Welcome to “Numbers don’t lie, they hide”

1. Welcome to “Numbers don’t lie, they hide” Training and Development Associates, Inc.

2. Numbers Don’t Lie, They Hide Financial Management for Homeless Grantees

3. Who Are We? • Presented by • Training & Development Associates, Inc.www.tdainc.org • As a subcontractor of the Corporation for Supportive Housing • Sponsored by • U.S. Department of Housing and Urban Development • Los Angeles Field Office Training and Development Associates, Inc.

4. Logistics • Manual and handouts • Exercises • Teams • Questions (the “Bin”) • Restrooms and telephones Training and Development Associates, Inc.

5. Who Are You? • Type of organization • Lead agency • Sponsor • Service provider • Your role • Executive director • Financial staff • Case manager • Another position Training and Development Associates, Inc.

6. Why Are We Here? • Different funding requirements and reports confusing • Grantees have questions about HUD’s requirements • Finance roles for staff and subgrantees can be confusing • Monitoring scrutiny plus new funding considerations • Reliance on outside “experts” leaves some in the dark • Programs rely on software they can’t interpret • Staff does not know the language or tools of financial management Training and Development Associates, Inc.

7. Workshop Goals • Participants in this session will • Understand the “nuts and bolts” of financial management and analysis • Know how to use “internal controls” to guarantee compliance with HUD and other funder requirements • Understand the “order of authority” and, therefore, what is required by HUD regulations, OMB Circulars and Generally Accepted Accounting Principles • Leave with tools and techniques to address financial management and know when to seek external assistance Training and Development Associates, Inc.

8. Performance Benchmark • Each participant will • Leave with at least 3 new ideas, techniques or tools to address financial management • Meet at least 2 new participants who can be their resource person, mentor or support network after the workshop Training and Development Associates, Inc.

9. Table Talk: Real vs. Ideal • Discuss the difference between the ideal-world and the real-world as it applies to financial management of your HUD homeless grant • Identify 3 items and provide the following • In an ideal world _____ • But in the real world _____ is what happens • Why the real world differs from the ideal world • Ways the real world can be more like the ideal world Training and Development Associates, Inc.

10. It’s Time for Bingo!

11. Financial Management Systems

12. The Order of Authority • GAAP • Congress • OMB/GAO • HUD • HUD Grantee Training and Development Associates, Inc.

13. Relationship of Federal Regulations *Federal Acquisition Requirements Training and Development Associates, Inc.

14. Homeless Program Fiscal Management System Cash Management Accounting Regulations Financial Reports Procedures Internal Controls Documentation Budgeting Policies Auditing Monitoring Financial Management Training and Development Associates, Inc.

15. Financial Management Constant process of safeguarding financial assets of organization, whether for-profit or nonprofit By instituting policies and practices that maintain and increase the value of assets for overall benefit of the organization Financial Analysis Systematic technique for evaluating financial health of organization By quantifying information and comparing that information to similar organizations in the field Setting the Stage Training and Development Associates, Inc.

16. The Importance of Financial Management • “Fitting in” with other funders • Better planning • Gaining allies • Raising your “match” • Sustaining future growth Training and Development Associates, Inc.

17. Fitting in With Other Funders and Better Planning • Funders (private and public) look at financial management to make investment decisions • Solid information helps grantees to • Realistically project the future • Seek funding for that future • Plan more accurately • Financial management is part of a multi-year planning process • Operating like a business helps organizations to • Increase program services • Not always be obsessed with raising more funds Training and Development Associates, Inc.

18. Fund Accounting • Your grant may be one of many funding sources that your agency has • Multiple funders leads to “fund accounting” • Your financial system must account for the requirements of all of funding streams • While many of the requirements have a higher authority than HUD • HUD is the funding stream that we focus on Training and Development Associates, Inc.

19. Example of Fund Accounting Training and Development Associates, Inc.

20. Gaining Allies • Who is financially responsible for the viability of your organization? • Your board of governance begins to own the program as they understand their liability and responsibility • External funders gain confidence in your organization as you comply with the norms of the business world Training and Development Associates, Inc.

21. 100% Equals 100% To serve 100% of the HUD-eligible clients projected in your technical submission and approved budget… With 100% of the projected HUD-eligible activities… You must raise 100% of the total project costs (HUD grant and match)… Otherwise, you are either not serving 100% of the clients or not providing 100% of the activities Training and Development Associates, Inc.

22. Keys to a Successful System

23. Who is Involved in Managing Your System? • Board of Directors • Local community development staff • Elected officials • HUD • Government staff • Other investors • Accountants Training and Development Associates, Inc.

24. Fiduciary trust Payment of taxes Government filings Cash flow Fund accounting and reports to funders, including HUD Service delivery Internal financial controls Reports to committees Legal contracts “The books” Construction…if? Future planning and financial projections Staff Responsibilities Training and Development Associates, Inc.

25. Board Responsibilities • Building the agency’s financial capacity • Raising the funds to maintain the organization long-term • Budgeting funds productively • Managing funds wisely • Reporting on funds raised • Supplementing budgets • Evaluating agency’s financial performance Training and Development Associates, Inc.

26. When Do You Need An Accountant? • Benefits justify the costs • “Too many hoops” • Adjunct staff and business partner • Fund accounting required • Funders’ requirement Training and Development Associates, Inc.

27. What Services Should An Accountant Provide? • Advice on tax matters, unrelated business income, tax questions • Preparation of tax forms • Quarterly IRS Form 941 • Quarterly federal, state and local government tax filings • Annual income tax returns and/or 1099’s • Analysis of management activities and advice Training and Development Associates, Inc.

28. What Services Should An Accountant Provide? • Assistance in establishing financial management systems • Collecting grants, outstanding revenues and “fees for service” • Control of inventory, asset purchases and cash • Recommendations to cut expenses, increase cash flow and price services • Assistance in preparing the organization for long-term growth • When can the agency afford new staff? Training and Development Associates, Inc.

29. Components of a Financial Management System

30. Why a Financial Management System? • Required by HUD and OMB • Systems required to meet certain standards • Control and account for funds, property and other assets • Identify source and application of funds • Allow accurate, timely and complete reporting • Minimize time in transfer of funds between parties • Addressed through policies, procedures, practices and personnel—the “4-P’s” Training and Development Associates, Inc.

31. Ineffective results in Major audit findings Negative publicity Funding withheld Effective results in Sound management decisions Documentation supporting program activities and expenditures Knowledge of regulations, policies and procedures Strong accounting system Good internal controls Financial Management System Training and Development Associates, Inc.

32. Components of Financial Management Systems • Uniform administrative requirements • Cost principles • Audit procedures • Procurement standards Training and Development Associates, Inc.

33. In The Final Analysis… • Like it or not, financial management is a requirement of your grant • We need to learn to appreciate it, rather than fight it! • Use source documents for guidance • Regulations • 24 CFR Part 85—Governments • 24 CFR Part 84—Nonprofits • HUD’s desk guides • OMB Circulars • HUD’s Monitoring Checklist • Exhibit 13 – 8, Items 1-12 Training and Development Associates, Inc.

34. Frequently Asked Questions Who? What? How? Under SHP

35. Supportive Housing Program • One component of the continuum of care strategy for homelessness • Outreach and assessment • Immediate (emergency) shelter • Transitional housing (with support services) • Permanent housing (with support services) • Enacted in the McKinney-Vento Act Training and Development Associates, Inc.

36. Answering the Important Question: What is 3-6-8-8?

37. National Objectives • 3 goals of HUD’s homeless programs • Help participants obtain and remain in permanent housing • Help participants increase skills and/or income • Help participants achieve greater self-determination Training and Development Associates, Inc.

38. HUD Objectives National Targets • Create new PH beds for chronically homeless persons. • Increase percentage of homeless persons staying in PH over 6 months to 71%. • Increase percentage of homeless persons moving from transitional housing into permanent housing to 61%. • Increase percentage of homeless persons becoming employed by 11%. • At least 390 CoC’s will have functioning HMIS. Training and Development Associates, Inc.

39. Program Components • 6 types of projects • Transitional Housing • Permanent Housing for people with disabilities • Supportive Services Only • Safe Havens • Innovative Supportive Housing • Homeless Management Information Systems Training and Development Associates, Inc.

40. Eligible Activities • 8 ways to spend SHP funds • Acquisition • Rehabilitation • New construction • Leasing • Supportive services • Operating expenses • Administration • Homeless Management Information System Training and Development Associates, Inc.

41. Acquisition and Rehabilitation • Purchase and/or rehabilitate all or part of building • Used for housing and/or services • Pay off a current mortgage (lump sum) • If not previously used for HUD • Funding limited to between $200,000 and $400,000 • Higher amounts applicable to high cost area • 50% cash match obligation • 20-year use restriction Training and Development Associates, Inc.

42. New Construction • Newly construct building for housing (not services) • Funding limited to $400,000 • Covers both land and building • Funds cannot be used for demolition • Must demonstrate costs are less than for rehabilitation • 50% cash match obligation • 20-year use restriction Training and Development Associates, Inc.

43. Leasing • Leasing building for supportive housing or supportive services • Portion of building, entire building or multiple buildings • Not building already owned • No mortgage payments or building operations • Pay rent for individual units • Paid directly to landlord • Units must meet housing standards • Rents must be reasonable • No match requirement for leasing Training and Development Associates, Inc.

44. Supportive Services • For new grantees, cost of new or increased services • For renewals, cost of continuing services • Salaries to providers and other direct costs (actual direct staff time) • Services aimed at moving homeless to independence • Offered while part of project • For transitional housing, services may continue for 6 months after graduating • 20% cash match obligation Training and Development Associates, Inc.

45. Operating Expenses • Costs of operating facilities • Only for new project or expanded portion of existing project • Supports function and operation of project • Often referred to as indirect costs • Standards in OMB Circulars A-87 and A-122 • Pro rate costs to individual funding sources • Eligible for all components except supportive services only • 25% match obligation Training and Development Associates, Inc.

46. Administrative Costs • You may request up to 5% of grant to cover administrative costs • Costs associated with carrying out the grant • May be split between lead agency and sponsors • Costs associated with carrying out components ineligible • No match requirement for administrative costs Training and Development Associates, Inc.

47. Homeless Management Information System • Computerized data collection tool • Designed to capture client level system-wide information • Costs to implement and/or operate a computerized data collection tool • Characteristics and service needs of the homeless • Funds cannot be used for planning or developing new system • 20% cash match obligation Training and Development Associates, Inc.

48. HUD Eligible Activities • For Shelter Plus Care, remember: • Housing Assistance is for the term of the grant • Service Match is $1:$1 during the term of the grant • Service match must be for HUD-eligible activities • Administration is 8% of the grant ( after the housing assistance) Training and Development Associates, Inc.

49. Eligible Clients • 8 eligible categories of homelessness • Not all homeless people are HUD-homeless eligible • Not all clients with disabilities are eligible for permanent housing • If a client is not eligible, all costs associated with that client (including administration and match) are not eligible Training and Development Associates, Inc.

50. Procurement, Match and LOCCS