Speaker 1: Welcome to Money and Wealth with John O'Bryant, a production
Speaker 1: of the Black Effect Podcast Network and iHeartRadio. Hey, Hey, hey,
Speaker 1: everybody is John Hope Bryant And this is Money and
Speaker 1: Wealth from the Black Effect Network on iHeartRadio, part of
Speaker 1: my season three of the Money in Wealth podcast series.
Speaker 1: And this is a very important and powerful.
Speaker 2: Episode because it gets you behind the curtain.
Speaker 1: All too often we see the hype, we see the
Speaker 1: press releases, we see some leader whoever it is you admire,
Speaker 1: going to red carpet events, going on a plane in
Speaker 1: front of a plane, and some people are flacid. I
Speaker 1: don't do that, Try not to do that, showing off
Speaker 1: their bobbles. I try to do that either or just
Speaker 1: in meetings or or celebrating. But you very rarely see
Speaker 1: what has to happen behind the scene for sustainable success,
Speaker 1: which is excellence in execution, excellence in operations, an excellence
Speaker 1: in financial management.
Speaker 2: And so who is the man or woman.
Speaker 1: In this particular case, a man, sometimes it's a woman,
Speaker 1: by the way, behind the mission who's running in my case,
Speaker 1: a seventy five million dollar social impact enterprise or budgets
Speaker 1: go vaslates between seventy five million and fifty million. I
Speaker 1: don't know what's going on in the society and the economy.
Speaker 1: Four and a half billion dollars invested. This is just
Speaker 1: Operation Helped. Brian Group Ventures is my holding company and
Speaker 1: is a for profit leg and is a nonprofit leg.
Speaker 1: Most people know of my nonprofit work, by the way,
Speaker 1: the firewall between those two entities, and we'll talk about
Speaker 1: that maybe a little bit in this conversation. I literally
Speaker 1: have different team members for different operations because it's too
Speaker 1: legal bodies. The one who runs the biggest body, the
Speaker 1: one has grown the most over thirty years because I
Speaker 1: spend the most time there is Operation Hope. And the
Speaker 1: guy behind that is Brian Betts. I just recently published
Speaker 1: He's my president and chief financial officer. Recently published a
Speaker 1: piece on Brian Journal at Brian Green Venture's website. On
Speaker 1: our twelfth consecutive four star Charity Navigator rating, it's like
Speaker 1: getting up. It's like having a triple bond a rating,
Speaker 1: triple bond rating on a firm on Wall Street. It's
Speaker 1: the best rating you can get as a nonprofit. The
Speaker 1: guy behind that, who makes that magic happen is the
Speaker 1: guy that you're seeing on the screen right now you're
Speaker 1: about to hear from If you're in your car, you're gardening,
Speaker 1: you're walking, you're whatever you're doing, you need to stop
Speaker 1: and take notes or come back with a piece of
Speaker 1: pad or your iPad, your iPhone and grab a notepad
Speaker 1: with some friends, because you're about to be schooled on
Speaker 1: what's behind the curtain of a vision made real.
Speaker 2: Brian DA's welcome to the Money in the World podcast.
Speaker 3: That Deer. I'm excited to be here for that.
Speaker 2: I love me some Brian Betts. He's a good man.
Speaker 1: President and chief financial officer of about sixty percent of
Speaker 1: everything I do, which is Operation Hope. Brian, that's a
Speaker 1: pretty weird title. President and chief financial officer. I haven't
Speaker 1: seen that many times. I don't know if I've ever
Speaker 1: seen it at all. But before we get into that
Speaker 1: combination and why that works for us and what does
Speaker 1: that mean. By the way, can you back up and
Speaker 1: tell the audience a little bit about what as you
Speaker 1: did before you got to Operation Hope and what we
Speaker 1: just found out just a few minutes ago, even though
Speaker 1: we you know, I've known each other for a long time,
Speaker 1: we just found out a moment ago about the common
Speaker 1: thread between your professional life and my personal life.
Speaker 4: Yeah, so, you know, I started off in public accounting
Speaker 4: after I graduated with college, did the role at a
Speaker 4: large top six CPA firm, international CPA firm for a
Speaker 4: couple of years. That's usually what an accounting person aspires
Speaker 4: to is go out and get that big public experience.
Speaker 4: And then went to work for Corporate America for almost
Speaker 4: fifteen years and various different roles in accounting and finance
Speaker 4: and strategic planning in different organizations. And you know we've
Speaker 4: shared before that that just didn't fulfill me. You know,
Speaker 4: how can I take my skills and my talent and
Speaker 4: really get that other piece I was missing, a self
Speaker 4: sense of fulfillment. And then that's where I fell in
Speaker 4: love with nonprofits. Everybody's focused, everybody's here to make a
Speaker 4: difference in the world, and the people, the culture, and
Speaker 4: the satisfaction you get from working for a nonprofit I
Speaker 4: couldn't get anywhere else. And that is where I found
Speaker 4: my sweet spot. I always liked to joke I found
Speaker 4: my people. I finally found my people. I got into
Speaker 4: the nonprofit industry, But before I came to Operation Hope,
Speaker 4: I worked with a nonprofit that really focused on the
Speaker 4: problem of homelessness, and you and I were just briefly talking,
Speaker 4: but you know, the face of homelessness is usually most
Speaker 4: people think of the person on the street, under the bridges,
Speaker 4: under the overpasses.
Speaker 3: But that's just the chronic homelessness.
Speaker 4: Yeah, small percentage of the people that are actually homeless.
Speaker 4: There are so many more people that are living with friends, families,
Speaker 4: and weekly hotels, couch surfing. There are so many more
Speaker 4: people that are unhoused. Then you can you can realize
Speaker 4: imagine that that problem just compounds itself. So after spending
Speaker 4: seven years and working in that industry, which I loved,
Speaker 4: helping the people, what I saw was how many people
Speaker 4: are on the verge of entering into a downward cycle
Speaker 4: of homelessness. So I always like to give the example.
Speaker 4: You have a single mother working a job. She gets
Speaker 4: a flat tire, she can't go to work, she can't afford.
Speaker 3: To pay for the tire. She loses her job.
Speaker 4: Two weeks later, three weeks later, she can't pay her bills.
Speaker 4: Eventually she's going to get an eviction notice. Eventually she's
Speaker 4: going to lose housing. Maybe she can stay with family
Speaker 4: and friends. But once you get that eviction on your record,
Speaker 4: it's going to be a higher security deposit. If you
Speaker 4: can find somebody that's going to rent to you, then
Speaker 4: they may have a higher rent. It may not be
Speaker 4: in the location you want. There's just so many more
Speaker 4: challenges by having that eviction on your record that you
Speaker 4: start this downward spiral gets so expensive, so difficult financially
Speaker 4: to get out of.
Speaker 3: But then we're not.
Speaker 4: Even talking about the spiritual emotional impact to that individual
Speaker 4: that the family uned it, that they experienced once they
Speaker 4: start that cycle. So we were talking before that. You
Speaker 4: were sharing that you were homeless at one point, and
Speaker 4: that's the common thread we were talking about. And I
Speaker 4: didn't I knew you were homeless, and I knew I
Speaker 4: worked in homelessness, but I don't think we ever put
Speaker 4: the two pieces together.
Speaker 1: Yep, and what And luckily I got out and you
Speaker 1: transitioned to uh to my forever story. Why president and
Speaker 1: chief financial officer here at Operation and Hope and why
Speaker 1: does that work? And what for the audience's sake? Right
Speaker 1: up front, what is a chief financial officer? They call
Speaker 1: it CFO in Lingo, What does that mean? And how
Speaker 1: is that different from your role as president? So First
Speaker 1: of all, why president chief financial officer?
Speaker 4: Okay, So you know, as a financial literacy organization, we
Speaker 4: have to set the example of living a very financially
Speaker 4: sound business model. So if that is our main mission
Speaker 4: driver and representing and actually doing what we preach, making
Speaker 4: the CFO of the president makes.
Speaker 3: Sense in this organization. You know, marry the two together.
Speaker 4: That is one of the most critical things you can
Speaker 4: do for a nonprofit. There's so many nonprofits doing fantastic work.
Speaker 4: Where they struggle is on the business side of making
Speaker 4: sure they don't overextend themselves. There's always going to be
Speaker 4: more need than you could ever address, So you have
Speaker 4: to treat it like a business. You know, nonprofits there are
Speaker 4: still a business and you have to run it like
Speaker 4: a business if you want to continue to help people
Speaker 4: on a long term basis. Otherwise you're going to find
Speaker 4: yourself in like most like startups that struggle. If you
Speaker 4: don't have a sound financial model, then you're not going
Speaker 4: to have a strong business model.
Speaker 1: So he just says something really important. I want to
Speaker 1: slow it down and repeat it that a nonprofit is
Speaker 1: still a business and you've got to run it like
Speaker 1: a business. I'm gonna go one step further, a nonprofit
Speaker 1: is a corporation like any other corporation.
Speaker 2: You simply apply to the.
Speaker 1: IRS the Internal Revenue Service for a non profit exemption.
Speaker 1: There are different kinds of exemptions. One for foundations, one
Speaker 1: for academic institutions. There's a special exemption for churches. We
Speaker 1: have a five to one C three exemption.
Speaker 2: Right. That's a that's that is a.
Speaker 1: Programs and services based nonprofit versus a giving money nonprofit
Speaker 1: like a foundation, but it's still a corporation and versus
Speaker 1: the profits going to the share private investors and going
Speaker 1: in their pockets. Our profits go to our shareholders, which
Speaker 1: is the community. The community is our shareholder and goes
Speaker 1: and is reinvested through programs and services in the community.
Speaker 1: A little known fact, whereas a for profit company wants
Speaker 1: to retained as much earnings as possible and distributed to
Speaker 1: its for profit shareholders, a nonprofit is judged by how
Speaker 1: much of the money goes to programs and services versus
Speaker 1: going to operations or held back and retained, which one
Speaker 1: could argue as operations.
Speaker 2: So we have a very high program to.
Speaker 1: Expense ratio and administration expense ratio, which is also complements
Speaker 1: of Brian Bett's leadership of about eighty eight percent or so,
Speaker 1: So eighty eight eighty seven percent of all of every
Speaker 1: dollar that comes in goes right out to programs and
Speaker 1: services helping people, and the rest of it is for
Speaker 1: useless things like me. We then also have reserves and
Speaker 1: we've started in an endowment and things like that. Maybe
Speaker 1: we'll have time to get into that. But he's the
Speaker 1: first thing he's said is that you as a nonprofit
Speaker 1: in financial literacy, we thought we had to over index
Speaker 1: on proper management.
Speaker 2: So the president in this.
Speaker 1: Case should also be really in all fairness and really
Speaker 1: unfairness to Brian, who really has three roads.
Speaker 2: President.
Speaker 1: I didn't give him the third title. I want to
Speaker 1: break him out. You know, President, he's really chief operating
Speaker 1: officer and chief financial officer. You really cannot be chief
Speaker 1: financial officer and president without actually also managing the operations
Speaker 1: because they all sort of elegantly work together. I'm founder,
Speaker 1: chairman of the board the governance organization, right and chief
Speaker 1: executive officer, which leads the management team. Those are three
Speaker 1: different roles, two different functions. Founder is not really a role.
Speaker 1: It's a role, but not a function. Chairman of the
Speaker 1: board is a function, but it is separate in a
Speaker 1: part from management. Right, the board should not be managing
Speaker 1: the organization, and then management is what we're talking about.
Speaker 1: I'm chief in this particular role, in this particular conversation,
Speaker 1: I'm chief executive officer. Brian is number two as president
Speaker 1: and chief financial officer. Okay, Brian, what does chief financial
Speaker 1: officer mean? And who's on your team?
Speaker 4: So if we break out my role into two different areas,
Speaker 4: we'll just focus on the chief financial officer. So, as
Speaker 4: chief financial officer, you really have two different functions you're managing.
Speaker 3: One is your traditional accounting function.
Speaker 4: How do we capture activity, translate that into financial statements
Speaker 4: and provide those for public viewing or to banks for
Speaker 4: if you have a loan or to the SBA. Everybody's
Speaker 4: going to want to see your financial statements. So how
Speaker 4: do we record our activity in accordance with all the
Speaker 4: standards and regulations and issue financial statements on a regular basis.
Speaker 4: That is one piece, But when you throw in the CFO,
Speaker 4: there's another piece that you've got to think about, and
Speaker 4: that's the finance function. And the finance function is really
Speaker 4: looking ahead to make sure you're not going to run
Speaker 4: off the road, whereas accounting is traditionally looking back at
Speaker 4: a period of time. So with the cfo's role, he
Speaker 4: is to marry both looking back at history, making sure
Speaker 4: you're understanding how you got to where you are today,
Speaker 4: but you cannot neglect looking forward of where you think
Speaker 4: you're doing. And traditionally that is really in a world
Speaker 4: of what we call forecasting or projecting. Where are we
Speaker 4: projecting growth? Where are we projecting expenses to grow? How
Speaker 4: can we become more efficient? And you really have to
Speaker 4: partner with every function in the organization to understand what
Speaker 4: does the organization need to continue to grow, scale and thrive.
Speaker 4: You've got to be partners with them. You've got to
Speaker 4: listen to what they need. You can't be the role
Speaker 4: that always says no. You have to be the voice
Speaker 4: that says, why, let me understand and let me prioritize
Speaker 4: all the organization's needs in terms of importance. Because with
Speaker 4: any company, there's always limited funds and you want to
Speaker 4: invest in everything, but that's not.
Speaker 3: Always possible, So you have to.
Speaker 4: Prioritize your investments in yourself and in the business.
Speaker 1: As CFO, who's on your team and what are their roles.
Speaker 3: You're talking about just the CFO.
Speaker 4: Yes, yes, So I have a senior vice president of
Speaker 4: accounting and finance that manages a team of about six people.
Speaker 3: We have a staff accountant.
Speaker 4: We have an accounts payable person, think of accounts payables.
Speaker 4: All the bills that come in have to be entered.
Speaker 4: We have to vet the venitors. We have to check
Speaker 4: their IRS, their tax ivs with the IRS to make
Speaker 4: sure we're not paying someone fraudulently.
Speaker 3: We've also got an accounting manager.
Speaker 4: That does a lot of the clothes for the monthly
Speaker 4: financial statements.
Speaker 3: We also have a grants manager.
Speaker 4: If you're getting money from a federal government, state government,
Speaker 4: local government, you really should invest in a specific role
Speaker 4: that really does grant reporting. People that are investing money
Speaker 4: back into your organization to deliver on outcomes and impacts,
Speaker 4: they're going to want to see that you spent the
Speaker 4: money as well as provided the outcomes and impacts according
Speaker 4: to what.
Speaker 2: You said you to do.
Speaker 4: So we also have payroll. You know, everybody loves to
Speaker 4: get paid. We've got to make sure everybody gets paid.
Speaker 4: But what you don't see behind the scenes, especially with
Speaker 4: Operation Hope, is we're in forty two states. That means
Speaker 4: forty two states. We have to file payroll taxes. We
Speaker 4: also have to file in some jurisdiction local payroll taxes,
Speaker 4: and you also have.
Speaker 3: To file unemployment taxes.
Speaker 4: And you also have to make sure you're registered with
Speaker 4: the Secretary of State to do business in that state,
Speaker 4: also register to solicit donations for a charitable organization. So
Speaker 4: there's a lot more behind the scenes from the compliance
Speaker 4: standpoint that you've really got to make sure you're setting
Speaker 4: yourself up and adhering to all the regulations. There are
Speaker 4: some parishes and jurisdictions that have local payroll taxes on
Speaker 4: top of taxes, so you've got to really have a
Speaker 4: good handle on what all's required for you to physically
Speaker 4: begin a state and operate in that state. And then
Speaker 4: in the world we live in today, you've got to
Speaker 4: also understand what does it mean to provide services virtually
Speaker 4: into a state where you don't have a physical presence.
Speaker 4: Are there any other regulations that require specific compliance issues there?
Speaker 4: So we've got a team that is small but mighty,
Speaker 4: but they handle a lot of that infrastructure to keep
Speaker 4: us in line with compliance, because the last.
Speaker 3: Thing we want to do is end up on the
Speaker 3: news as.
Speaker 4: A bad nonprofit and doesn't know how to run its
Speaker 4: business and not complying with federal laws and regulations.
Speaker 1: Particularly particularly as a financial literacy nonprofit.
Speaker 4: Especially as a financial literacy nonprofit. So I think, you know,
Speaker 4: nonprofits overall get more scrutiny because you know, donors have
Speaker 4: a lot of optionality of where to invest their resources
Speaker 4: into solving so many problems that we have in the
Speaker 4: world today, and you've got to be good stewards of
Speaker 4: that funding.
Speaker 1: So let's back up a little bit. We've covered a
Speaker 1: lot of ground pretty quickly here. So you're saying that
Speaker 1: you have six team members, to be clear for the audience,
Speaker 1: we have hundreds of employees. But he's saying of those employees,
Speaker 1: six of them are just on his finance team, whereas
Speaker 1: there are another three hundred plus three fifty or something
Speaker 1: plus on his.
Speaker 2: Presidents under his president's role.
Speaker 1: So we'll come back to that, on his chief financial
Speaker 1: officer role, a team of six. Explain, Brian, please, how
Speaker 1: finance is different from.
Speaker 2: Actuary, our audit.
Speaker 1: Let's be very specific, the audit function versus the finance function.
Speaker 2: Why that's those two things are important.
Speaker 4: Yeah, So with when you hear the word audit. That
Speaker 4: is usually you can do it internally. You can internally
Speaker 4: audit your transactions.
Speaker 1: Not even important. Some people are listening is going I
Speaker 1: don't need to do an audit. Who cares about that?
Speaker 1: Why is an audit? Why paying for an audit? We
Speaker 1: pay seventy thousand dollars or something less than might check
Speaker 1: me it's more than that probably now because of our
Speaker 1: size for an annual audit. Why invest seventy grand fifty
Speaker 1: grand of your small organization two grand in an audit.
Speaker 3: So there's a couple of reasons that are like mandatory.
Speaker 4: So if you get over a million dollars in funding
Speaker 4: from a federal government agency or multiple federal government agencies,
Speaker 4: you're required.
Speaker 3: By law to have that audit done.
Speaker 4: If you get financing through a bank, whether that is
Speaker 4: a turn loan, whether that's a line of credit, they're
Speaker 4: going to audited financial statements.
Speaker 3: And then, of course, like we.
Speaker 4: Were talking about earlier, our donors require a sense of validation,
Speaker 4: So an audit really is a third party coming into
Speaker 4: your organismation and validating that your financial statements reflect what
Speaker 4: you're actually publishing.
Speaker 3: So it's all about trust. Trust. The maorifi.
Speaker 4: So our audit partners look at our internal controls to
Speaker 4: make sure the process is working right, and then they'll
Speaker 4: validate the end numbers. So that requires confirmation from banks
Speaker 4: on what's sitting in the bank accounts, confirmation on your investments,
Speaker 4: looking at if you bought any land building, computer equipment,
Speaker 4: is it really on the balance sheet or should it
Speaker 4: belong on the income state. Also, they're very careful about
Speaker 4: revenue recognition. You know, when can you actually say you
Speaker 4: have revenue? Is it based off of a contract? Is
Speaker 4: it did you book it in the period that you
Speaker 4: said that the contract states, or did you book it
Speaker 4: too early or too late.
Speaker 2: Let's let's lead out. Let's let out. He's starting to talk.
Speaker 2: He's got to talk.
Speaker 1: Lingo, So audience, he revenue revenue you would described as income, right,
Speaker 1: and there's two types of income.
Speaker 2: There's cash income.
Speaker 1: I got the cash right now and I as he
Speaker 1: heard you heard the phrase I booked it booked it
Speaker 1: means he put it on the balance sheet and the
Speaker 1: income statement. Now there's another kind of income, and it's
Speaker 1: a cruel income. It's not cash right now, it's a
Speaker 1: crude income. It's revenue. But let's say, somebody commits a
Speaker 1: million dollars to your organization over five years, they paid
Speaker 1: two hundred thousand dollars today, that's cash income. They are
Speaker 1: going to give you two hundred thousand dollars a year
Speaker 1: over the next four years for a total of five
Speaker 1: years to a total million dollars. Now, all of that's
Speaker 1: income revenue, some of it is cash.
Speaker 2: Two hundred thousand. You book that as cash.
Speaker 1: It goes on your income statement in your balance sheet,
Speaker 1: really through your balance sheet. And he'll explain maybe what
Speaker 1: a balance sheet is and what does that mean. And
Speaker 1: the eight hundred thousand is a cruel income and it
Speaker 1: shows up in a couple of different places interestingly enough
Speaker 1: on you in your financials. But for the sake of
Speaker 1: this making this really simple at the moment, I gotta
Speaker 1: be careful.
Speaker 2: I say the following thing.
Speaker 1: Nonprofits are the only entity I'm aware of that have
Speaker 1: what I call legal double books. Now, if you gotta
Speaker 1: clip this, anybody listening to us on social media, if
Speaker 1: you're gonna clip this, clip the whole thing. Don't just
Speaker 1: say John Bryant says he's got double books. A nonprofit,
Speaker 1: any nonprofit, not Operation Hope, has legal double books, and
Speaker 1: meaning you have a cash register that says I got
Speaker 1: this money today or this year. You also have a
Speaker 1: cash register that says, here's my cruel income. Cruel in
Speaker 1: cash income, which is a combination of all of my
Speaker 1: commitments to the organization, which also include things like in
Speaker 1: kind commitment. And maybe he'll get to that as well. Okay,
Speaker 1: let's back up, and why don't you drill as deep
Speaker 1: as you want, Brian on anything. I just said you
Speaker 1: probably should go deeper on the cash versus a cruel piece.
Speaker 2: Yeah.
Speaker 3: I don't think it's a conversation for today.
Speaker 4: But John, I would even challenge you that we've got
Speaker 4: three sets of works.
Speaker 2: Okay, go ahead.
Speaker 4: One, like you said, cash basis, so really tracking what
Speaker 4: comes in the bank account.
Speaker 3: And what goes out the bank account.
Speaker 2: Yep.
Speaker 4: That is your cash basis. That is how you're paying
Speaker 4: your bills and when you're getting paid. The cruele basis
Speaker 4: is what you were talking about saying, Okay, I've got
Speaker 4: a donor that's gonna give me a million.
Speaker 3: Dollars paid out in cash over five years.
Speaker 2: Yep.
Speaker 4: So the cash set of books is only going to
Speaker 4: get two hundred thousand.
Speaker 2: Oh I know where you're going for five years, are
Speaker 2: you going to reimbursement? Go ahead?
Speaker 4: No, no, no, no, I'm want to get thrown under little wrinkle.
Speaker 4: Then you've got your cruel books gap that followed generally.
Speaker 3: Accepted account ye principles, principles.
Speaker 4: Yeah, and that million dollars gets booked when they commit it.
Speaker 3: Yeah, you've got a time.
Speaker 2: In book right away, right away, over time booked right away.
Speaker 4: Booked right away. There's a third set of books that
Speaker 4: we also track. We actually take that million dollars and
Speaker 4: then we'll break it out in the financials equally over
Speaker 4: five years to see if we're break even or not
Speaker 4: and making sure we're still profitable. So it's in nonprofits,
Speaker 4: it's called without donor restrictions. And the with donor restrictions
Speaker 4: is the restricted that restricts the income based on certain
Speaker 4: of time or you got to deliver a service or
Speaker 4: deliver a program, so you can restrict it over many
Speaker 4: different areas. But so I would say cash, you've got
Speaker 4: to be able to bring money in to pay your
Speaker 4: bills a cruel. That's what the banks, the financial institution restricted, yeah,
Speaker 4: are going to look at. And then you want to
Speaker 4: make sure that you know in the year you're operating,
Speaker 4: that you actually have enough revenue for twenty twenty six
Speaker 4: tied to twenty twenty six to pay the bills in
Speaker 4: twenty twenty six, even though they may have recorded. We
Speaker 4: may have recorded that revenue three years ago.
Speaker 2: Yes, and now you've seen, now you've gone on that
Speaker 2: rabbit hole. We all.
Speaker 1: We should also mention probably that you have reimbursable revenue grants,
Speaker 1: which are weird.
Speaker 2: Uh.
Speaker 1: You've got to put the money out first to align
Speaker 1: of credit or your own resources, and then these are
Speaker 1: typically government grants, and then.
Speaker 2: They reimburse you. It's really weird. They reimburse you and
Speaker 2: it may take thirty sixty.
Speaker 1: Ninety twenty days. You got to put the money out,
Speaker 1: do the work, confirm you did the work. It's your
Speaker 1: report that you did the work, and then they reimburse
Speaker 1: you for the money you put out. And as part
Speaker 1: of that you might get an allocation for overhead expense
Speaker 1: as part of that grant. That's your call, that's your profit.
Speaker 1: You also have in kind revenue. You might as well
Speaker 1: cover what that is. Brian's out now that we're at it.
Speaker 4: Yeah, So I'll start with our model where we have
Speaker 4: the largest n kind activity that flows through our financials
Speaker 4: is that with our bank partners, a lot of them
Speaker 4: given us free office space inside of the bank. Yep,
Speaker 4: there's a retail value to that.
Speaker 2: Yep.
Speaker 3: Operation Hope pay.
Speaker 1: We're the only non profit and history ever allowed to
Speaker 1: operate inside of a bank branch in history, by the way,
Speaker 1: in sort of an FDIC insured bank branch, which has
Speaker 1: a lot about Operation Hope, and that's through the FFIEC approval.
Speaker 1: The federal government of regula joint regulatory agencies have allowed
Speaker 1: Operation Hope to do that since twenty sixteenth in written form,
Speaker 1: but really since twenty since nineteen ninety two informally and
Speaker 1: at the state level. Just at the federal level, we
Speaker 1: have this federal approval which again northern nonprofit history has
Speaker 1: ever had that and that allows the banks to get
Speaker 1: cro credit community investment at credit for that through investment,
Speaker 1: linning and service back to you, Brian.
Speaker 4: Yeah, So there's a retail value for that office space
Speaker 4: that is donated for our use inside of the bank branch.
Speaker 4: So what the IRS has allowed for the accounting profession
Speaker 4: has allowed is you can actually record that value of
Speaker 4: the free rent you got in your revenue but then
Speaker 4: you also offset it in expenses as rent as well.
Speaker 4: So this really takes the concept of having to enter
Speaker 4: into an agreement with someone and actually change cash back
Speaker 4: and forth. So we would not get a donation to
Speaker 4: pay for rent inside of that bank branch, nor would
Speaker 4: we actually pay a rent payment back to them to
Speaker 4: lease the space.
Speaker 3: So it really just cuts.
Speaker 4: Down on administration and cash flow when they just donate
Speaker 4: access to the facilities that we have. Otherwise we would
Speaker 4: have to pay rent somewhere to provide those services.
Speaker 1: I'm gonna put this in my phraseology versus Brian's there's
Speaker 1: two ways to make money. You make more, you spend less,
Speaker 1: And in this particular case of an in kind commitment,
Speaker 1: you're spending less with an inkind commitment tied to office space.
Speaker 1: We almost went broke several times, by the way, over
Speaker 1: thirty years. But I remember we had like nine this
Speaker 1: was before Brian got here with us. We had physical
Speaker 1: Hope and side locations where we leased the We leased
Speaker 1: the location, we paid the least rate we paid, the rent,
Speaker 1: we paid, the utilities we paid. I remember I got
Speaker 1: threatened to be sued by a janitorial company, a minority
Speaker 1: owned janitorial company in Harlem, because we hadn't paid the
Speaker 1: janitorial services for three months, and I hadn't gotten the
Speaker 1: money from the donor, and so I was waiting with
Speaker 1: the money for the donor to then pay the bills.
Speaker 2: But the local.
Speaker 1: Vendors didn't know I was waiting for that, and we
Speaker 1: didn't have the reputation that we have to day, and
Speaker 1: so they were right to like, where's my money? And
Speaker 1: I was just trying to do the right thing by
Speaker 1: hiring local small businesses. I could have hired a major
Speaker 1: national sanitation, you know, maintenance company and they would not
Speaker 1: have flinched at me not paying them for sixty to
Speaker 1: ninety days. This is local company needed their money understandable,
Speaker 1: selves understandably. So so they threatened to assume me, and
Speaker 1: it called me kind of names and and I'm like,
Speaker 1: what what, I'm not in the janitorial maintenance business.
Speaker 4: I'm not.
Speaker 1: And then I started looking at the least payments and
Speaker 1: we were upside down in the lease and we were
Speaker 1: laid on all of our bills because the donor was
Speaker 1: we had one major donor donor back then, and they
Speaker 1: were having their own challenges and they were slowing down payments.
Speaker 1: Of course, that slowed us down, and I'm like, okay,
Speaker 1: I'm in.
Speaker 2: The wrong business. And then I.
Speaker 1: Figured out, you know, nobody really wants to come to
Speaker 1: a building that says poverty solved here essentially. Uh, And
Speaker 1: so I decided when this whole thing crashed and burned,
Speaker 1: and the donor came to us and said, look, we'd
Speaker 1: like to change our relationship with you and just give
Speaker 1: you some money. And we don't want to do with
Speaker 1: a lot less money than what they were giving us.
Speaker 1: We don't want to do this these hope and sides anymore.
Speaker 1: I had one major donor, and I'll give them credit.
Speaker 1: Actually it was E Trade And for years they were
Speaker 1: fantastic and I couldn't have survived if we.
Speaker 2: Can survive without them.
Speaker 1: And they had I don't know, eleven presidents in nine
Speaker 1: years or something, and the last two presidents were like,
Speaker 1: you know, we're having to restructure everything, and you're the
Speaker 1: first thing on my list, right and.
Speaker 2: So, and they didn't have any branches. We were their branches.
Speaker 1: And this guy named Scott Widley, who's who's with another
Speaker 1: company now, was very helpful then and is even helpful
Speaker 1: now as new firm relationships really matter.
Speaker 2: But anyway, that caused me.
Speaker 1: I remember calling of our team when they canceled that
Speaker 1: grant and essentially put all of our offices out of business.
Speaker 1: And I said to my team, this is an opportunity.
Speaker 1: They thought I was crazy. I caught them all on
Speaker 1: a Friday night, Bryant and Lance and Mary and Rachel
Speaker 1: and all the folks. You know, Jenny, we have to Rea,
Speaker 1: you know, let's figure out which of our model is working,
Speaker 1: and let's get rid of everything that's not working.
Speaker 2: Give me an analysis.
Speaker 1: And they came back and said, where there's one local
Speaker 1: that's paying for itself and it's a location for the
Speaker 1: Bank of the West. What was in Bank of the West?
Speaker 1: Now it's who owns them now? I mean, because the
Speaker 1: rest was purchase. I think it's b More Harris. I'm
Speaker 1: not sure, but anyway, Bank of the West was in
Speaker 1: San Francisco. We had a branch in Oakland, a hoping
Speaker 1: side and the CEO demograph, God bless them, and Michael
Speaker 1: Shepard demographs like I'm not giving any money. I'll pay
Speaker 1: I'll put you in one of my low branches. It
Speaker 1: was a complete accident. I'll put you in one of
Speaker 1: my branches that I'm building, and I'll give you half
Speaker 1: the space and you can collaborate with my team members
Speaker 1: around your no loan denial strategy, which is I would
Speaker 1: basically say you're as long as you do what we say,
Speaker 1: we won't deny you, will approve you subject to the
Speaker 1: resolution of your primary denial factors, and the banker would
Speaker 1: send the bank client over to us to when they
Speaker 1: thought the person might be declined. We would work on
Speaker 1: them because they worked for me, my employees worked for me,
Speaker 1: not the bank, and then send them back to the
Speaker 1: bank branch when they were ready.
Speaker 2: So that that location was covered.
Speaker 1: Brian, the rents were covered, all the utility payments, everything
Speaker 1: was covered by the bank. Well, that was the only
Speaker 1: model that was self sustainable. By accident, I was upset
Speaker 1: because the guy didn't give me. I wanted the money.
Speaker 1: I had the ghetto.
Speaker 2: Mentality, had a hustle mentality, give me the cash.
Speaker 1: But they were But it was actually a better deal
Speaker 1: for us because they covered all those expenses, including the
Speaker 1: staff expenses, and then they gave us a grant for
Speaker 1: ancillary services. Profit that our profit, if you will, And
Speaker 1: so now we have fifteen hundred locations, three hundred plus
Speaker 1: of which are physical hope inside full time staff than
Speaker 1: the twelve hundred which are satellites like we were doing
Speaker 1: at Truest branch, and Truists were doing this model at
Speaker 1: Truest Bank of America, Wells Fargo and others, First Horizon
Speaker 1: Bank in out of Tennessee and others. And so this
Speaker 1: out of a bad thing came a good thing, a
Speaker 1: new model where we value and booked in kind revenue.
Speaker 1: We have a huge in kind commitment from partners like Shopify,
Speaker 1: where this is stuff we would have had to pay for,
Speaker 1: but they neutralize the cost for us, meaning zeroed out
Speaker 1: like costs for licenses, for Shopify accounts and other things
Speaker 1: that are worth tens of millions of dollars. So shout
Speaker 1: out to Shopify. All right, what did I cover there, Brian?
Speaker 1: That you think needs additional clarity?
Speaker 4: I you know, one thing I think nonprofits have to
Speaker 4: realize is that just because a donor can't write you
Speaker 4: a check does not mean they don't have something of
Speaker 4: value to you that they and then that actually gets
Speaker 4: captured in your financial statement.
Speaker 3: So you know, if they.
Speaker 4: Can't give you cash, cash is king We all love
Speaker 4: cash and John say he wanted to cas, but sometimes
Speaker 4: donating what they can provide goods, services, rent is just
Speaker 4: as valuable or more valuable.
Speaker 3: Can you imagine, John.
Speaker 4: If we had to be landlords for puff the locations
Speaker 4: that we're in, God administration.
Speaker 3: Part of that would be crippling to.
Speaker 2: The organ Well.
Speaker 1: We would have to have a physical I hadn't thought
Speaker 1: about this, Bryant. If we were covering the locations and
Speaker 1: all the extenses tied to it, we would have to
Speaker 1: have an annual budget right now of one hundred and
Speaker 1: twenty five million dollars minimum minimum, just to cover the
Speaker 1: load of locations in forty two to forty three states,
Speaker 1: three hundred and fifty physical locations.
Speaker 2: I mean, my god, the leases.
Speaker 1: In all the local red tape and the legal look,
Speaker 1: we'd have to have a lawyer.
Speaker 2: On staff full time, and all that stuff.
Speaker 4: I don't want any to get into, you know, occupancy
Speaker 4: taxes and everything else that goes along with that. So
Speaker 4: it would be crippling for us to try to reach
Speaker 4: the scale you are at now and the scale we
Speaker 4: want to be at. If we were in the real
Speaker 4: estate business, we just it would cripple us. So getting
Speaker 4: the donated office space has been a game changer for us.
Speaker 4: And you know, just because it wasn't check written to
Speaker 4: us didn't mean it didn't have value, didn't.
Speaker 1: Mean it exactly explain, Brian, So a company is like
Speaker 1: a body. A company is a person in legal form.
Speaker 1: So explain to people how a company might have an
Speaker 1: asset that's also a liability. First time somebody saw this,
Speaker 1: it was really weird to me that an asset or
Speaker 1: something that comes in as an asset, either a physical
Speaker 1: asset or a grant. Also it could be a contingent liability.
Speaker 1: It shows up on your income statement and in through
Speaker 1: your expense wash. And also the next thing, please explain
Speaker 1: what a balance sheet in an income statement actually is.
Speaker 1: But that first, this first question, how can something that's
Speaker 1: positive also be an offsetting negative.
Speaker 3: Well, one of the.
Speaker 4: Things we have on our balance sheet that you'll find
Speaker 4: both in assets and liability is our child satan accounts.
Speaker 4: We put the cash that's in our bank it's something
Speaker 4: we own, something that has value. We put that in
Speaker 4: an asset because it's a bank account, it's cash. It's
Speaker 4: a positive, but we also have to restrict it. If
Speaker 4: a parent makes a donation to that account because it's
Speaker 4: the parents' money that we're holding on too. But we're
Speaker 4: going to have to pay out for that kid when
Speaker 4: they graduate. So you can have cash in a bank account,
Speaker 4: but it might not be yours because you're just you're
Speaker 4: the custodian of the funds. But you've got a liability
Speaker 4: to pay that out at a certain date time benchmark
Speaker 4: to someone else. So it's something that you owe, but
Speaker 4: it's something that you have.
Speaker 2: And how does that relate to a multi year grant
Speaker 2: for the audience.
Speaker 3: Yeah, so let's take some of our donors.
Speaker 2: Pre pay.
Speaker 4: You know, we talked about a million dollars over five
Speaker 4: years and paying us two hundred thousand dollars each year.
Speaker 4: Some of our donors say, I'm going to give you
Speaker 4: a five year grant for a million dollars. Here's the
Speaker 4: million dollars up front. So you get a million dollars
Speaker 4: in cash, but you've also got liabilities for the next
Speaker 4: four years to spend that money, so to do work,
Speaker 4: to do the work, and deliver on what you agree
Speaker 4: to in terms of programs.
Speaker 1: So you spend that million dollars when it comes in
Speaker 1: on hula hoops or or dinners, or whatever it is
Speaker 1: you want to do, and even if it was legal
Speaker 1: to do it. In other words, you weren't fluffing it
Speaker 1: off one personal stuff, but you're doing stuff is legally
Speaker 1: allowed within the nonprofit, but it was not. It was
Speaker 1: not the contract to program work, but it was other
Speaker 1: things that you thought were important.
Speaker 2: But you spend it all on year one.
Speaker 1: You actually are in technical default on that grant obligation
Speaker 1: in years two, three, four, and five.
Speaker 2: Isn't that right? Right?
Speaker 4: That is, if you don't deliver on it and get
Speaker 4: the moneys from somewhere else. So they've given you a
Speaker 4: million dollars to be the custodian a trustee of the
Speaker 4: funds to spend that in the outline that you've agreed
Speaker 4: on in your contract.
Speaker 3: So you know, you've got to be able to commit.
Speaker 4: And deliver on that multi year contract regardless if they
Speaker 4: pay you at the beginning equal installments over the year,
Speaker 4: or you know, cost reiversible after the fact that you've
Speaker 4: already spent the money. So the donors will come calling,
Speaker 4: and you've got to adhere to those contracts regardless of
Speaker 4: when the cash hits your bank account.
Speaker 1: Mission without management means the whole vision collapses. Explain the skeleton,
Speaker 1: the bones, the skin, the mouth. The mouth is me,
Speaker 1: the skin is my hope, coaches and all that stuff.
Speaker 1: And the heartbeat maybe is our special forces team, the
Speaker 1: management team, the skeletal bones, the fascia tissue and the
Speaker 1: skeletal bones and the ligaments that beat the muscle. Uh uh,
Speaker 1: and maybe even part of the muscle too. Is is
Speaker 1: balance sheet, income and expense statement, et cetera. Explain Pete please,
Speaker 1: Brian for the audience. I don't know if I don't
Speaker 1: know if anybody's ever explained to people what these things are.
Speaker 1: People assume and presume that folks understand it. And I
Speaker 1: don't know why anybody should. You never get this information
Speaker 1: with anybody. What does this mean?
Speaker 4: So, in simplistic terms, a balance sheet has three components.
Speaker 4: You have an asset, and an asset is something of
Speaker 4: value that's got your.
Speaker 3: Name on it, that you own.
Speaker 4: So, whether that's a bank account, whether that's a building,
Speaker 4: whether that's a receivable somebody owes you money that is
Speaker 4: something and of value to you that you book as
Speaker 4: an asset.
Speaker 3: On the opposite side, you have all your bills that
Speaker 3: you've got to pay. So think about your loans or.
Speaker 4: On the liability side, think about your accounts, payable all
Speaker 4: your vendors, like you were talking about your janitorial service.
Speaker 4: Those are things you owe to people, right, So you
Speaker 4: take your assets and you subtract out what you owe
Speaker 4: other people and that in the corporation world, is your equity,
Speaker 4: what is the business actually worth?
Speaker 3: What is the leftover? So what do I have in
Speaker 3: my hand that is valuable?
Speaker 4: Take out what I owe other people, and then what's
Speaker 4: less is your equity or your net assets in a
Speaker 4: nonprofit world, so there's three components. That's why the balance
Speaker 4: sheets so important. It's like what is your value, who
Speaker 4: do you owe? What's left over.
Speaker 1: That. If you are telling others to watch this or
Speaker 1: listening to this podcast, they should go to that two
Speaker 1: minute three minute segment where he breaks down balance sheet,
Speaker 1: income and expense and really play it several times because
Speaker 1: you can get into a lot of trouble not understanding that.
Speaker 1: It's the skeleton that gives you the structure and the
Speaker 1: integrity to hang the muscle, the heartbeat, the blood flow,
Speaker 1: the skin, the look, the clothes, the feel, the mouth,
Speaker 1: the vision. All that has to ride on a very
Speaker 1: solid skeleton. Or your you're cock this fuck tutus and
Speaker 1: that's French. You can figure that out for yourself. Cock
Speaker 1: this fuck tutus. All right, Brian, you and I met
Speaker 1: were introduced in a crisis, and let's unpack that a bit.
Speaker 1: Because rainbows only follow storms, you learn a lot about
Speaker 1: somebody how they manage tough times. And I called Brian
Speaker 1: without getting into the background, it's not important. We were
Speaker 1: having a management change in the middle of a crisis.
Speaker 1: And I remember I was in New York City in
Speaker 1: a hotel room, middle of the after late afternoon, preparing
Speaker 1: to go to the airport. We had a we had
Speaker 1: an emergency meetings of this or that and the other thing.
Speaker 1: We had a management change. Certain people were not there anymore.
Speaker 2: I couldn't. I couldn't didn't.
Speaker 1: Want to call uh, you know uh, certain folks that
Speaker 1: get get answers.
Speaker 2: I wanted to call the moneyman.
Speaker 1: So you and I really had just met, and I
Speaker 1: called you, and you one of our first conversations. And
Speaker 1: we also had a situation where the audit firm, the
Speaker 1: prior audit firm, as I recall, had quit.
Speaker 2: In the midst of all of this, we had government.
Speaker 1: Grants and private grants that we had to report on,
Speaker 1: and we were in the middle of an and we
Speaker 1: had to get a new audit firm, And you went
Speaker 1: and got the new audit firm while you're managing the
Speaker 1: crisis of the old audit firm like herding cats, are
Speaker 1: you know, you know, juggling, you know, like.
Speaker 2: Rearranging the deck chairs of the Titanic.
Speaker 1: Unpacked that period for the audience so they can understand
Speaker 1: how to manage in a crisis. And you gave me
Speaker 1: confidence by the way that it was going to be
Speaker 1: handled by it, telling me everything, the good news, the
Speaker 1: bad news, the warts and everything in between.
Speaker 4: Yeah, it's funny now i'm thinking about it. I think
Speaker 4: I've been here six seven months at that time.
Speaker 3: Yeah, and all of this has blown up.
Speaker 4: We didn't meet here in the interview process, but yes,
Speaker 4: we had not worked closely together. There were a couple
Speaker 4: of layers of management between us. But yes, so our
Speaker 4: prior audit firm. We had some disagreements of the accounting
Speaker 4: treatment for certain transactions of historically what they wanted to
Speaker 4: see versus what I thought was founded in true statements
Speaker 4: and guidelines. And so instead of restating the prior year
Speaker 4: they decided they just didn't want to issue new financials.
Speaker 3: So they quit.
Speaker 4: And then when they quit, this was I think late September,
Speaker 4: and we had to get our financials to the federal
Speaker 4: clearing house and that was by nine p thirty, So
Speaker 4: we had a couple of days. We thought we were done,
Speaker 4: We thought we were getting a report, and at the
Speaker 4: last minute, no, not only are we're not getting a report,
Speaker 4: we're leaving you not it's going to quit, balkboy, hindsight,
Speaker 4: the best thing that could have happened. You know, things
Speaker 4: happened for a reason. But what I did at that
Speaker 4: point was pulled on relationships. Who do I know in
Speaker 4: this world that owns the audit firm that trust me
Speaker 4: to say this is not a bad thing because the
Speaker 4: audi or find us this was just a disagreement.
Speaker 3: Let me walk you through my logic and my justification for.
Speaker 4: Why we ended up where we were and was able
Speaker 4: to secure an audit firm based on a relationship, because
Speaker 4: better audit firm based on prior relationships. They know. I
Speaker 4: knew what I was talking about in terms of getting
Speaker 4: the financials ready for an audit, and decided, yeah, we'll
Speaker 4: take you on as a client. So I literally dropped everything.
Speaker 4: The day that we got fired, got in my car,
Speaker 4: I called the audit firm partner and I was like,
Speaker 4: now you come see you.
Speaker 3: He's like, well, you know, you want to talk about
Speaker 3: it on the phone.
Speaker 1: I said, no, No, I didn't come to see you on.
Speaker 2: Your face.
Speaker 4: I needed to see you face to face. This is
Speaker 4: not This was before zoom, so this was just telephone.
Speaker 4: I was like, this ain't gonna work. We're gonna have
Speaker 4: to get in the across the desk from each other
Speaker 4: and have a conversation.
Speaker 2: So I ago about something like that.
Speaker 4: Yeah, I drove thirty minutes to their office and sat
Speaker 4: down and explained everything.
Speaker 3: But we were able to get through that.
Speaker 4: But John, you know what I learned is you've got
Speaker 4: to have relationships with all of your vendors, audit firms,
Speaker 4: all of those things, they're all based on relationships. You know,
Speaker 4: they trusted what I had done in the past to
Speaker 4: feel comfortable engaging with us on audit. But they still
Speaker 4: did the audit. They've got a verifight, you know, They've
Speaker 4: still got to go through the process. But we wouldn't
Speaker 4: have gotten to that stage without trust. And that trust
Speaker 4: is based on personal relationship capital. As you talk about
Speaker 4: a lot, don't think of your vendors just as vendors.
Speaker 3: They're your partners. They should be viewed.
Speaker 2: As a partner.
Speaker 4: They provide value to your organization. If they don't, you've
Speaker 4: got the wrong vidors.
Speaker 2: And we fell forward.
Speaker 1: We went from a local audit firm we had been
Speaker 1: with since we were founded in nineteen n eighty two
Speaker 1: in Los Angeles, where the partners that change, the people
Speaker 1: that changed. Someone knew us anymore. We had moved into Atlanta.
Speaker 1: I didn't know the people anymore. No one knew the
Speaker 1: people that that out a firm anymore, accounting firm. And
Speaker 1: they had no they had no they were getting a
Speaker 1: discounted fee to do the work. They just were not
Speaker 1: motivated to do it. And I thought they wanted out.
Speaker 1: And Brian had a different view of the world than
Speaker 1: they did. Let me phrase that, they had a different
Speaker 1: view of the world than the truth and so two things.
Speaker 1: So you can have professionals that have two different views,
Speaker 1: and sometimes.
Speaker 2: A rational lies is tell rational lies.
Speaker 1: They wanted out, they wanted to go, and they were
Speaker 1: trying to create reasons to go. And I don't know
Speaker 1: whether they were trying to hurt us or not. But
Speaker 1: what they originally went from, we have a disagreement, we
Speaker 1: have some questions. Then you can have what's called a
Speaker 1: material You could have a material disagreement, which is not good,
Speaker 1: which means that we don't trust. We think there's a
Speaker 1: problem with the financials themselves. The material what do they
Speaker 1: call that in accounting terms, it's material weakness.
Speaker 3: Material weakness and statement.
Speaker 1: Right, they wanted to restate the financials, which we might
Speaker 1: have gone along with, but then they just quit. So
Speaker 1: Brian's like, no, you guys don't understand what you're doing
Speaker 1: and you're not seeing this properly. And he was able
Speaker 1: to go to a much larger, much more prestigious firm,
Speaker 1: much more sophisticated, who said, oh, yeah, we get this,
Speaker 1: we understand this, and this is what you know anyway,
Speaker 1: blah blah blah, rest his history.
Speaker 2: But that could have killed us.
Speaker 1: I mean, that moment could have been the death of
Speaker 1: us if we didn't handle that properly. And it's been
Speaker 1: over thirty years before Brian got to us, thirty three years.
Speaker 1: There's been many moments. Had I had a president twenty
Speaker 1: five years ago who stole.
Speaker 2: I think it was seven.
Speaker 1: I figured it was seven than twenty thousand something. It
Speaker 1: was a lot of money at that time for us.
Speaker 1: And I remember he came and cried on my couch
Speaker 1: and I'm like, what you cried for? You either one
Speaker 1: who took the money. He defrauded us, And it was
Speaker 1: hard to canser fraud because he wrote the checks right
Speaker 1: back in the days where everything was a written check.
Speaker 1: And I think he had gone to one of my
Speaker 1: board members and said we were going bankrupt. It is
Speaker 1: twenty five, thirty years ago, and the boarder called me.
Speaker 1: He's like John, thinking me to get rid of this guy.
Speaker 1: He just showed up. You're going bankrupt. Before your president,
Speaker 1: we had an account. We had a bookkeeper thirty years ago,
Speaker 1: thirty years ago, Brian, who did not have a bank account.
Speaker 1: The bookkeeper I was trying to hire from the community.
Speaker 4: Down.
Speaker 3: Your heart can get you in trouble sometimes.
Speaker 2: Don't don't.
Speaker 1: I tell people, don't get emotional about your business. Do
Speaker 1: not make emotional decisions. It was completely emotional. I met
Speaker 1: this guy.
Speaker 2: He was so impressive and I was had a heart
Speaker 2: for people, and yeah, we'll hire him, hire him. You know.
Speaker 1: It was Rachel hire m put him in the accounting department, right,
Speaker 1: and we found out later very nice guy. He never
Speaker 1: made a mistake actually, but did not have a bank account.
Speaker 2: Kill you, couldn't you? Okay, Bye?
Speaker 1: Sorry, so many many stories over the years, but let's
Speaker 1: sort of go to the end now. Tell the audience
Speaker 1: where we are now from a physical health perspective, and
Speaker 1: why this Charity Navigator forced our rating matters so much.
Speaker 1: And as we begin to wrap up, what are five
Speaker 1: or ten really important things that the audience needs to
Speaker 1: think about as they're growing an enterprise? And how do
Speaker 1: you work with a crazy person like me, an entrepreneur
Speaker 1: like me with my hair on fire, is always about
Speaker 1: growth and new things and new partnerships.
Speaker 2: How do you keep up? You're in the back office,
Speaker 2: But you.
Speaker 4: Know, I'm really proud of what we've accomplished here at
Speaker 4: Operation Hope. Charity Navigator is a third party, independent organization
Speaker 4: that actually takes everybody all nonprofits tax returns which are
Speaker 4: publicly available, and they actually ranked the organizations on terms
Speaker 4: of financial health. Are you a healthy organization? But they
Speaker 4: also look at your transparency. Are you really opening up
Speaker 4: and letting donors, investors, whatever you've got see the true
Speaker 4: picture of what's going on, good, bad, and ugly.
Speaker 3: Are you showing the truth?
Speaker 4: So for twelve consecutive years we have gotten a four
Speaker 4: star rating, which is the highest rating you can get
Speaker 4: with Charity Navigator.
Speaker 3: On accountability and transparency.
Speaker 4: This last I think the last two ratings were perfect
Speaker 4: scores of one hundred in both categories.
Speaker 2: So what nonprofits conplain that?
Speaker 3: I think we're the last.
Speaker 4: They stopped giving me statistics on how many nonprofits actually
Speaker 4: had that track record of consecutive four stars. I think
Speaker 4: it was either in year nine or year ten, But
Speaker 4: we were in the top seven percent of all nonprofits
Speaker 4: in the.
Speaker 2: Of all the country a million.
Speaker 4: You're talking about American Cancer Society, big big.
Speaker 3: Organizations, and we're in the top seven percent.
Speaker 4: Making sure that we are consistently transparent and financially healthy.
Speaker 4: You know, we talked a little bit about program expenses,
Speaker 4: making sure that all of our donations are going to
Speaker 4: providing impacts to the communities that we serve. You know,
Speaker 4: you may hear these commercials on the radio, eighty eight
Speaker 4: cents or ninety cents of every dollar goes to supporting
Speaker 4: animal in our care for the American Humane Society.
Speaker 3: It's really important because donors do not want to pay. John,
Speaker 3: you may not like this. We want to pay for you.
Speaker 4: They to pay for what are we doing to actually
Speaker 4: change lives? That's right, you're not changing lives, but they
Speaker 4: don't want to give, you know, a home. If fifty
Speaker 4: dollars is going to be blown on a Christmas party,
Speaker 4: you know they want to see change in the community.
Speaker 3: So the charity navigator is very.
Speaker 1: Important to us, which is why, by the way, the
Speaker 1: audience and anybody running an operation. I don't have an
Speaker 1: expense account, Okay, I have an expense report. There's so
Speaker 1: much that getting into this, Brian is so much this
Speaker 1: almost could be a series. I don't have an expense account.
Speaker 1: I have an expense report. An expense report means I
Speaker 1: put it on my credit card. Expense account is it
Speaker 1: goes on the organization's credit card, and I'm even giving
Speaker 1: a budget or something. I think there's really a prescription
Speaker 1: for waste if you have expense account cards just willy
Speaker 1: nilly running around, and I think a lot of fraud
Speaker 1: happens that way. Expense report is I put it on
Speaker 1: my credit card, then I issue an expense reimbursement request
Speaker 1: and I've got to justify why I made that expense.
Speaker 1: And by the way, while you're at it, why you're
Speaker 1: answering these questions, Brian, you might as well tell the
Speaker 1: audience how often you tell me no on whatever it is,
Speaker 1: and why I have to empower you to tell me no,
Speaker 1: even though I mean technically your boss.
Speaker 4: Well, we always joke we want everything we do to
Speaker 4: be looked through the lens it was it published on
Speaker 4: the front page of the newspaper or the.
Speaker 1: Do you never want to do anything you don't want
Speaker 1: to see on the front page of New York Times
Speaker 1: in five years. You want everything you do to be
Speaker 1: transparent and you comfortable and cool with whatever it is.
Speaker 4: So if John Smith's an expense reimbursement report and something's
Speaker 4: on there, could it be a business expense yes, could
Speaker 4: it be a legal expense yes? But would it pass
Speaker 4: the muster of someone from the external going?
Speaker 3: Is that the best use of the donor's funds?
Speaker 2: And then sometimes sometimes I make a mistake.
Speaker 1: Sometimes my team we'll put a personal expense on that
Speaker 1: they didn't mean to you from a different card.
Speaker 4: Yeah, yeah, So there's a various reasons why I kind
Speaker 4: of push back sometimes But most of the time, John,
Speaker 4: I'm just trying to build the justification in case I
Speaker 4: get questioned on our financials that I understand what's in them.
Speaker 1: But sometimes he says, I mean, it's not just about
Speaker 1: expense reports. Sometimes he'll say no.
Speaker 2: About like try to give an example.
Speaker 1: Uh, I'll say I want to do X, and he'll say, no, John,
Speaker 1: you we really can't do that. But he'll say, but
Speaker 1: I know what you're trying to achieve. Let's do it
Speaker 1: this other way because that's more appropriate. Uh. Like you know,
Speaker 1: we may want to make a donation or maybe want
Speaker 1: to make a but there's no budget for this particular thing,
Speaker 1: or there's no you know. But we have an entity
Speaker 1: called Hope Ventures and we invested it's a real life example.
Speaker 1: We've invested in a company, uh, twenty five thousand dollars
Speaker 1: in this company, the coff that Black Coffee company, and
Speaker 1: and what Abara's going to do it? It was it
Speaker 1: was there was no budget for there was it wasn't
Speaker 1: really the cleanest way to go about it, even though
Speaker 1: it's completely appropriate in line with our mission. But Hope Ventures,
Speaker 1: that's exactly what Hope Ventures was set up to do.
Speaker 1: And so Brian's job was to say, no, we're not
Speaker 1: doing it that way. We can do it. We have
Speaker 1: the money, we have the resources where within budget, but
Speaker 1: we should do with that. We ain't talk about budgets.
Speaker 1: What does that mean we made to come back and
Speaker 1: do it budgets.
Speaker 4: We didn't talk about legal entities because Operation Hope is
Speaker 4: the umbrella company. We do have Hope Ventures, which is
Speaker 4: LLC that's one hundred percent owned by Operation Hope, but
Speaker 4: it's a separate legal entity. We had one for our
Speaker 4: properties that was a separate llcors Advisors. So you can create.
Speaker 2: Hope Hope Global forms.
Speaker 4: You can create legal structures to accomplish what you're trying
Speaker 4: to do, But then you've got to understand what activity
Speaker 4: can be under which entity in which one that falls
Speaker 4: in the best. Where me and John we're talking about
Speaker 4: the Black Coffee investment, I was like, yeah, that really
Speaker 4: doesn't invent the nonprofit Army used to be in our
Speaker 4: Hope Ventures entity to make that investment and be an
Speaker 4: equity holder in that company.
Speaker 1: So audience hear this. The entrepreneur is is really important.
Speaker 1: But the entrepreneur needs a banker and and a an accountant,
Speaker 1: a financial officer, chief and age. So the chief financial
Speaker 1: officer is the financial architect, the financial modeler for the
Speaker 1: for the enterprise. The entrepreneur is the driver, the hunter,
Speaker 1: the builder, right, And I keep saying every organization has
Speaker 1: to have a hunter, a skinner, and a cook and
Speaker 1: lands Triggs as part of the well. A lot of
Speaker 1: our folks are doing the cooking, delivering the product to
Speaker 1: the audience. The analysts are a lot of folks. Rachel
Speaker 1: daff Chief of staff, Bill Fair Uh, Tina Fair Uh,
Speaker 1: Deborah Collins, LaToya Hall Uh, Sir James Buchannan, There's a
Speaker 1: whole bunch of folks, uh, his accounting, Michael Smith. There's
Speaker 1: a lot of people in the engine room who are
Speaker 1: the skinners and Uh and I'm I'm the I'm clearly
Speaker 1: the hunter. And Brian's probably the chief skinner. Brian Bett
Speaker 1: the chief skinner. We haven't talked about budgets. You've got
Speaker 1: to have a budget, got to stay within it. We
Speaker 1: talked a little bit about what goes in a budget
Speaker 1: and the kinds of revenue. We talked a little bit
Speaker 1: about liabilities. I think we've covered generally speaking, it's really
Speaker 1: you got the boss. So the banker and the accountant
Speaker 1: and others keeps the entrepreneur on the road.
Speaker 2: The entrepreneur is going.
Speaker 1: So fast the entrepreneur can run off off the road,
Speaker 1: run into a ditch. So the banker's job is not
Speaker 1: just to say no, no, no, no, name no, or
Speaker 1: the account because you need the entrepreneur growing. Without growth
Speaker 1: the entrepreneurs, there's nothing but the banker and the accountant
Speaker 1: and the auditor and the auditors.
Speaker 2: To fuss about. Right, So the entrepreneur needs.
Speaker 1: The guard rails of the of the protectors of these
Speaker 1: rows of accounting and finance. Likewise, accounting of finance, legal,
Speaker 1: et cetera. Needs the fuel of a guy like me
Speaker 1: or a woman, an entrepreneur who's hunting every day, who's
Speaker 1: going don't do one, do both, otherwise you have busyness
Speaker 1: and not a real business. Most people think that movements
Speaker 1: are built on passion and speeches, but movements are actually
Speaker 1: survive because of systems, budgets and discipline. And Brian Bett
Speaker 1: runs the operational engine behind Operation Hope. Today we're talking
Speaker 1: about but what's behind the curtain and how the mission
Speaker 1: actually works in a real tangible way.
Speaker 2: We run it like a business.
Speaker 1: Brian as we wrap up, is there anything we could
Speaker 1: have gone on for another hour?
Speaker 2: Actually? Is there anything? Yeah? Is there anything you want
Speaker 2: to cover that we haven't?
Speaker 4: No. I mean I'd like to make a quick statement
Speaker 4: about what you said, is that you've got to have
Speaker 4: that dreamer, that entrepreneurial mindset to really look at future possibilities.
Speaker 4: Where I see my role is really protecting you to
Speaker 4: make sure you're making their best decisions with all the information.
Speaker 3: So pointing out risk. Just just because you have a.
Speaker 4: Risk doesn't mean we're not going to do something, but
Speaker 4: we need to be aware of it.
Speaker 3: So you know, my job is not to say no
Speaker 3: to John.
Speaker 4: It's really to point out and make sure we have
Speaker 4: a complete picture before we move into something.
Speaker 3: So it really does have to be a partnership.
Speaker 2: Sometimes he doesn't say no, which is fun. Sometimes anyway
Speaker 2: he protects me, he protects the organization.
Speaker 3: Yeah, but it really has to be that partnership.
Speaker 4: So you know, when you're looking at those two roles,
Speaker 4: they don't conflict with each other. They have to work
Speaker 4: together because, like you said, one without the other does
Speaker 4: not make a healthy organization.
Speaker 1: And then you've got the board of directors, which Brian
Speaker 1: also deals, which is a governance role, and Brian has
Speaker 1: to manage between operations, executive branch me and governance.
Speaker 2: He's got a he's got to work. And then the
Speaker 2: outside vendors.
Speaker 1: Like the added firm and accounting firm which may be
Speaker 1: different from sometimes and others to make in legal all
Speaker 1: these things. It's like herding cats.
Speaker 4: And all we're trying to do John on a daily
Speaker 4: basis is deliver on our mission. So yes, we think
Speaker 4: about real impact. It doesn't scale by accident. You've got
Speaker 4: to have those systems, you've got to have those partnerships.
Speaker 4: And then we didn't even get into you've got to
Speaker 4: have people that deeply believe in the mission. And I'm
Speaker 4: excited to say that. You know, Operation Hope just received
Speaker 4: an award for top Workplace for a nonprofit. So that
Speaker 4: means our happy. Our employees are engaged, they believe in
Speaker 4: the organization. They're being fulfilled here. So we've got Charity
Speaker 4: navigator on fiscal and transparency. We've got our employees recognizing
Speaker 4: us as a top workplace. We've got our partners that
Speaker 4: continue to invest in us because we deliver on our promises.
Speaker 1: Atlanta Business Chronicle keeps recognizing as one of the biggest
Speaker 1: nonprofits in all of Atlanta, and we're the largest big
Speaker 1: blackmail nonprofit in US history.
Speaker 2: And there's a lot of first.
Speaker 1: And we're I think we're just we've only just begun
Speaker 1: now adding hope AI to our work around financial literacy.
Speaker 1: Are there any takeaways that you have for the audience,
Speaker 1: any recommendations for founders, entrepreneurs, dreamers out there? Nonprofit people
Speaker 1: are trying to run a nonprofit, want to run a nonprofit,
Speaker 1: want to run a for profit?
Speaker 2: Pleas at nonprofit people see me. I think it's easy
Speaker 2: to do both.
Speaker 1: It's not easy, and it's expensive to have separate infrastructure,
Speaker 1: but you must. You cannot blend these two together. That's
Speaker 1: the best way to go to jail or get in trouble.
Speaker 1: Any suggestions you have as we wrap this up in general.
Speaker 4: Yeah, I mean, I think you've got to prepare. You
Speaker 4: can't go into it based emotion. You can't go into
Speaker 4: it without knowledge. And there are so many organizations out
Speaker 4: there here in at Georgia, we've got the Georgia Center
Speaker 4: for Nonprofits that will give you training on how to
Speaker 4: create a nonprofit, how to manageable ward out of you know,
Speaker 4: financial statements for non financial peace people so that you
Speaker 4: understand every aspect of it. So I would encourage you
Speaker 4: to get connected to all of these resources. Fully understand
Speaker 4: what you're getting yourself into. Because this sounds great. I'm
Speaker 4: going to start a nonprofit to do X, but do
Speaker 4: you really understand what it's going to take from a
Speaker 4: compliance standpoint, a framework standpoint. It may be a great idea,
Speaker 4: but I always want to get everybody knowledge before they
Speaker 4: get into it because it is so hard to get
Speaker 4: off the rails. And we want to make sure all
Speaker 4: of our companies have seed. So let's make sure we
Speaker 4: give you the infrastructure and the knowledge to do that.
Speaker 2: I love me some Brian Betts, and I trust John Homan.
Speaker 1: This is a this is a This is a brilliant dude,
Speaker 1: and I'm glad that I'm able to let the audience
Speaker 1: see and hear who he is.
Speaker 2: He doesn't get credit for all that he does. I
Speaker 2: love him so much.
Speaker 1: I made him part of the historic Founding Special Forces
Speaker 1: Team and the Rider Die Special Forces Team, my key
Speaker 1: group of leaders. And when I sold one of my
Speaker 1: companies a few years ago, you guys can watch this video.
Speaker 1: One of the people who I surprised who he didn't
Speaker 1: know was getting anything I gave.
Speaker 2: I gave everybody a new.
Speaker 1: Car, a car and plus some cash, investment, cash, whatever.
Speaker 1: And I surprised Brian with a car which I think
Speaker 1: was his dream car, and he is and sold it.
Speaker 2: I think I think actually likes that.
Speaker 1: But that's what I was able to do that in
Speaker 1: my for profit world to help people in my nonprofit world.
Speaker 1: But that's that's how much I treasure this guy. He
Speaker 1: really treats Operational like it's his own. He treats me
Speaker 1: like I'm family, and which means sometimes you have to
Speaker 1: tell family, let's do something this way versus that way.
Speaker 1: You have to empower people to give you constructive criticism.
Speaker 1: Otherwise they can't help you. You just have a bunch
Speaker 1: of yes people around you, and they're gonna get you
Speaker 1: into trouble. You can get yourself in trouble because you
Speaker 1: don't know everything. You may be smart is what you
Speaker 1: don't know that you don't know and you think you know.
Speaker 1: So Brian, thank you very much, great job you're doing.
Speaker 1: I think we need to have you back. I think
Speaker 1: there's so much weak ground we didn't cover. Once you
Speaker 1: think about Brian all the stuff we didn't cover. I wonder, Gee,
Speaker 1: it's gonna I hope we can get you know, forty
Speaker 1: five minutes for an hour. It is, this is we've
Speaker 1: run out of time and there's so much more. So
Speaker 1: think about all of a sudden we didn't cover that
Speaker 1: we should cover the next time and the audience. Go
Speaker 1: in the comments when you see out takes on social
Speaker 1: media and say, can you please address x Y and
Speaker 1: Z because there's some things that Brian and I might
Speaker 1: just assume that you know and we're we don't. Shake
Speaker 1: Tree tells me all the time, John, you got to
Speaker 1: make this simple. Don't assume that people know X Y
Speaker 1: and Z. Brian, last word from you.
Speaker 3: Yah, I'd be more than excited to come back and
Speaker 3: talk to your viewers and listeners. And it's just been
Speaker 3: a real pleasure.
Speaker 2: You know.
Speaker 4: I enjoyed my work here in Operation Hope, knowing that
Speaker 4: we're changing lives on a daily basis, not just giving
Speaker 4: a handout or giving it and empowering them with Big Lady.
Speaker 3: And that's something you can't take away as.
Speaker 1: Your dignity a man, everybody should want to have somebody
Speaker 1: as smart as Brian betts On on their side as
Speaker 1: their ride or die partner. He's making smart sexy. We're
Speaker 1: making dumb sexy for way too long. We need to
Speaker 1: make smart sexy again. Ladies and gentlemen. This is Money
Speaker 1: and Wealth on the Black Effect Network on iHeart Radio.
Speaker 1: And this has been Brian Betts in conversation with me,
Speaker 1: President Chief Financial Officer, and we even talk about what
Speaker 1: the presidency means. So much stuff of Operation Hope and
Speaker 1: what's behind the curtain of Hope, how it is a
Speaker 1: mission made real through management. Money and Wealth with John
Speaker 1: O'Brien is a production of the Black Effect Podcast Network.
Speaker 1: For more podcasts from the Black Effect Podcast Network, visit
Speaker 1: the iHeartRadio app, Apple Podcasts, or wherever you listen to
Speaker 1: your favorite shows.