Today our guest is Megan Tarnow. Megan is a, well, all-around great person, first off, but she’s a speaker, a trainer, a coach. She gets lots of recognition. She’s been an Insightful Accountant Top 100 Pro Advisor for ’22 through ’23. I’m sure she’ll get it again if she applies. We’ll see what happens. And then last year I got to see her receive this award at Scaling New Heights, but she was the Top Niche Practice Pro Advisor, which was pretty cool. I didn’t know it was coming. I knew who she was, so I got to see her up there accepting that award, which is pretty cool. She is a QuickBooks / nonprofit guru. I think she mentions she lives at the intersection of QuickBooks and nonprofits. And one thing we’re going to talk about, but I’m going to mention: she started a Facebook group about six years ago for nonprofits—I’ll let her explain what it’s for—but that currently sits at over 11,000 members. We’ll talk about that. Megan, welcome to The Unique CPA.

Thank you. Happy to be here.

Yeah, well, yeah. So, we’ll tell some people some behind the scenes: This is our fourth attempt at recording. The first two, I don’t know, the first three times, I’m not sure what the conflict was. The last one, I was dealing with vertigo, which I’m slightly dealing with still now, but we’re not rescheduling again. So I’m glad we’re getting this done today. First thing, I did a quick intro. Anything you want to add to that or expand on or correct as well?

I think I made the Top 100 Pro Advisor List starting in 2000, maybe 2001. ’21! No, ’20 or ’21.

2000! I’m like 23 years in a row now, that’s pretty good!

No, no, no. Although I’ve actually been like a certified pro advisor since 2002.

Okay.

But I didn’t apply to be on the list for a long time because I thought those people were, I don’t know, bigger, fancier, smarter than me.

Sometimes I think we do that too often, thinking everybody else can do it better than us, and in reality, they’re wrong, because they didn’t get this award—you did.

Well, and it just, I mean, in so many ways, right, you wait to be invited to the table. And you wait for someone else to create something. And then you’re like, oh, I can make a room. I can make the table myself that I want to be at.

Yeah. Well, let’s go with that then, because you did make the table yourself when you were talking about this Facebook group. Because that, I mean, 11,000 members, and this is an active community. I went on there today and I saw there were already 22 messages today on this group, so obviously it’s going strong. Give us the background of this. What was the brainchild of this, how did you decide that this was something that was needed?

It was really just the room I wanted to be in, right? I told you that I live in a very narrow intersection of QuickBooks and nonprofits if you’re doing a Venn diagram. But I think it’s big enough, right? The U.S. has—Minnesota alone has 30,000 nonprofits.

That’s a lot.

And probably 90 percent of them are of a size that they’d probably be using QuickBooks.

Wow. That’s huge!

Which is mind-blowing. And so, 11,000 sounds like a lot, but I also think it’s a drop in the bucket compared to what’s really out there. And so, where this came from was, I was scheduled to speak at a local nonprofit conference about six years ago on April 16th, and it got snowed out. We talked a little bit about how important in-person conferences are, actually seeing our people, and you and I interact around that a lot. And so I was just, I was devastated. I was so looking forward to seeing the other people who do what I do, and having that camaraderie. And so I found myself, you know, doom scrolling, as one does, and was thinking, ah, somebody should make a group that’s about QuickBooks for nonprofits. And it hit me that I’m somebody.

You are somebody.

I am somebody. So I’m like, I don’t know. I don’t know how to do this. So it was again, some googling. And I just on a whim made this thing, and I invited a handful of people that I knew that were kind of working in the same space to just be in that room with me. And it has blown me away how it has grown, because now we are about 50/50, like accountants and consultants and bookkeepers and nonprofit staff. And I look at the stats on it every week. We are roughly 75 percent active over any 28-day period, like 75 percent of the members are in there over any 28-day period, and that’s been true for 4 years now.

Wow, that’s amazing. That’s great participation. I don’t know, but I believe it is. It sounds like it is to me.

I don’t know either! I would love that stat. I actually admin another group on Facebook called the Group for Accounting Group Leaders.

Okay, wow!

It’s made up of people I know who run Facebook accounting groups. And I’m sure there’s a ton of people I don’t know that run Facebook accounting groups, and they are welcome to join us. But again, it was the same sort of thing, like, is that good? Is 75 percent active good? I don’t know. Let me gather the other people I know so I have a place where I can ask them.

Yeah. I’m going to say it is good. Well, I don’t care what the stats say. In my mind, that sounds very active, so we’re going to go with that. 

The one I keep an eye on, right, is it QuickBooks Power Hour?

I don’t know these things.

It’s an OG Facebook group, and I think they’ve got 16,000 people.

Okay, and how long have they been around?

That I couldn’t figure out.

Okay. Well, I mean, you’re crushing them probably as members per year, which I’m not saying it’s a competition, but it is a competition.

But I’m just curious, right? Because you want to know how you compare. And I look at that every week and we grow, like, people tell others about it, but I don’t like tell people about it. I’m not out proselytizing. And it grows by like 75 to 100 people every week lately.

I mean, it’s obviously active from that standpoint. You know it’s continuing to grow. It’s not stagnant. You’re getting messages like I mentioned earlier. People are communicating, people are posting, and people are getting something out of it. What do you think is, why are people joining? Is it the community aspect of it? What do you think?

Well, I think in both places, for the people who are working with nonprofits, who are in nonprofits themselves, a lot of times they are the only financial person in their organization, so they don’t have anywhere to go for questions, and they don’t have anyone who gets them. And for the accountants and consultants, a lot of them are solo practitioners, they’re in small firms, and then they’re working with multiple nonprofits, but again, they don’t have anyone to go to for answers either. And a lot of the education that is out there around nonprofit accounting is the what, but not the how.

Yeah, the how’s important. Because they’re a lot different.

So we try to hit both, you know, how to actually do that thing in this tool that we all happen to use.

Yeah. Because I’ve been a treasurer or a head of the finance committee for a couple of nonprofits. I don’t know what I’m doing. I mean!

It’s hard, man. I’m in the process of, I don’t know if we’ve talked about this, but I’m not actually an accountant. I mean, I do accounting, but I joke but it’s true—I have never taken an accounting class for which I got high school or college credit.

Oh, never?

Never. I mean, tons of CPE, but no high school or college credit.

You’re definitely an accountant. You’ve learned on the job, for sure, which I think is, I mean, honestly, learning on the job to me is so much more valuable than learning in school anyways, in my mind. So if you have the talent and the skills, you’ll be able to do it. So you’re an accountant without an accounting degree or any single class in accounting.

Yeah. So I’m in the process of doing the AICPA nonprofit certificate after all of this time. Nonprofit accounting is wackadoodle hard. Like it’s crazy hard. And QuickBooks is quirky in its own way.

I was going to say, does QuickBooks specifically have a nonprofit version?

Desktop said it did.

Okay.

And online, if you tell QuickBooks Online that you file a 990, it changes the P&L to the Statement of Activities, and it changes the balance sheet to the Statement of Position. But it doesn’t rename equity to net assets. It just randomly renames some forms, so an invoice becomes a pledge. Not super helpful. 

Okay. This is not where we’re going to go, but now I’m so curious: How did you get into the nonprofit accounting environment then? Did you just fall into it or what?

Yeah, I did, honestly, and this is kind of why I can relate to my people, because like 40 percent of nonprofit finance people, I am accidental. I had a small business background, my dad and my grandparents ran a hearing aid dealership in the eastern part of Montana that I started working at when I was 10. And then I had a theater degree, like a little bit of acting but more directing degree, and my husband and I had spent four years in Japan. So it’s kind of convoluted, but naturally I would end up with a job as the office manager of an Asian American theater company.

Okay, obviously.

Right? And it’s the late 90s. QuickBooks has only been out for a couple of years, and they have already destroyed it.

Okay, yeah.

And had started the process of working with a really good consultant to restructure their data file. He was a good one and also a great mentor. He’s like, okay, here’s what I’m doing, and here’s why I’m doing it.

Okay, so you learned on the job.

Yep, and then we had a board treasurer who was the CFO for Banta Publishing, which is a large publishing company. And he’s like, here’s what I need to see and here’s what it’s telling me, right? And we had an auditor who came in with the green and white lined paper and his own red pencil doing the audit. He’s like, here’s the adjustments I need to make, and here’s why, right? And I was a why person, right? I had a directing background, which is like, I want to understand how all the pieces go together. Unfortunately, my boss was not such a fan of that because I was like, I wanted to understand all  the things and he was just like, put your blinders on and do your little job. 

So that job ended somewhat abruptly. And very painfully. It was awful. It was really awful. I don’t want to give anyone that sort of power over me ever again. What skills do I have that anyone would possibly hire me for? I thought, well, there’s a lot of small nonprofits like the one I just came out of, that have five employees, and four of them are directors of something. And the last person’s job is everything else. And part of that is the financial side and the bookkeeping, and typically, that’s not their background, right? They’re there because they care about the mission and they’re like, you’re not afraid of numbers, this becomes your job. Would anyone hire me to support that person? I just started off applying, like I’d see jobs in the paper that looked like what I wanted to do, and I would go in and pitch hiring me as a consultant instead of this employee position. I was able to get two or three that way, and they happened to share an auditor. So, the auditor came in the next year and was like, wait, these books are not nearly as jacked up as they were before. What happened?

Wow, nice.

“They hired this woman.” That was the start of it. And then I built a business for 21 years.

That’s pretty cool. How long were you in that job that ended abruptly before you went out and did your own thing?

Maybe two, two and a half years?

Okay.

That’s a lot of chutzpah, right? You have a lot of chutzpah when you’re young.

Oh yeah. 

But also digital software was new, right? So I became a Pro Advisor. Okay, you’re not a CPA. But you are certified in this tool that we use that nobody seems to understand, so that was enough to get my foot in the door back then.

No, that’s big. I mean, education, getting a certificate, you’re about to get another one saying that you’re a, I don’t think you probably need the AICPA certificate.

I’m learning stuff. It’s fascinating. It’s so stupid, like their definition of a non-financial asset is any asset that is not financial in nature.

Isn’t that the same thing?

That would not fly in an English department.

I was going to say, you’re using the words to define itself. There’s a joke about that. I can’t remember. Somebody was saying productivity, well, it’s somebody that’s productive. Alright, well that doesn’t really help me much.

Alright, so there are a couple of things that, you know, nonprofit intrigues me. I’ve been part of nonprofits, I’ve been the president of a couple of nonprofits in the past. Again, didn’t know anything about the financial accounting end of things. I was always cognizant of the fact that we needed to raise funds and fundraising was important. I was not all that good at it. I know we needed to do it. You mentioned this term the other day that I had never heard before in my life. I still don’t know what it means, but I’m kind of hoping we can talk about it today, which was fiscal sponsorship, am I getting that right?

You are. Right. Which is not the same as fiscal agency. Agency is easier to say, but it’s a completely different thing.

Well okay. Is fiscal agency something you can define quickly before we get to fiscal?

Yeah, so fiscal agency is like, you know, your mom’s in the nursing home and she lets you write the checks for her, but it’s her money. So, you do the details, but you don’t really have any control. You’re just like a passthrough entity, helping do the things.

You’re working on their behalf, doing what they say to do or whatever.

Yeah, exactly.

Okay. And then what’s fiscal sponsorship?

Fiscal sponsorship in a nonprofit context is where an existing 501(c)(3) allows an individual or a project to come under their umbrella and, you know, sort of piggyback on their charitable status so that donations to them become tax deductible and provides the oversight. The key difference is who really has control of the funds. So, for donations through fiscal sponsorship to be tax-deductible, the sponsor has control.

Okay, let’s just pick a name we know, the American Heart Association, let’s say. And so they have then, and I’m not saying they do, we’re not saying that, this is a hypothetical situation here. There’s an organization that comes to them and says, hey, we want to do work to help support you, but we kind of want to be independent, but we want to piggyback on you. I’m just trying to…

Okay, so say, hey, I’m the American Heart Association, and I have this idea that we could develop some new way of finding out about heart disease earlier on, and I have people who want to give money to help me figure out how to solve this problem, but for whatever reason, they have to give to a 501(c)(3), and I don’t have that, right? And I come to you and say, instead of me setting up my own nonprofit organization and going through all the paperwork and all the administrative hassle and all of that, would you be willing to sponsor this project? Okay, so the money would go to you as the American Heart Association, essentially as a restricted grant for my project.

Okay. So the sponsorship, in this scenario, the AHA manages the money still, they said that’s a key factor. And then they probably have… Are they the ones supplying all the employees? Am I getting too confused on this?

It’s a complicated thing for people, right? It depends. Officially there’s like, there’s some folks, Adler and Colvin, who wrote a book called Fiscal Sponsorship 6 Ways to Do It Right. And they provided six different models of fiscal sponsorship. One is, they call it Model A, but it’s where the project is treated like a program of the parent organization. So all of the income, all of the expenses completely show up in natural categories on the sponsor’s financial reports. There’s one that’s Model B, which is like an independent contractor arrangement, which would be like the American Heart Association saying, yeah, that seems great. We’re essentially going to hire you to manage that project, and in which case, the income comes into the sponsor’s books, the expense all just goes, it flows to somebody’s 1099 or whatever, depending on their tax status. And the balance is a restricted net asset for the sponsor. And the third one is a pre-approved re-grant, which works pretty much like the one I just said, except the project does have some sort of nonprofit status. And then, on the sponsor’s books, instead of being an independent contractor expense, it would be a re-grant expense.

Okay, so the whole point of this… I’m not a nonprofit expert. That’s why you’re educating us today. And it’s interesting because these are obviously nonprofits in general. It’s an arena where you can have some very, you know, like I said, I was president of a stroke organization, a nonprofit stroke organization where we’re raising money to put out stroke awareness, support stroke survivors and their families. That was really the mission of it. We had a program, and I’m probably going to get this completely wrong, so you correct me if I’m wrong. We had a program in there, and we still do it, I’m not part of it, but I still support the organization… I don’t know why I mentioned the American Heart Association, now I’m not mentioning others. I’ll mention ours: Stroke Survivors Empowering Each Other. So, Stroke Survivors Empowering Each Other has an organization called Survivor 2 Survivor. It is where a stroke survivor will agree to receive phone calls from another stroke survivor while they’re in the hospital before they’re discharged to, hey, you just had a stroke, most people on this podcast know I am a stroke survivor. You just had a stroke. You’ve got a million questions going through your mind, we know that, and so we’re there for you. And if you agree, we can communicate after you leave the hospital, because hospitals are great, but they’re not going to tell you, they’re not going to be able to answer all the questions you have afterwards. 

This is an unbelievably strong program that got attracted by a large organization that says, hey, we would like to help you take this program nationwide. So, in that scenario, we’re still an independent organization, but now we have this large national organization that wants to help support our program. Is that somehow a fiscal sponsorship arrangement?

It could be, maybe, yeah, where they said, okay, and we’re going to receive big grants on your behalf and then shoot them back out to you because this is a program we think should exist. 

Yep. 

More often, how it comes into being is before, like, because so many nonprofits, too many in my opinion, come out of someone’s personal tragedy. Like, “I have breast cancer and it needs to mean something, so I’m going to start a nonprofit, right, because I have all these things that I wish would have happened.” So instead of starting our own, I go to a larger stroke place and go, you know, what really would have been meaningful for me was to be able to speak to another stroke survivor. I have, essentially, a business plan. I know how I want it to work, but I don’t need to do all that admin and stuff. I’ve got people who want to give money to it, but I need to simplify it. Would you sponsor this project?

Got it. That makes sense.

So that I can just get it up and running and doing the stuff instead of creating a whole business in the background.

So we’re an independent program that is sponsored by the larger organization, and that makes a lot of sense. But then, because this is an accounting podcast… Well it’s not. It can be at times.

Roughly?

Yeah, roughly! So, I mean, it’s obviously, like I just said, it sounds like a great opportunity for someone to start up a nonprofit, but then that also sounds very confusing from just a standpoint of being able to manage the whole situation. Are there tools or something out there that can help with that?

There is now. I’m doing a little bit of consulting with this organization called Ribbon, and you can find them on the web at GetRibbon.org. They’re not a 501(c)(3) themselves, but they are a platform that facilitates fiscal sponsorship.

Facilitates it?

Yeah. So, like, I initially heard about these guys when they reached out to me to introduce me to what they were up to, and they found me through the Facebook group, right? Hey, you do nonprofit stuff, you need to see this thing that we’re working on. And it came out of the whole scenario of someone’s personal crisis and wanting to make it make sense, and doing the whole nonprofit thing and going, “Oh, there has to be a better way.” I’ve done the books for organizations, I’ve done it for sponsored projects, and I have done it for sponsors, and what I have found historically is that the bookkeeping is hard.

Yeah, it sounds like it.

A lot of times, the projects are keeping their books on the side because they don’t have visibility into how things are actually going because the sponsor is doing all the bookkeeping, and then after they close their books, they’ll send them some reports that make sense from the sponsor’s side but don’t actually provide the information the project needs to run their little line of business. So it’s a really fascinating platform, and initially, their concept, I think, is that they would match proposed projects with sponsors. Where it’s gone is that they are onboarding sponsors who already have, you know, from one to two to dozens to hundreds of projects.

Okay.

And so you and I are used to FinTech. We’re used to being able to log in and see things. So when we say platform, you kind of get a sense of what that means, right? But it is capturing in one spot, that is transparent and accessible, the information that both the sponsor and the project need in real time.

That makes sense. So we can see what’s happening. We know it’s not a surprise. We don’t get these financial statements that we don’t understand. It’s not helpful at the end of each month or quarter.

But even more because it’s flowing through the platform, right? So they have whatever the Stripe widget is where you can make a donation page on your website, right? And the donations through that are flowing right into Ribbon and being associated with the project. It’s automatically sending the thank you note letters, because, like, we do our own nonprofit work, what a nightmare that can be. It’s automatically going out, but it’s capturing the expense side as well. So the project can get a debit card for their members, or they can submit bills, submit reimbursement, and those expenses are flowing right into the platform as well.

So, sorry, I know you’re going to keep going, but I just had to stop. So it’s flowing into the platform. Is the platform actually doing the accounting, or is there still QuickBooks behind the scene or something doing the accounting?

It’s functioning as a subsidiary ledger, where it is doing the accounting for the project.

Okay. Got it.

A sponsor can, like, in one dashboard, see reimbursement requests from multiple projects. You can go, yep, yep, yep, and it has, like, it’s almost like a combination of Divi and Bill, where they’re using the phone app and they’re attaching their receipts and they’re coding what it was for, or they’re submitting bills and they’re getting the sponsor’s approval and the sponsor can see the information, so they’ve got good oversight. But the project goes, I brought in this much money, I’ve spent this much money, this is how much I have left in real time.

And I’m assuming you can set budgets or something so that someone’s card doesn’t go crazy and buy all this extra stuff. 

Yep. 

Okay, so it has controls in it as well. Alright. What other key factors are there to this? And so, just as a side note, I am a CPA, and you’re a much better accountant than I am, I’ll tell you that right now.

At least I talk a good game, that’s the theater degree, right?

So what are, I guess overall, what are the key aspects—let’s just go, why would the sponsor use this? I mean, we already explained, but what are those key factors that make sense for this?

I mean, they’re probably selling it more to the sponsors because the sponsor can oversee dozens of projects in a fraction of the time because it combines what would otherwise be several tools into one platform. I was sold from a project standpoint because it provides so much more visibility for the projects than they have had before. It increases the value prop of fiscal sponsorship as opposed to starting your own nonprofit. Because you’d think for somebody that lives in the intersection of QuickBooks and nonprofits, I’d be like, yeah, let’s all start nonprofits! And I’m usually like, no, don’t do it!

Well, you and I are part of a startup nonprofit that’s, what, just about a year old now at this point?

Yeah, we’re in our second year.

And you’ve been probably the key member on that board because you’ve been able to help us understand what we need to do as a nonprofit. And just so everybody knows, that’s the Accounting Cornerstone Foundation, which we’ll put a link to Ribbon in the show notes. We’ll put the Accounting Cornerstone Foundation. We’ll put links to everything—Megan’s accolades as well and everything in the show notes. Let’s talk about real life for them from that, Accounting Cornerstone Foundation. At this point, we are not going to sponsor anything else, but let’s come up with a scenario where it would make sense for Accounting Cornerstone Foundation to get involved or get Ribbon on board.

I think I proposed this, so see if I get myself in trouble. The Accounting Cornerstone Foundation existed before I knew it existed. Dawn had already filed the paperwork, and it was already a registered 501(c)(3), and we had our IRS determination letter, and it was a done deal. The one I would have loved to see get sponsored, I don’t know, I think you’re part of that, Randy, are you on #TaxTwitter?

Yes.

There is an organization, like a just loosely affiliated #TaxTwitter, and #TaxTwitter did a retreat.

Oh, you are right! I was at the retreat.

Oh were you? I’m so jealous. Some of their folks were really determined to make the #TaxTwitter Retreat a standalone 501(c)(3).

Yes, I remember that.

I pushed but clearly lost out because I was kind of roundabout, but I was like, please consider fiscal sponsorship, and I think I’ve spoken to the board at the Accounting Cornerstone Foundation, like, consider if they come to us, fiscal sponsorship, right? Because I think people don’t understand how hard it is to be a volunteer-driven nonprofit. It’s like, you’re running stuff by committee, nobody has the final say, and everybody has outside jobs, so a lot of things can fall through the cracks. It’s a big deal. So to be able to add that professional layer when you’re starting out until you have proof of concept is this even going to be a thing.

Right. Do you know what #TaxTwitter Retreat has done this year?

They registered their own 501(c)(3).

Their own 501(c)(3), huh? That probably would have made sense. Let me ask you this then. So, our conference, Bridging the Gap, we have not given out scholarships ourselves, but I am proposing that next year we do give out scholarships to college students to attend the conference. Because we’re getting some more activity, people in, currently in college degrees that are hearing about the conference, come to the conference, I thought, you know what, we should give them an opportunity to see that we are a fun profession. And I think that’s one thing, Bridging the Gap showed that we are a fun profession. So in that scenario, rather than Tri-Merit, or Bridging the Gap becoming its own 501(c)(3), or whatever it is, it may make sense to see if Accounting Cornerstone Foundation can sponsor scholarships that Bridging the Gap wants to put together, or am I still way confused?

I think, because right now, and just for folks that aren’t familiar, Accounting Cornerstone Foundation provides scholarships for folks to attend their first in-person accounting conference. We did two conferences last year, Scaling New Heights and QuickBooks Connect. We’re doing four this year, including some sort of tax thing, but I can’t remember the name of them.

The National, it’s like National Tech…

N A E A.

I was going to say those initials too… Yes, that conference.

Clearly we’re not tax people, Randy and I, and then XeroCon.

Well, I am a tax person.

Different kind of tax!

Not like an everyday, you know. And so we’ve had some of those conferences comp us tickets. A nonprofit component to that, it’s just for them, it’s a marketing expense, and there’s no new money out in addition to their existing expenses. So, like we show it on our books as an in-kind donation, but for them, it’s kind of nothing because it’s not above and beyond anything they would have done otherwise. I mean, you can do good work and not be a nonprofit. The time it makes sense to, you know, look at fiscal sponsorship or consider being a 501(c)(3) is if you are receiving contributions of a size that people want it to be tax-deductible.

That makes sense because in our scenario what we would do is we would not charge the college students to arrive and we would probably pay their travel.

Right.

So, I’m guessing we probably would need to 1099 them or something for the value of what they receive.

And if you wanted to, you know, just to kind of grow the organization you could make, you know, and it depends, do you want to choose the recipients or do you want to let the Accounting Cornerstone Foundation choose them? Because essentially, you know, then it becomes like a restricted contribution, where we’re giving it to the organization to be used for this class of person, but not this specific person. You know, and then it’s probably still a marketing expense for Tri-Merit, but it’s contribution income for the foundation.

I took us down a rabbit hole there, but it was something that I was like, okay, but it doesn’t make sense. So let’s go back then, and let’s wrap up the conversation because this is really interesting. I don’t want to.

I know, we could talk forever, couldn’t we?

Yeah. I think in general, what we learned is, yes, a lot of people want to start nonprofits. They have a passion, whether it’s a personal impact or someone they love, somebody they see a need out there. It may make sense, rather than jumping in feet first and trying to do everything yourself, to see if this idea has legs with somebody else that could sponsor. And then with Ribbon, you make this a very cohesive activity, and believe me, the accounting of running a nonprofit is not fun, and all that behind-the-scenes admin and everything. I think that’s the bottom line. What did I miss? What’s a good wrap on this?

I think that’s key. You know, they talk about the “philanthropic industrial complex,” right? The nonprofit sector is the third largest business sector in the country after, golly, manufacturing and retail, and nonprofit is number three, right? So, it’s massive. Yet if you talk to the folks at Ribbon, they’d say, okay, we’ve had Feeding America, for example, for four years, and yet we have more demand on food shelves today than we’ve ever had before. Like fabulous, but we’re not solving the problem. So potentially fiscal sponsorship can be a way of people starting those innovative ideas. “Let me try this and see if it makes a difference,” with the benefit of nonprofit without all the administration. I think getting the sector to be more limber, let’s try some big stuff.

Yep. Just as a quick story, and this has been very, for some reason, it’s had a very emotional impact on me this week. I was at a meeting, so I was able, this vertigo, I was able to get out of the house Wednesday because it wasn’t a bad day. I went to a meeting, I’m part of an organization called the Arlington Business Group. We usually have a nonprofit in once a month at least to kind of explain what they’re doing and we try to support them. This group came in, and the reason I’m telling the story, the person did basically what you’re saying, “There’s an easier way to do this.” He had this idea. He was passionate about books and reading and the power of books for children in underserved communities that don’t have an opportunity to bring books to their kids because of money factors or the education system. The story is, his father and grandmother died on the same day. His father was big into reading. He started what’s called Bernie’s Book Bank, and it was just this reaction to books being so important, and I’ve seen that they’re so important. It actually was, the deaths in the family caused him to rethink his life and what he should be doing. 

This was a passion of his. He went out, started this with his credit card, but they’ve built it to a point where it’s a very big organization now. I’m in awe of what they’re doing, because I never thought about it from the standpoint of, my kids had a leg up—we bought books before they were born. We read books to them from the day they were born. We built a space in their bedrooms, when they both were young, they had a reading nook. They would read every night before they went to bed. We would read to them every night before bed. I took it for granted. I think why I got so emotional and attached to this is because there are so many people who don’t have this opportunity that my kids did—they probably have the brain power that my kids have, but they’re never going to get to where my kids are because from day one, they just haven’t been given this opportunity. 

And when I started thinking about that, because a big thing that we talk about in our profession is, yeah, we’ve got this pipeline issue. We’re not getting enough people coming into the profession. I talk about this a lot. When I go out and speak at events, I talk about culture and how do we attract people and all this stuff. In reality, it’s where the people are coming from. We have the people. We just need to educate them, and we need to educate them from day one. This is going to become a big passion of mine, I think, going forward, because it just started this week, but I’ve had multiple conversations with this organization already. They could have probably started under this sponsorship opportunity—but I’ll let you tie it all together.

Let’s bring that back for a minute and use Bernie as our example, right? Bernie has whatever’s happened in his life, and he needs to make it mean something. He understands the value of getting books into the hands of kids, right? He’s just going to make that happen. When he’s first starting, nothing’s stopping him from just using his credit card and getting books to kids, right? Nothing’s stopping him from starting some kind of GoFundMe, and people give him money that he then uses to buy books for kids. Maybe that flows to a Schedule C.

What we’ve discovered, especially with the change in the standard deduction, is that the tax deductibility of donations for the vast majority of people is absolutely not meaningful. It’s meaningful only if you are a super high-value donor giving a massive amount or you are a government or a foundation, right? So unless you’re getting government or foundation or huge donor money, the tax deductibility makes no difference. But where Bernie can get into trouble just putting it on a Schedule C, is if people give him more than he spends, then that flows to him personally as income, and then he’s taxed on it, and that sucks. He’s paying tax on the books he buys, and that stinks too because that’s money he could have used to buy more books.

Correct.

He could start his own nonprofit, but again, in my experience, up to about $500,000, it’s excruciating. The executive director spends 80 percent of their time on board management and just administrative stuff. And like, Bernie doesn’t want to do all the administrative stuff; he just wants to get books into the hands of children. So if he starts his own nonprofit at that point, he doesn’t get to do the thing that he started this nonprofit to do in the first place. Maybe his volunteers get to go give books to kids, but he’s spending all of his time creating board minutes and managing board meetings, and it’s crazy. Or he could potentially find a sponsor that does all the administrative stuff, and even if he’s doing Model B or Model C where it’s flowing through, the income he shows and the expense he shows will zero out because all of the expenses are documented, from the accounting perspective, they are accountable reimbursements. If he gets paid personally, it might show up on a 1099 for him as income, but there’s not profit. 

The profit is hanging out with the sponsor as an increase in restricted net assets that carries over for Bernie’s activity as long as he keeps doing the same thing. If Bernie goes, I want to spend that money and start giving records, the nonprofit and its board can agree. But if he’s sponsored, his sponsor could say, “No, we are all about books, and now Susan is willing to give books to children, and we’re going to give her this money instead of you.” Does that help make it a little clearer?

It does make it clearer. Just so everybody knows, Bernie is his own nonprofit now. That is the way it’s going. It’s actually Brian that named it Bernie’s Book Bank. I’ve also talked with Kristen and Christy there, and they’re doing an unbelievable job, so I am proud of them. My plan is to get heavily involved in at least promoting what they’re doing, and so this is the start of it. We’re promoting Bernie’s Book Bank on this podcast. You heard it here first. Great organization. Make sure you look at it. That’ll also be in the show notes. This is going to be a record, the number of show notes and links after an episode. That did help me understand for sure. I appreciate it. 

Before we finalize everything, there are two final questions everybody gets. First one, and I didn’t warn you ahead of time. I’m sure if you’ve listened to all 150 episodes before, you probably know this is coming. So, you know, we’re talking about your expertise and your knowledge and passion for nonprofits, which is good. Being passionate about what you’re doing is really important. For me, your outside of work passions are just as important or more important than what you do inside of work. So when you’re not helping nonprofits and consulting, what do you like to do outside of work?

It sounds super boring, but I have grandchildren.

I figured that was one of them.

Yep. I’m a walker, right?

Yeah, me too.

I did the Portuguese Camino last fall.

I don’t know what that means.

There are routes all over the world, mainly in Europe, that end at the Compostela de Santiago, a cathedral in Santiago. There are ancient pilgrimage routes that lead there from all over Europe and other places as well, I think. 

That’s the terminal? That’s where all of these end?

Yep, some people continue out to Finisterre, which means “end of the world,” in Spain. So, yeah, we walked from Porto to Santiago.

How many miles, kilometers, however you measure that?

I want to say it was like 199 miles, something like that.

Wow, and how long a time period was this?

About 10 days.

That’s pretty good. Were there blisters or anything on that route?

You know, my friend got terrible blisters. I got—this is the weirdest thing—I got super tiny blisters on the outside of my second toes, because I’m one of those weirdos whose second toe is a little bit longer than my big toe.

Yeah, I know what you mean.

Which apparently in India is a sign of intelligence.

Oh, well, obviously.

Someone told me that. That was the only blister I got. But I just kind of got addicted to walking.

Yeah, that’s serious walking. It’s not walking around the park for a mile.

You start talking to people and so many people, there’s more of us than I would have known. 

Well, I think we probably both know Liz Farr. You know, Liz and her husband set out to do a big walk across England last year.

Liz is in my Toastmasters group.

Which was great. I think they hit a couple of hiccups along the way. Her ankle wasn’t in good shape. 

It was a crazy thing that she decided to do and she managed it. 

Yep, but that’s great for her. When I first met her, the first time in person was at XeroCon in August, in New Orleans in August of 2022, the first place I met you as well, so we’re bringing it all back together.

I didn’t meet her at XeroCon, but I met Liz in person when she came for the first day of Accounting Salon in New Orleans. We went for a walk, and I have this terrible tendency to head off with authority, not actually knowing where I’m going. It’s a theme in my world in general. Liz was totally okay with it, but I walked her in circles around New Orleans.

Liz is great, and I could see that she wouldn’t complain about that. She’s a wonderful person. I really enjoy any time I get to spend time with her—and you, I always enjoy that too. Alright, then last question. We will put this in show notes, but if people want to find out more about what you’re doing, where’s the best place to look?

You can find me on all the socials at Megan Tarnow, including BeReal and Reddit.

Alright, yep. You and I were actually having a little chat on LinkedIn today, commenting on Jason Staats’ post. That was fun.

It’s true!

Alright, well, Megan, thanks for being here. I’m glad the fourth time we scheduled this we were able to get it in today. I really appreciate the education I received, and hopefully others did as well. Nonprofits are important, but you don’t always have to go start your own. You can get a sponsorship, I think, is the key to remember. That’s one thing probably Stroke Survivors Empowering Each Other could use because we are a small budget nonprofit. But it’s done really good work though. Again, thanks for being here.

You’re so welcome. It’s been my pleasure.