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Making Finance Understandable with Kina Morgan and Kimberly Johnson · Marci talks money (and life)

• Marci Grossman (00:15) Hello, I am MoneyMarci. Welcome. I am thrilled to welcome today's guests, Kina Morgan and Kimberly Johnson. Kimberly has more than 25 years of accounting experience in various industries, specializing in financial reporting, SEC filings, and technical accounting research. Kimberly started her career with KPMG LLP, (the U.S. arm of a multinational accounting firm, which is currently what is termed one of the big four accounting firms here in the U.S.) as an external auditor for six years. She has worked for multiple Fortune 500 companies, including Mohawk Industries and Rollins Inc. Kimberly is from Cleveland, Ohio. She has a BS in accounting from North Carolina, A&T State University and an MBA from Georgia State University. She has been a Certified Public Accountant for over 25 years. She enjoys working out, traveling, sporting events, and music. Kimberly is passionate about personal finance and currently volunteers as a financial coach for Atlanta Habitat for Humanity. She is also a proud member of Delta Sigma Theta Sorority Inc. and has served on several committees at her local chapter. Kimberly's passion for teaching has led her to also be an adjunct accounting professor at Georgia State University. Kina Morgan is one of the founding partners of Your Balanced Partners LLC, a firm that provides fractional CFO services, SEC reporting services, accounting services, and governance and controls management. Prior to starting the firm, Kina was the chief financial officer for Indelible Business Solutions, a consulting firm that provides support to governmental and health equity agencies across the country. Kina also spent fifteen years at the Coca-Cola Company in various leadership roles in internal audit and controllership. She worked for Bell South Corporation, currently known as ATT, in several management roles in shared services and internal audit. A native of Kansas City, Missouri, Kina has spent her professional career in Atlanta. She started her career at KPMG as an assurance auditor. Kina is a proud Magna Cum Laude graduate of Florida A&M University School of Business and Industry, where she majored in accounting. Kina is also a Certified Public Accountant. During her time in college, she was also an INROADS Scholar. Kina is a longtime member of the National Association of Black Accountants and has served in several positions. She is also a proud co-owner of CocoCakes by Coco, an excellent bakery in downtown Tucker, Georgia. Together, they are podcasters with their business partner, April Batiste-Reid, at Balance Your Books Podcast on YouTube, Spotify, and Apple Podcasts. They provide finance and accounting insights for small business owners in a fun and approachable way. Welcome, Kina and Kimberly. Kina Morgan (03:29) Wow, Marci, let me tell you. Kimberly Johnson (03:29) Thank you, Marci. We sound like, wow. Marci Grossman (03:34) Yeah, and that's our show for today. Thank you very Kina Morgan (03:34) Yeah. I was like, wow, Marci, thank you. Kimberly Johnson (03:42) Wait a minute, hold up. Kina Morgan (03:44) Also feel tired. Marci Grossman (03:47) Wow. Yeah. No, you guys you guys are busy. Kina Morgan (03:48) Done a lot, huh? Yeah, it's been, it's been a good life, thank God. Yes. Yes, exactly, exactly. Kimberly Johnson (03:53) Yes. Yes, a good run. Marci Grossman (03:57) Right. We're not done running. Kimberly Johnson (03:59) Exactly. Marci Grossman (04:01) So what made you decide to go into accounting? Kina Morgan (04:04) Ooh. I'll start. So for me, I have to give a shout out to two influences. One would be one of my best friends, Terry's dad. He was a partner at a firm in Kansas City. And so that was my introduction to what accounting was, was seeing him and him talking about his work. And then the other would be Coach Elliott, who was my accounting professor in high school. So I actually took an accounting course in high school and I really enjoyed it. I wonder where Coach Elliott is today, but ⁓ I gotta give him a shout out as the two influences of going into accounting. And as you mentioned, I was in INROADS which is an excellent program to introduce high school students to at the time it was accounting or engineering. Those were like the two areas that INROADS would provide guidance. And then also you could get with a sponsoring company and get internships every summer. Joined that program with my friends and decided that wait, I think accounting is the one that I want to do because I looked at Business Enterprise magazine and it said what are the top majors that would get a job? And number one was engineering, number two was accounting. And so I knew I didn't want to do engineering. And there you go. Kimberly Johnson (05:26) Well, my story to accounting is not as smooth. I started as a psychology major in college and after two semesters, the classes started to become more science-based and I went to my guidance counselor and said, I like math. Can I take another math class? It was not on my curriculum. And she said, Kimberly, what do you want to do? Because I was just thinking, I didn't know what I wanted to do. And she suggested that I take a introduction to accounting class. And at that time, that class was a weed out class and everybody thought it was hard and the engineering students at the school would take it to show the accounting students that it wasn't that hard. I took it and it came natural to me. And then after I got my first internship and I was like, wait, I can make good money doing something that comes natural to me. Okay, I'm gonna stick with this accounting thing. And so here I am. That was over 35 years ago. Kina Morgan (06:25) Yeah. Isn't that amazing? Yes. Kimberly Johnson (06:26) that I took my first accounting class. Marci Grossman (06:30) On the show I talk to a lot of people about life pivots. Kina Morgan (06:33) Kimberly's a pivoter. She's a pivoter. Kimberly Johnson (06:33) My life has been a, I'm a major pivoter. So that was the first major pivot. ⁓ And you can't hold me down. You can't put me in a box, Marci. I will change. Kina Morgan (06:46) But you know what's interesting is within the profession there's so many different things that you can do that are very different from each other. And so that's why I'm teasing Kimberly around her pivots. Kimberly Johnson (07:01) Mm-hmm. Marci Grossman (07:05) Well you didn't go from accounting to you know, now I'm going to be a I don't know, I'm a a painter. Kina Morgan (07:14) Painter. Kimberly Johnson (07:17) A Broadway star. Marci Grossman (07:18) You could be a Broadway star. I have no idea, do you sing? Kina Morgan (07:22) She does sing. Marci Grossman (07:23) Okay, okay, Broadway, here she comes. Kina Morgan (07:28) you never know. Marci Grossman (07:29) But yeah, I think we know once you're in accounting, I do know plenty of people. They get to a firm, they stay there, they just go up the trajectory, but I know many more that start at a firm and maybe they stay in public accounting or maybe they go to private. Maybe they switch firms before they find the firm that is just the right fit for them. Did you meet at KPMG? Kimberly Johnson (07:51) Yes. Kina Morgan (07:51) We did. That's where we met at KPMG. Yeah, all three of us. So all three of us, we've known each other for thirty years. So that's where the friendship was forged. Kimberly Johnson (07:53) Yes. Marci Grossman (08:03) So you met at KPMG at the beginning of your career. You all went in different directions and did different things but you kept in touch. I assume you didn't just randomly twenty five, thirty years later say, Hey, let's... Kimberly Johnson (08:07) Mm-hmm. Kina Morgan (08:07) Yes. Yes. No. No. We've been friends throughout the whole time. Kimberly Johnson (08:22) Yes, yes. Marci Grossman (08:24) You bring a wealth of experience because the three of you went in all these different directions and then you decided to create a firm and then while you're creating it you're like, Yeah, you know, why don't you join us over here? Kina Morgan (08:37) Yeah, exactly. That pretty much. Kimberly Johnson (08:38) And that was my last pivot. I was just like, I don't like working corporate America anymore. And Kina was like, come on, okay, pivot. Kina Morgan (08:50) Right, like I started saying, there's so many different things that you can do and we all went so many different directions, but even Kimberly moved away and came back and you know, so it's been an interesting adventure. And what's interesting about the accounting world, you know how they always say that seven degrees of separation with Kevin Bacon? That's kind of how it is in accounting too. It's like everybody's kind of connected in some way in the profession, especially I would say in the Atlanta area, which is where we are. Marci Grossman (09:22) Okay. Your firm offers a lot of different services. I I assume that was from the things that you guys did coming up. You got to the point where you said, Okay, we're doing the firm and these are the things we know. I I love the the fractional controllership, because so many companies they don't need a full time controller, a full time CFO but they need someone in that position who knows what they're doing, who can who can communicate regularly with them. are are you finding that's a big part of your business? Kina Morgan (09:49) We need the guiding hand. Yes. I would say that, part of why we started the firm was, when you're in corporate America and you're in finance, there's a thousand finance people, and especially at a company as big as I was at. And so a lot of times a lot of the things that you are working on just go into this big vast bubble. And I think, you work hard on it, you figure out different processes, you figure out different things to do, and you may have the opportunity like I had to build an organization and do all of these things that you think are great, but then there's all these other layers above you that then say, you know what, we're gonna completely talk about pivot, we're gonna completely pivot the company and take everything off overseas. You know, so then everything you created is gone in an instant. And so that was what it was for me. I got tired of putting my sweat into building something, into building people, into creating these environments that was like, okay, this is the culture we're gonna have in our group and this is what we're gonna do for the company. And then it just completely goes to nothing. When I left and started working with a smaller business I loved how much I could impact that organization quickly. And that led to creating the firm. Like, what if you could use like what I call our finance superpowers? What if we could use this for good, in the small business community? What if we could really help organizations be able to get the same type of techniques, guidance, methodologies that a lot of the big wigs use, but we narrow it down to what's good for small business. That was the driving motivation for doing the firm. And starting our podcast, really, because we recognize that as as you talk to more and more small business owners, there's a lot around finance and controls and governance that they don't know. Kimberly Johnson (11:56) Yeah. Marci Grossman (12:07) Right. Kina Morgan (12:08) We were working with a few different clients and then we would just be out meeting people. We started networking more in the small business community and they just have some crazy notions. You just hear them say some things and you're like, You shouldn't do that. That's not how you should handle your financials or that's not how you should set up a process, and what you recognize is there's a lot, I'll say this. Accountants tend to hang out with other accountants. And so we can end up talking and think that a lot of the things that we know are common knowledge. And so the more that you talk and interact with other people, you recognize that a lot of things that we do actually is knowledge that is unique to us that we need to share. Kimberly Johnson (12:44) Mm-hmm. Kina Morgan (12:58) And so we do have superpowers that maybe we didn't realize that we had and that we need to use. And so that's why I say we decided to use it for good. You recognize that, ⁓ you don't know that? Phew, okay. Well I'm in my circle, everybody knows that. Right? So that's the kind of things that that, we've decided that we need to get this information out. Kimberly Johnson (13:12) right? And being friends and traveling together, like the three of us, we would sit around and talk about stuff. And when we'd be around our friends that aren't accountants, like we have some educators and we're talking about a topic or something we came across. The people who don't know accounting were like, this is good information. The ones who are starting their businesses, they're like, this is good information. You should share it. So I think part of it is the beauty of our podcast is that we are such good friends and really we're just talking about things we've seen, we've experienced. It might be an article or something it's like the way our minds work. As soon as we see something that has any type of financial tinge to it, we start to think about how could small businesses benefit from this information. Marci Grossman (14:04) Yeah, I've listened to your podcast, it's a lot of fun and it's good information. I just wanna sit there with ya, have some coffee and hang. Kimberly Johnson (14:08) Thank you. Kina Morgan (14:11) That's kind of yeah, we wanted to make things as plain as possible. And Marci, you do that on your show as well. We wanna make the conversation easy for the listener so they can get just a little nugget. Let's just plant a seed of knowledge that hopefully will bloom into something beautiful. Sometimes it's been very frustrating working with clients, 'cause sometimes they don't wanna listen but we've learned a lot from that too. Marci Grossman (14:41) Yeah, well they get these wild ideas because they hear something that either the person wasn't giving them quality information or they misunderstood what they heard and all of a sudden they've got an idea and this is how it should work and you know, boy. That's fun. yeah. Kina Morgan (14:56) They're a dog with a bone. They're a dog with a bone. What I have found is well, there's a good and bad for being an entrepreneur. The good is you have to be a little crazy, right? You have to be a risk taker and someone who is almost unrealistically optimistic. So you got to think that things are always going to work. Or an entrepreneur would quit the second day, you know, in starting a business. So they need to have that type of energy. Kimberly Johnson (15:28) Thank Kina Morgan (15:33) The issue is that in recognizing that you need that kind of energy in your business, then that means you definitely need to go out and seek those who don't have that type of energy, but who still want you to succeed, that to partner with you. And that tends to be the finance side of the house. You know, I call us the Debbie Downers to do Saturday Night Live. You know, woh, woh, wohh. Kimberly Johnson (15:59) woh woh. Kina Morgan (16:01) but yes. Marci Grossman (16:02) the sad trombone. Kina Morgan (16:06) Woh Woh with the look that she used to give. When we do that, we do that because we want you to succeed. It's not because we want you to fail. And so you've got to bring that level of energy to your business if you want it to be successful. That's what I have found. And when you don't listen to it, it makes it tough. Marci Grossman (16:23) That is. Kimberly Johnson (16:25) Yeah. Marci Grossman (16:25) That definitely Now, when we had talked before the podcast, get to know each other, one of the things we talked about that'd be great to talk about here on the podcast was about nonprofits and what people need to know when they start them up. Because I frequently see that online. Hey, does someone know how to start a nonprofit? And there's so much people don't know about nonprofits. And while I worked on one, I didn't set it up. Kina Morgan (17:25) Yes. Yes. Marci Grossman (17:39) And it was a large one, it was a machine that I kept going, but it wasn't the instigating parts of it. So I'd love to hear from you. I don't know if it's more like a checklist or more of just anecdotally the things people should know. Kina Morgan (17:50) Mm-hmm. Yeah. Well, I would say first is really be clear on what your mission is. So a nonprofit should be providing good to the world. And who that audience within the world that you are going to serve, be clear on who that is. And so if your nonprofit is to save the whales, then save the whales. The whales are your audience that you're trying to save. You can't save the whales and the donkeys. You have to save the whales. So be clear on what's your mission because nonprofits have to survive off of giving, either donor giving or getting grants which is still just giving, it's just in a different package. But you survive off of those who believe in your mission. So if your mission isn't clear, you're not gonna get people to donate to your mission. So I would say that would be the first thing is to be clear on that. Kimberly Johnson (18:49) Mm-hmm. Kina Morgan (19:04) What I have found people start nonprofits for two reasons. One because they believe in there there's certain type of good in the world. And then there are wealthy people who start nonprofits for tax reasons. So those are kind of the two reasons that I've seen people start nonprofits. Kimberly Johnson (19:16) Mm-hmm. Marci Grossman (19:20) Now, starting a nonprofit for a tax reason doesn't mean that's a bad nonprofit. It doesn't mean it doesn't have a mission. And there are people who work at nonprofits and they make salaries, they work there, they're not volunteers, and that doesn't mean that they are bad people or that it's a bad nonprofit. You know, you need those people to make that mission happen. And I think a lot of people lose sight of it because you'll see these charts that go out. Kina Morgan (19:25) It doesn't. It doesn't. Kimberly Johnson (19:26) No, not at all. Kina Morgan (19:34) Yep. Nope. Nope. Nope. Nope. Yes. Marci Grossman (19:49) This non profit, this much went to salary. Well, the question is what is their non profit goal? Is their goal to create money for something else or is it to do something and you need these people to do something? Kimberly Johnson (19:55) Right. Kina Morgan (19:55) Yes. Kimberly Johnson (20:02) To serve the community, yeah. But can I add something? Let me add something before, I think before you even be clear on your mission and yes, you need to be clear on your mission. You need to determine if there's a need for what you're trying to do in your area. Sometimes I find that people are saying, hey, I want to start a nonprofit to ⁓ service middle school girls in the community. And I'll say, wait, Kina Morgan (20:03) Yes, yes, yes. And you yeah, there's Yeah. Marci Grossman (20:04) Right. Kimberly Johnson (20:31) and I can list two, three other organizations that are doing this. So is there a need for this nonprofit in your service area? And if there is, then define your mission. But I think there are sometimes people, just, they see something and they feel there's a need, but you have to do the research to determine is that need in your service area, in your community? Is there another organization already doing that? Maybe you can join with that other organization and help them grow. So I just wanted to add that part. Kina Morgan (21:07) Yeah, no, that's fair because there's a lot of different nonprofits. And if you are really mission based, is it about you being in charge or is it about the mission? The mindset for your nonprofit work is about community. And there are times that we've even had to remind some of our nonprofit leaders that wait, I feel like you're starting to venture into a thinking like a business, like a for profit business. Every time I talk to them, I'm like, I always say, well wait, what's the mission? Well wait, what's our mission? You got to always that's got to be that center for all decision making for a nonprofit is the mission. For profits, it's to make money, but for a nonprofit is to fulfill the mission. And that's why I said that ⁓ it doesn't matter all the paperwork you do, we'll go into that part next, but it's it that mission has to be you have to be committed to it. And so once you're committed to it, another thing that really helps I think a nonprofit is to develop a board of directors or advisors. And those are other people who believe in your mission. I think nonprofits that are more successful build that board earlier. Because then you're getting not only do you have the arms and legs of other people who are out there spreading the word about the mission, but also challenging the different programming things that you are putting up to make it better and stronger. So I'm just a firm believer in you know, more the the right heads together are gonna make a better decision than the one head. So Kimberly Johnson (22:59) Exactly. And it goes back to what you said about the innovative, unrealistically optimistic person that may be the one that says, hey, I want to start this nonprofit. But then you have your board of directors of those that'll say, okay, let's make it, let's bring it down. Let's take small bites. Let's rein it in. And you may be the one with the big dream. And then you have your friend who is the one that can, let's build a spreadsheet, let's make a list, let's make sure we check off all, you know, we're doing this, we're doing that. And the two of you, the three of you, however many of you together with your different skill sets, your board will be able to build a successful organization. Kina Morgan (23:46) Right. So because like if your if your organization is something that's education focused have like a teacher or a principal or something as one of your board people. Then of course maybe you have a finance kind of person, or maybe you have a marketing, or someone who's really good at fundraising. Those type of advisors on your board makes it really strong from the beginning. Because they all bring something very different to the table for your nonprofit. So I would say get that board together. So now you kinda know who you are and what you're trying to be and these are the group. Now you gotta do your mechanics. And the mechanics are in your state. Understand the rules of nonprofit to set up nonprofit in your state. You gotta set up there first. So you're gonna register with the with the secretary of state of your state. You're going to like with the board, who are those board members? You usually have to start with at least three board members to set up your nonprofit. That usually is the person who the executive director, a secretary, and a ⁓ treasurer. So it's like they have to be in one of those board seats. So that's usually a part of the setup. You'll set up with the Secretary of State and then you have to set up with federal. yes, go ahead. Kimberly Johnson (25:09) Let's backtrack because this is all good. This is all good. As you know, part of my experience is the technical accounting and I want to get a little technical because before we do that, you need to know the IRS rules for a nonprofit. You need to know that what it takes to register to become a 501c3, a tax exempt status for a nonprofit, because if you are Kina Morgan (25:18) Yes. Kimberly Johnson (25:37) organizing a nonprofit, you want to have tax exempt status in order to fund your nonprofit. I am more like, let's say I'm a giving person, but if you are 501c3, I'll give more money to your child's organization than if we're just raising money for uniforms. Because I... Kina Morgan (25:44) Ideally. 'Cause you don't have to 'cause just so people don't you don't have to be a tax exempt nonprofit. You can you can register with your state and be a non profit, but no one can deduct their donations to you on their tax return. Kimberly Johnson (26:03) Yeah. Right. But. Marci Grossman (26:17) You can say that that's political and stuff where those are not deductible contributions. Kimberly Johnson (26:17) So yes. Mm-hmm. Right. And I want my contributions to be deductible as a person giving. So determine, do you want to be a tax exempt nonprofit or a nonprofit? I don't want to say just a non tax, but if you want to be a tax exempt, non tax exempt nonprofit, and if you want to be tax exempt, then understand those rules Kina Morgan (26:23) Yes. So It's a non-tax exempt nonprofit. Kimberly Johnson (26:52) that is one of the things. And you can start out as a non-tax-exempt nonprofit and move to a tax-exempt nonprofit. But if your ultimate goal is to be tax-exempt, start to understand those rules now. You can start the board of directors and do all that, but know what you're going towards. And I always say, again, for income, my son is raising money for, is this a nonprofit? Will I get a letter? Kina Morgan (26:59) Yes, yes. Yes. Kimberly Johnson (27:18) If it's nonprofit, I'll get a letter. I'll give you $100. If it's not, here's $25. That's just how my mind works because I'm trying to keep my tax liability low. Anyway, carry on, Kina. Kina Morgan (27:30) Yeah, it's correct. Marci Grossman (27:31) Well that must be, so many people are not able to itemize anymore. So it becomes irrelevant. I know the new tax law, so for 2026 you're gonna be able to deduct charitable to some extent even if you don't itemize. But the tax laws change continually. I do wanna kind of bring up 'cause a as a firm the way you are, I assume Kina Morgan (27:35) Yes. Yes, the new tax laws have Kimberly Johnson (27:37) Mm-hmm. Right. Yeah, Marci Grossman (27:52) that you probably have people that say, Hey, we would like to start a nonprofit. Will you donate your time to be our, you know, and how do you deal with those? Because people are like, I want to start a nonprofit. I am looking for an attorney and accountant to donate their time for me to start my nonprofit. You know, if I donated my time to every group that wanted me to donate my time to be their accountant. Kimberly Johnson (28:19) you wouldn't have time to make money. Kina Morgan (28:19) We respectfully say no. I that's part of why we are doing things like your podcast, our podcast, to get the information out there. This is our giving you the free part. But i if we're gonna do the work, yes, there is a cost, But a lot of it Kimberly Johnson (28:32) This is the, yes. Kina Morgan (28:39) If you take the time and read through your state's requirements and the IRS requirements, you could do it yourself. you could set it up yourself, at least to get at least the the registration part. Cause it's actually not that difficult. Kimberly Johnson (28:47) Mm-hmm. Kina Morgan (28:58) especially the state registration just to get your nonprofit before you go into the tax exempt part. So just the initial piece of it is really fairly easy. The big mistake that I saw one, and I hate it. This is what I this is again why we also started going to this work. Because a client of ours who is a nonprofit, they came on board, we're like, great, we're going through all of their governing documents, and we noticed that they had set up a nonprofit with their state, we're like, boom, you're good there. They have their mission, boom. They have a couple people on the board, great. But then we look at their federal filing and they had set up the organization as a corporation, an S corporation. What happened? Why are you and they're like you were doing so good you were do ⁓ you were so close to being correct What happened? And they actually had paid somebody to set them up. Marci Grossman (29:47) You were doing so good. Kina Morgan (30:01) And it's like, well, you're they set you up incorrectly. So we literally had to get our tax partners, which is what April and her team does. We had to all get together say, how do we resolve this? How do we cause they they're totally set up wrong. So we had to completely dissolve the organization, do a last tax filing. They had to file as a corporation, you know, they had to file at the state, as a nonprofit, file as a corporation federal. We dissolved it all and we had to rebuild it completely for them. . Marci Grossman (30:33) If your tax return is not a 990, then chances are you're not a non profit. Kina Morgan (30:39) Exactly. Kimberly Johnson (30:39) Exactly. Kina Morgan (30:40) Exactly. And it's you know it was disheartening because they had they had paid somebody to be a registered agent to set them up for this stuff and it was completely wrong. So yes, make sure that when you are setting up everything, including initially with the IRS, that it is a 990, that you are checking, you are a non-profit. There you do not set up as any other type of organization. I know it's a long list when you look at the IRS, but you are doing non-profit. Kimberly Johnson (31:09) Mm-hmm. Kina Morgan (31:20) And so that and that is, as Marci mentioned, it's the 990 tax return that you do. Kimberly Johnson (31:25) Mm-hmm. Yes. Marci Grossman (31:29) I think a lot of people are surprised it's a non profit, why am I doing a tax return? Kina Morgan (31:34) Yes. Cause you still have to tell the government what you brought in and how you spent it. And it's really more the 990 is more like a huge, huge checklist. And there is what's called the postcard 990 that if you're a small non profit, it's a really quick document that you need to file. ⁓ so you know, if you're not I forgot what the Kimberly Johnson (31:39) Right. Right. Kina Morgan (32:01) threshold amount is but if you are a small non profit that doesn't bring in a lot there is the opportunity to do that. But yes so in that initial setup please please please make sure that you have selected the right organization. I think people get a little confused by putting Inc on their stuff and all these other kind of things but it's like no you're a non-profit. You're not a profit business. Kimberly Johnson (32:17) Yes. Kina Morgan (32:29) That's why I said, what's your mission? What is what is it that you're trying to come? Kimberly Johnson (32:31) And you have to put your mission on your 990, they require you to put your mission. Your mission is on, it's that important. You put your mission on your 990 because the government wants to know, okay, what's the purpose? And then when you go through the part where you list the community that you served and how many people benefited and all that, that has to align with your mission. Kina Morgan (32:37) Yes. Mm-hmm. Mm-hmm. Yeah. You also then should have some type of tracking mechanism. So I would say an accounting tool on tracking your donations coming in and your expenses. So if you're really small, you could do that in Excel, but if you got a lot more transactions, then you want to have an accounting system. So your business. Kimberly Johnson (33:24) And you want to track your expenses on a project basis because that goes back to what you have to report on your 990. When you're saying these are the programs that we had, this is the community that we served, how many people benefited? How many expenses went to the back to school backpack drive, right? What did we spend there? What did we spend on the college tour section of our mission and how many students went. You need that level of detail. If it's very small and you just have one major project a year, maybe you can do Excel, but you want some sort of system where you can track it on a project basis. Kina Morgan (34:04) Mm. Marci Grossman (34:10) Probably a good idea if you're starting a nonprofit, rather than wait until you've finished a year to look at the 990 and what it wants, spend some time getting familiar with that 990 so you know how you want to track your information and and what you want to keep. Kimberly Johnson (34:18) Yes. Exactly. Kina Morgan (34:26) Yes, absolutely. Absolutely. And yeah, so I would say so in setting up your financial system, you've done all your registrations, you've got to get money. How do you get money? And so there is a separation between your personal and your nonprofit. Go ahead, Kimberly. Kimberly Johnson (34:51) Before we start getting money, here's the technical, create policies and procedures. Have a level of policies and procedures that you have documented, that your board has agreed to when you start to, if you're hiring people, you start to hire them, they know these policies and procedures before you bring in money, have your policies and procedures documented so that anytime Kina Morgan (34:53) Mm. Kimberly Johnson (35:20) you may have a disagreement about something or how you're handling something, let's go back to the policies and procedures that we documented when we formed this organization and look to see, how should we handle this transaction? Okay, so now we're getting money. Kina Morgan (35:35) Yeah, because I would say, it really depends on the size of your like I'm thinking about I'm president of a friends group for our local library. Our mission, very simple. We sell books to make money to give to the library for its programming. That's it. It's no more than that. It's very, very basic. We sell books for a dollar, people donate books, we sell books for a dollar, and then we give them money for like paper and other stuff they need, for the library needs for its its programming. So if it's small like that and it's very, very focused, we have an operating agreement that says this is what it does, this is what we provide money for. Kimberly Johnson (36:15) Yeah. Kina Morgan (36:20) If you have kind of what Kimberly is describing where you want to do several different programs and they're very specific and you are running them, like your nonprofit is running them, then in that situation you definitely have to have something that's more detailed. So just to kind of give the levels of your of nonprofit, ⁓ 'cause there's levels of nonprofits just like there is in a bigger for profit organization. Whether you're a very, very small business or a medium sized business, you're gonna have more and more policies and procedures the larger you are. But if you are really a community based, you got to have some type of process documentation. Yeah. or something that is yes. Kimberly Johnson (37:07) And the more people you have involved, I think it's more key to have documentation, documented policies and procedures. Kina Morgan (37:14) so then donate. Yes, donors. Getting donors. Kimberly Johnson (37:16) Let's get money. Kina Morgan (37:20) So let's say initially, because you believe the mission, you're kind of gonna start with your circle. Like you start with yourself in the middle, and then you have this circle going out and out, and it goes out and out further and further, and you network. And as Kimberly mentioned earlier, people take you more seriously when you are real 501c3. ⁓ if you're a registered nonprofit in your state, you know, some states like the state of New York has a special separate registration that you can do for your nonprofits so people can go out and search the nonprofits of the state of New York, and if you're an official nonprofit in there, people tend to be more willing to give you money. So when you're trying to get money, anything beyond I would say the individual, they're gonna look for a lot more information from you. So they're gonna wanna look for those registrations. They're gonna sometimes wanna see financial statements. They want to see that you have a CFO and what are their credentials. So the more money and level of money you're trying to get, the more structure they're going to be expecting you to provide. The number of people served, a lot of things that we ask, what we advise our nonprofit clients to do. Every year you should be doing an impact report. And so that impact report should be detailing who you served, how did you serve them, and what is that impact on society. Kimberly Johnson (38:46) Mm-hmm. Kina Morgan (38:56) And then here's how the money was used. And a breakdown of how the money was used. And that should be something that you create every year. And so that impact will get bigger and bigger in terms of what you're pulling together as your organization grows. But that is a key piece to getting donors. Kimberly Johnson (39:14) That's your marketing. That's part of your marketing pamphlet. Even corporations, large corporations, their annual report. The first part of it is that glossy with pictures and this is what we did and these are employees and this is where we donated and all that. For your nonprofit, that impact report is, that's your sales pitch. Kina Morgan (39:18) Yes. Kimberly Johnson (39:41) the more you can include, pictures and things like that. And I think sometimes nonprofit leaders, they're focused on the mission and they're like, ⁓ we didn't take any pictures at this event. No, take pictures. People like pictures of children smiling and people reading or whatever it is. People like those pictures. Take pictures of every event so that you can, promote your organization and get more people to give money. Kina Morgan (39:54) For sure video. Kimberly Johnson (40:06) back to giving money and have that process where you can give them their letter, of course, that says, Hey, this is how much you donated. If you've received benefits that kind of lowers how much is considered a charitable contribution. Kina Morgan (40:07) Yeah. And it's the Marci Grossman (40:08) Right. Well Kina Morgan (40:15) that's about the money. Marci Grossman (40:22) Sometimes there's a dinner or if there's, you know, an event. Kimberly Johnson (40:24) Yep. Like contributing to the museum, being a founding member of the museum, every year I get a glossy calendar. I'm donating $250. I get a glossy calendar. I get a discount on this and this, that, the other, and they will break down. You donated $250, 225 is deductible. That's the type of letter that I get. But that's a huge organization that can break it down like that. So yeah, I'm sorry, Kina. Kina Morgan (40:52) Yeah. Yeah. And the more no no no that 'cause that's a good point because the more quote unquote legit your documentation and what you're providing to donors, the more donors you will get. So making sure that award letters go out. The award letters are the letters that you send to donors at the end of the year. Usually you send them in January so people can get it for their taxes. You will send the award letter say hey thank you you donated X amount. So that is ⁓ critical especially Kimberly Johnson (41:07) Mm-hmm. Kina Morgan (41:30) for individual donors. Organizations, large organizations may not be looking for that so much, but those individual donors for sure are. And so the more that you do that and you send that with an impact report, you'll start seeing that more people will start to buy into your mission because they're like, this person is serious. They're serious about their mission, they're serious about how they're operating their nonprofit. We've all heard different horror stories and people Kimberly Johnson (41:48) it is. Kina Morgan (41:58) Who get convicted of crimes because they did not follow the rules. So it's it's serious business. and you have to conduct yourself as such. Because I think sometimes people think, no, I'm just gonna be a nonprofit, like that's something easy to do. Kimberly Johnson (42:01) Mm-hmm. Marci Grossman (42:04) Right. Kimberly Johnson (42:10) And as someone who donates, someone who gives, I love getting those impact reports. I love when I can see this, my money went to something good and I see smiling faces or even at my alma mater, you know, I get a letter from some student at school and it's like, thank you for giving, I didn't have to pay for books this semester because you donated to the university. Things like that make me feel good. So it's not for me, not just tax deduction. I like to feel good when I give my money. Kina Morgan (42:47) Right. Marci Grossman (42:47) I do want to say even though we are having this conversation in a lot of detail and a lot of information is going here, this is not tax advice to my listeners. This is accountants having conversations about these things. This is information for you to consider whether you need to go to a professional or whether you think you can do it on your own. So please do your own research and make sure you know what you're doing is as you move forward, hopefully creating a non profit to benefit your community. Kina Morgan (43:19) Absolutely. Yeah. Kimberly Johnson (43:19) Yes, always consult your tax professional. Marci Grossman (43:24) Absolutely. Talk to us. Bring us coffee. We love coffee. Anyway, Kina and Kimberly, before we wrap up, do you have anything else you want to mention that maybe we haven't covered yet? Kimberly Johnson (43:27) Hahaha. Kina Morgan (43:27) Yeah. I encourage people to continue to work to build the world a better place and that's what the nonprofit is about and you shouldn't be worried about getting the credit it should be about doing the mission so be willing to do the work to do it right Kimberly Johnson (43:59) the impact. Kina Morgan (44:06) and set it up correctly because that then will help you achieve your mission. Kimberly Johnson (44:11) Yes. Amen. Marci Grossman (44:15) Anything from you, Kimberly? Kimberly Johnson (44:17) Nope, that is good. I'm good. Marci Grossman (44:19) Okay. Well, Kina and Kimberly, thank you so much for being my guest today. We appreciate you taking the time to join us here. Kimberly Johnson (44:27) Well, thank you, Marci. This was a good time. Kina Morgan (44:27) Thank you, Marci. Thanks for having us. We appreciate it. Marci Grossman (44:31) This was a good time. To my listeners, I will be sharing a link to Your Balanced Partners LLC and the podcast in the show notes. Please check them out. They have a lot of interesting information. And don't forget to subscribe, leave us a review, and stay tuned. I'll see you next time. This has been MoneyMarci on Marci Talks Money (and Life). You got this.