses which can be identified as belonging to one of these three categories can be quickly allocated. Others, however, fall into more of a gray area which cannot be identified with a specific program or budgeting category.

Indirect Cost Allocation and Its Effects

Indirect cost allocation impacts many areas of your organization. It impacts how donors view your organization, for example, by changing the way in which expenses are laid out in your financials. High administrative fees may be unacceptable to some donors.

Indirect costs also impact the budget for programs. If costs seem to be weighing heavily towards one area, that area may get more or less budget for upcoming years.

The allocation also impacts the final percentages that appear on Form 990 for each tax year. These are the numbers that are listed publicly and can impact the public’s view of your organization. Think carefully about how you apportion indirect costs as their ramifications can be long-lasting.

Coming Up with an Indirect Cost Allocation Method

Determining a fair and equitable indirect cost allocation method is a good solution to the problem of items that do not have an easy ‘home’ in your budget line. By examining the methods you have on file to share expenses, you can plan and allocate accordingly.

One method by which you can allocate indirect costs is to estimate what percentage belongs in each major budget line. Let’s assume that an administrative assistant works for both the donor relations and the program area. Which budget should contain his salary? If the assistant supports three people in donor relations and one in programs, then 75% of his salary budget can be allocated to donor relations and 25% to program areas.

Obviously, not every allocation will be this clean and easy. Square footage is one area that can get tricky. For instance, if you rent office space shared by multiple program and departmental areas, determining the percent of costs to be borne by each department can get complicated if many departments share the space. Sometimes, you just have to give it your best guess.

Consistency Is Key

The big thing to remember about allocation is that consistency is the key to successful indirect allocation. Whatever method you choose, put it in writing and file it in accounting and financial documents, plans, and budgets so that it is common knowledge. Then, apply the rules fairly and consistently to the budgeting process. It is this consistency of application that auditors look for to determine if an indirect allocation method is acceptable.

Indirect allocation is a common challenge in the world of nonprofit financial management. Fortunately, it’s one with a solution that makes sense and that can be rolled out fairly easily throughout your organization.