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DAY 1-MORNING SESSION
SEPTEMBER 30TH, 2020

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>> TIM FUCHS: The last thing I wanted to do, really, was introduce our presenters. This is an updated version of a training that we've done a number of times through the years. It's one of my favorite trainings. It's also, as I mentioned, it's one of our most popular trainings. And I am so happy to have John and Paula back with us this week to share their knowledge and expertise with you all. 

John and Paula are not only, I think, the two best people to lead this training, but they've done this training together through the years, and they're an excellent pair in their rapport, in their deep knowledge of financial management and regulations for CILs. And in the way that they complement each other with their different experiences, right, John being a trained CPA, having worked with nonprofits, including Centers for Independent Living for years. Paula, of course, being the Technical Assistance Coordinator for the IL Net [phonetic], headquartered out of ILRU and working for Centers for Independent Living and statewide independent living council’s day in, day out for decades and is a true expert in regulations, the law, ACL's approach and perspective on these issues. And so, the way that their knowledge dovetails is really second to none, and it's just a pleasure to work with them. 

If you've participated in any of the trainings or webinars that they've done with us, you know that's true, and if it's your first time joining us, I hope that you'll agree by the end of the week. John and Paula, I know you put months of preparation into this training, into the updates, so that everything we're going to go over this week is up to date and current, especially in this kind of tumultuous environment we find ourselves in. Brand new regulations and interpretations around CARES Act funding and everything else we're dealing with. I can't thank you all enough. And not only the training content, right, but your patience and flexibility as we have taken this from an in-person training in May to possibly a delayed training to any virtual event here in September. Thanks so much, and I look forward to being with you all this week. 
	
With that, I think I'm going to turn it over to John and Paula. I'm going to also click back to the chat. As I've been doing the intro, one of the things I haven't been able to do is keep up with that chat in real time. But my role will transition now as I'm able to refocus and support you all because I will be with you all week, not only as your host, but also as moderator so that I will be following your questions as they come in through the platform and the other question options that I described, feeding your questions to John and Paula and helping you all troubleshoot any technical issues or concerns that you have as we go through this. 

So, all right, John and Paula, I'll turn it over to you to continue our introductions and opening this morning, and I'll click over to the chat and see if anyone in our audience needs support.

>> PAULA McELWEE: Sounds good.

>> JOHN HEVERON: Thanks, Tim.

>> PAULA McELWEE: Thank you. We want to make sure that throughout this conference your questions get answered. Tim has told you some great ways to figure that out. We want to take a different look at this and we want to ask the question: What answers do you need that makes this worth your time? There are some pretty big chunks here for the next few days. What answers or insights are going to be worth that to you? That's one of the questions that we want to ask you so that you ask those questions and make sure you get those insights or answers.

>> JOHN HEVERON: And we want to make sure the ideas can be implemented. So if you had what you thought were good ideas from prior webinars here or other webinars on similar topics that aren't really easy to implement, we can help with that as well.

>> PAULA McELWEE: You know, some of you are executive directors who want to talk about financial matters with your board, of course, sometimes with funders, sometimes you contract with an accountant and you want to have an informed conversation with them about how you want to set things up or what you would like to accomplish or your staff, to your accounting staff. What will make you more comfortable to feel like you have the knowledge you need to have that conversation and have that be fruitful or useful for you?

This is for Centers, this training, just as an aid. We did a SILC webinar on this same topic that was more specific to SILC. There are some differences between the two. We're really focused on Centers here. If you're a SILC, there's a training link for you. If you're not a SILC, if you're a SIL, hopefully this will be targeted to, we hope, exactly to what you need to see.  

>> JOHN HEVERON: So what you will learn here, we're going to be talking about internal controls that will be designed to help you protect your assets and protect your reputation.

>> PAULA McELWEE: How do you monitor those? How do you make sure that those controls are in place and working, not just written into your policies, but actually functioning in your center?

>> JOHN HEVERON: And why don't you continue, Paula?

>> PAULA McELWEE: We're also going to talk about how the ACL, the Administration on Community Living in the Office of Independent Living Programs, how do they audit centers, and how do you prepare for those audits? Because that's the kind of thing that you may find yourself actually dealing with hands-on. They've rolled out their system and have begun to do audits, and your center may or may not be one that's audited in the future.
>> JOHN HEVERON: And we'll talk about what can go wrong with nonprofits and how to prevent those things from happening.  

>> PAULA McELWEE: How you're responsible for security. You know, somebody has to mind the shop, take care of it, that things are secure. So how does that happen?

>> JOHN HEVERON: Techniques for developing a budget will be later this week, but we will be talking about that.

>> PAULA McELWEE: And how do you request money and document your drawdowns and your advances? We're going to talk a little bit about that because cash flow has been something, I hear anyway, from some of you that you want to make sure that you have good cash flow. We'll talk about some of those things.

>> JOHN HEVERON: In the survey, it sounds like cash flow was a real issue for some people. We'll also talk about how to recognize and reduce the possibility of fraud.

>> PAULA McELWEE: And what costs are allowable and not allowable. I get a lot of calls about that. We'll talk about how you determine that for yourself because we don't get to tell you that it is or isn't allowable. You have to figure out how to determine that. We'll help with you that.

>> JOHN HEVERON: We'll talk about how to distinguish direct from indirect costs, and this is important because some agencies have selected the 10% de minimis rate -- differentiating those is really important, so we'll get into that in some detail.

>> PAULA McELWEE: That has to do with how you allocate your costs across your different funding sources or cost objectives, and you need to have a consistent practice for how you do that. We'll work through that with you.

>> JOHN HEVERON: And we're going to talk about proper procurement procedures, and there are some recent updates that are positive. Good news, so we'll talk about those.

>> PAULA McELWEE: And how do you document all this? At the end of the day, how do you show your compliance with the federal requirements, and how do you show that you have controls in place to assure that compliance continues?

>> JOHN HEVERON: We'll talk about how you can dramatically reduce the possibility of ransomware and other cybersecurity attacks. And I've got a brand-new publication from a 
cyberinsurance carrier that talks about this, and we'll share some information from that as well.

>> PAULA McELWEE: That one is showing right now in our bullets as the number one concern.

>> JOHN HEVERON: It just pulled into the lead.

>> PAULA McELWEE: Popped up there, in the lead. We will talk a little bit about distinguishing advocacy and lobbying. We ended up with a lot of other content, so we're just going to touch on that, and we have other places you can go for more detailed information, but what lobbying activities are permitted with federal funds and what lobbying and activities are not allowed to do.

>> JOHN HEVERON: We're going to talk about the board's financial responsibilities. Many people join a board because they really care about the program, but they also have important financial responsibilities, and we'll emphasize them. That's the nature of this program.

>> PAULA McELWEE: Where do you find resources to help you with policies and procedures? As Tim mentioned, we have a sample policy and procedure manual that's one of those resources, but we have some other resources that you may find helpful as well.

>> JOHN HEVERON: And depending on your role, you may need to improve your understanding of nonprofit financial statements. There are going to be some changes to those statements, so we'll give you a heads-up on those as well.

>> PAULA McELWEE: And you're responsible for some annual filings. Just because you're a nonprofit doesn't mean the IRS isn't interested in what you do. We're going to talk about what annual filings you're required to do, what other filings you're responsible for.

>> JOHN HEVERON: We'll talk about the differences between employees and subcontractors, a really important issue. It's one that IRS is very concerned about, proper classification, and it can lead to fines and penalties if you don't get that right, so we'll make sure you're clear on that.

>> PAULA McELWEE: We're going to talk too about sub recipient monitoring, this especially has to do with how the DSE monitors the Part B recipients. We'll get into that in a little more detail with you as we go along.

>> JOHN HEVERON: We'll talk about simplifying your accounting system -- a favorite topic of mine. 

>> PAULA McELWEE: Yay! And where to get free stuff. Everybody wants a little of that, right, along the ways, so we'll pass along some free stuff. 
	
We have some definitions that we'll be using as we go through, and these are some that you may want to look back at as we get to that section, if you're not sure, you can go back to this set of definitions, and I think you'll find them helpful. 

The first one is the nonfederal entity. That's you. Sometimes you'll see in the regulations, NFE, nonfederal entity. So an organization that receives federal funding that isn't part of the federal government is a nonfederal entity in the regulations that we'll show you.

>> JOHN HEVERON: And we'll talk about subrecipients, subgrantees. And if you receive Part B funds, you are a subgrantee of the designated state entity that receives a grant from the federal government. So they receive -- the designated state entity receives a federal grant and they pass it along to your agency.

>> PAULA McELWEE: We'll also talk about cost objectives. If you're somebody who has been working with beyond understanding your indirect cost rate, or you're hoping to do that, that's a term you've heard us use before. It has to do with those group of services that are specific and that you apply certain rules to each cost objective, that has to do with allocating a cost, funding sources or cost objectives.

>> JOHN HEVERON: We'll make sure you're clear on the concept of modified total direct cost. That's a big deal, again, if you have a de minimis indirect cost rate. This is a select group of your direct cost, but not all of your direct costs, and we'll make sure you're clear on that.

>> PAULA McELWEE: And then your indirect costs, what are they? You identified some of those, by the way. How do you share them and pay for them fairly across the different categories that you have? How do you share salaries? How do you share occupancy costs like rent and utilities? How do you deal with the smaller costs? But how are those indirect costs allocated is a big part of what we'll talk about. 
	
So there's a survey. We asked: What keeps you up at night? What areas of risk are you concerned about? You've already plugged in your answers, most of you, but if you haven't, you can go over to the polls on your site there. And I was interested to see that fraud, John, was only 9%. Isn't that interesting?

>> JOHN HEVERON: That is. It is a concern. We -- a lot of bad things happen when there is fraud, so we still spend some time on that. But clearly, cybersecurity, cyberattacks, and ransomware are high on the list, and I mentioned that I just read a report from the largest cyberinsurance company in North America, in the headlines of this was that 41% of all cyberinsurance claims in the first half of this calendar year were ransomware. And the costs are -- the frequency of these are up substantially. The amount of ransom that is being requested has gone up quite a bit. They even named a couple of the groups responsible for a lot of this. So they know who it is, but it doesn't seem to be slowing down. They said in the first half of this calendar year, there was a 260% increase in the frequency of ransomware attacks and the amount demanded has gone up 47%.

>> PAULA McELWEE: Wow.

>> JOHN HEVERON: And also a spike in the number of cyberinsurance claims for funds transfer, in other words, taking money out of your bank account. It's grown between -- there are different types of this -- but some have grown 35% first half of this year; some 67%. So we're going to talk about this later, but interesting that that is your top concern in the survey.

>> PAULA McELWEE: It really is. The second is natural disasters. And an interesting thing that many of us are dealing with is a natural disaster on top of a pandemic. You already have the pandemic in place, and all those things you have to do related to that, and then you have a fire, or a hurricane or whatever the other -- the windstorm in Iowa and all the other natural disasters that are turning out still through this year on top of that. So how are you sure that you're ready for that and that your risk management is as good as it can be considering those kinds of situations?

Also, fairly high in the list was not having cash flow to make payroll. So that comes in as number three in your concerns. Number four is a tie between cost allocation and indirect cost rates and allowable and nonallowable costs. So those are questions that you'll often have about how will our funders see this situation and will it be allowed or not? Is it appropriate or not? So we'll get a lot of that [indiscernible] as we go along as well. 

Any other observations from that? John, I think that hits the high points.
  
>> JOHN HEVERON: I agree. You know, the specific one, which cost allocation is concern that the cost allocation or indirect rate is not correct, and we've done some webinars on this in the past. They're still available. But we are going to try to break this down a little differently, a little better this time, try to make it more straightforward because we want ideas to be implemented here. We don't want you to invest this amount of time without having something really tangible to take with you.
  
>> PAULA McELWEE: That's the most important thing about any of the training that we're able to provide to you is that once you hear it, you use it back home, or you're staying home I guess this time, you use it in your operations, because that's where the value is for you -- not just to hear us for a couple of days, but to actually get information that you can take back and use at your center.

>> JOHN HEVERON: So this next section, we're going to talk about environmental risk for nonprofits. We'll go through this fairly quickly here, but the point we're trying to make with this is that these are circumstances that exist that we can't really do too much about that probably won't change on a short-term basis. Where these come from is our AICPA, our national leadership organization. Every year they talk about environmental risks for nonprofits. We're going to go through these, and these are just some of the realities that you're facing. A tight job market at a time of increased complexity and risk combined with budget concerns.

>> PAULA McELWEE: Turnover, as for-profits, schools, and hospitals turn away some of their employees, and staff turnover showed up fairly high as well in the survey [indiscernible]  

>> JOHN HEVERON: These are exacerbated by complex accounting changes and new regulations that get issued and updated.

 >> PAULA McELWEE: Of course, you may want to look at defensive strategies when you look at these risks, maybe increasing salaries, increasing professional development. Building a strong culture, certainly, using outsourced accounting and financial resources might be useful to you as well.

>> JOHN HEVERON: Software changes, there's been a big push towards cloud-based software. Of course, as we're working remotely, all of the sudden, that seems to make an awful lot of sense. But it is different, and there is some risk because you're not in full control of these programs or even your data.

>> PAULA McELWEE: You might think about who uses cloud-based programs and for what. But I know QuickBooks is a cloud-based program or can be. You might find yourself using that. That keeps your data safe from just being locally located on your computers that might be either hacked or destroyed in a flood or whatever might happen on site, so it gives you that backup. We also see people using cloud-based -- the Microsoft Suite is -- much of it is cloud-based as well. It updates your software. You pay a fee to go through that. So think about what you use cloud-based programs for.

>> TIM FUCHS: Hey, Paula.
>> PAULA McELWEE: Yes.

>> This is Tim, and I said we were going to try to address some of these quick questions, and one thing I want to do this week is try to keep all of us honest in our promise to spell out acronyms. Paul is wondering what AICPA9a stands for.

>> JOHN HEVERON: So –

>> PAULA McELWEE: It's in the footnote on that slide, but what is it, John?

>> JOHN HEVERON: The American Institute of Certified Public Accountants. I'm not sure, without seeing the slide.

>> PAULA McELWEE: I went back to it. That's at the bottom of the slide.

>> JOHN HEVERON: I'm not sure what the 9 is. That might be a typo.

>> TIM FUCHS: Okay. Thanks.

>> PAULA McELWEE: Okay. What's SOC, because we're about to come up to that one too? In a minute.

>> JOHN HEVERON: So personally identifiable information, that's Social Security information, bank accounts, possibly donors or program participants that needs to be protected. You have a legal responsibility to do that. And Paula, do you want me to continue with these sections?

>> PAULA McELWEE: Sure.

>> JOHN HEVERON: As you start to outsource certain functions, more and more agencies are outsourcing financial reporting, and I'm seeing the opposite side of that in my industry. This is not something we as a firm are doing. Some of the accounting firms are saying rather than do the annual audit, we will do the accounting during the year. It's a more regular and probably a larger cash flow. They've seen it as a good thing for them. But, you know, it can be helpful, and it is occurring more and more. 

But, certainly, you're outsourcing things like your payroll and maybe your retirement plan administration. You need to be sure that the organizations you're working with are responsible and secure. And we talk about SOC 1 reports. SOC is a service organization -- my apologies. Service Organization Control. It's a report on controls in an organization that's providing service to you. So if you're working with a payroll processor, you should ask if they get a SOC 1 report. It will be a report of their controls and security. Ask to see a copy of it, if that's the case. So, again, as you transition to more and more outsourced services, find out if these organizations have a SOC 1 report. As you're comparing potential providers of service, see if one has it, the other doesn't. Of course, this is something that larger organizations will do more than smaller organizations.

>> PAULA McELWEE: I was just going to say that. Sometimes you're using a small mom-and-pop operation in your community, but it's still good to know what their controls are whether or not they've had the report done. 

>> JOHN HEVERON: Yes.

>> PAULA McELWEE: We also look at risks like COVID-19. It's unprecedented, the ways in which we've had to work, most of us remotely. Some people have been unable to do the work that they do, you know, the kind of work that they do. And so we've been having to look at how we do remote work and still have good internal controls. And I don't -- you know, I don't know how much you all think about this, but John and I know as soon as there is a change, that's when the opening comes for a problem to emerge. Because you've changed your practices and you've changed your policies, something's been set aside. A big risk is, can you still implement your good internal controls or have you forgotten about those right now and you need to go back to figure out how you're going to do them in this new environment.

>> JOHN HEVERON: Yeah, I'm sure there's been some of that, and as we've sort of slowed down and sort of taken a different approach with things, the cyberscammers have not slowed down; that they've actually increased their activity. They know that the controls at home, at least initially, aren't as good as the controls that you had in the workplace. So we're going to try to provide some guidance about having a good workspace and a good routine as well.

>> PAULA McELWEE: Of course, you want to make sure the critical software is available to all staff. A lot of you have upgraded your computers. Have you also made sure that you have all the same protections on those tablets or laptops that people are taking home as you did on the desktop that was back in the office? Anti-virus software, the same checks and balances for password protections and so forth. What are you doing to make sure everybody has the prudent [phonetic] software? 

A lot of you are looking at teams as part of that. Microsoft has a team’s version; Google has a meeting place. There are a number of different things that you can do to share with a select group. So make sure that you could do that. And, of course, you want to make sure that software is accessible to all of your staff as you develop it as well.

>> JOHN HEVERON: The nonprofit leadership groups are really stepping up to provide guidance as we go through these times. Techsoup.org actually has some resources, that's one of the sites for getting free stuff. In this case, it's not only, you know, tangible things, but it's also software training, things of that nature. So we'll talk more about that. But there really are some great tools out there.

>> TIM FUCHS: Hey, John, this is Tim. I just want to make sure that we got it correct in the captioning. It's techsoup.org.

>> JOHN HEVERON: I believe that's correct, Tim.

>> PAULA McELWEE: Correct. Well, when ACL comes on site, they have an instrument that you can look at, and we've posted some review of that instrument for when they come on site. But what they expect and audit for is found in the regulations. Sometimes you'll hear people talk about -- the super circular -- the name of it is gone, CFR 200, [phonetic] which is the --  

>> JOHN HEVERON: Uniform guidance.

>> PAULA McELWEE: Uniform guidance, yeah. And uniform administrative requirements is what it's called in HHS. Every department did its own version of those. They're basically the same. But they're found in 45 -- it's the Code of Federal Regulations, 45CFR 75. And the Administration on Community Living expects all of its grantees and subgrantees, which includes your center, to have policies and procedures in place for a number of things. And one of those is resource development. We'll talk a little bit about that because our situation is a little different for centers than it is for any other. Certainly about procurement, how do you decide on a vendor and make a purchase? Travel reimbursement, hiring of key personnel, there are some specific requirements you have to go through for approval of a new executive director, if you're not aware of that, talk to me later, and we'll get you the information. Expense reimbursements. How do you monitor that? How do you make sure that goes well? Make sure that the expenses are all appropriate and fit within the guidelines. On slide 13, John?

>> JOHN HEVERON: Yes, so they'll also look at how you develop your budget, how you review it periodically and update it as things change. They'll look at your compliance with cost principles, and when we say "cost principles," that's the uniform guidance and the uniform administrative requirements of HHS. They'll look at your compliance with your own indirect cost rate. Again, we saw that as a big concern, so we'll be talking about that. But just suffice it to say, this will be an area. If you have an indirect cost rate, even if you're using the 10% de minimis, that will be something they will look at. They'll look at your procedures and your actual -- I'm sorry, your policy and your actual procedures for records retention. They'll look at what you do to secure property and equipment.

>> PAULA McELWEE: And, of course, they're going to look at dealing with subcontractors or subrecipients, if you do. So if you have anybody that you're passing funds on to, they're going to want to look at that process. And there's also an executive order to buy American paramounting [phonetic] and you should be aware of that and know that you're required to follow that requirement. On slide 14.

>> JOHN HEVERON: They'll look for how you document payroll, hours worked, approve rates, and cost allocation, especially for payroll. Of course, payroll is your biggest cost. They may look at purchase orders, if you're using them. They may look at how you document your review of vendor invoices. So when vendor invoices come in, is there documentation that they were reviewed by somebody approved, if they wouldn't be subject to sales tax because of your nonprofit status, they would look for that. And, of course, allocation. So all of that should be on the invoice. Some folks use a rubber stamp, a physical rubber stamp, on the invoice to document they've done all that. 

>> PAULA McELWEE: They're also going to look at travel, whether or not your travel -- of course, this is not a big concern at the moment. Most people aren't traveling much.
>> JOHN HEVERON: Right.

>> PAULA McELWEE: But that you do the cost that's the most reasonable within your own policies and procedures about how that would happen and then usually the federal guidelines on per-diems or other amounts that you can take a look at. And as I mentioned earlier, how you hire key personnel because the Administration on Community Living approval is needed, and they're going to look at whether or not you receive that approval for key positions which would always be the Executive Director, sometimes with the fiscal person as well, because they like to make sure that the people most responsible for the money are checked out; that you have a process for checking references and checking the people that you hire. Slide 15.

>> JOHN HEVERON: They're going to look at how you allocate costs. They want to make sure that shared costs -- and shared costs aren't the same as indirect costs. These are generally costs that are shared between a couple of your programs, but not everything. So make sure that they're allocated and spread fairly among the funding sources. They'll look to see if you've got an approved indirect cost rate or a 10% de minimis or whether you allocate everything directly, and hopefully that's not what you're doing. That's very, very tedious and even questionable.

>> PAULA McELWEE: Yeah. They will look at what methodology you're using, though. Sometimes when I'm talking to a new Executive Director about their indirect cost rate, I say, "Well, what method are you using to allocate your costs now?" Because something should be happening. You should be sharing those costs fairly across your cost objectives, which funding source is how we use it in our head sometimes, but cost objectives, what we'll actually explain to you. And how are you doing that? Are you doing what you said you were going to do? Do you have an approved rate, do you have a methodology that you've submitted that said this is how you're going to know whether or not, you know, this cost, how this cost is shared. And then you follow your own procedure. You don't have confidence in what that methodology is and that it's being implemented, this is an area where we'll certainly help you pick up your ears and we'll spend a little time on that. 

>> JOHN HEVERON: We're going through these quickly. I want to point out, we're just talking now about what ACL expects from you and what they're audit for. We're going to double back and we're going to get into more depth in these areas. But right now, we'll just continue quickly here. Agencies are expected to properly account for and protect property and equipment.

>> PAULA McELWEE: And they may look at your process for how you record that, track that, have an inventory of it. Usually, these are the things that are capitalized. We'll go into more detail about that, but they require prior approval if they're $5,000 or more. But you may want to also track other things that you purchased so that you know exactly where things are and how they've been, you know, handed out, especially because a lot of people took stuff home, right? And 17.

>> JOHN HEVERON: So ACL, we'll check whether based on your spending the federal awards, if it's over $750,000, you would be required to have a single audit. Of course, they'll want to know if you did.

>> PAULA McELWEE: Yeah, and a single audit, if you spend that $750,000 in a given year, the likelihood of that has gone up a lot, because of the CARES Act funding. So even if in the past you didn't hit that $750,000 threshold, it is very possible that in the year that you're in right now that you're ending, or next year with the addition of the CARES Act funds, you may hit that threshold for the first time. So you really want to be aware of that so when we talk about that single audit a little bit later, I want you to think about that. So that's one of the assignments is take a look and estimate how are you going to end this year? How much federal money will you have spent at the end of this year, and how much federal money do you anticipate you will spend next year? Because that will give you a good guidance around whether or not you will be needing this special kind of audit, independent audit, in the future, so kind of keep that in mind.

>> JOHN HEVERON: One little bit of flexibility here. The calculation can be done either on a cash or an accrual basis. Doesn't make any difference what your accounting is. I assume most all of you use the accrual basis for at least your year-end financial statement. But you can use the cash or accrual basis for determining whether you are under that limit. We've seen that eliminate the need for single audit for a few agencies over the years. So it's important to know.

>> PAULA McELWEE: Especially the closer they are to that limit, the more likely that looking at it from both perspectives will give them an answer.

>> JOHN HEVERON: Yes.

>> PAULA McELWEE: Yes. Good. All right. Slide 18. So ACL may look at your resource development activities. This is an interesting one to talk about, and we won't be talking about it much later, so I want to talk about it just a little bit here. 

Resource development is a requirement for centers. But fundraising is not allowed. So you've got an interesting dilemma that you have to make a case about or you have to make decisions about locally. And that has to do with the fact you are required to do it. So how are you using federal funds for resource development? It's a requirement. It's an opportunity most nonprofits that get federal money don't have that option. So how do you do that? And you need to really keep track of how to do that successfully, because if you spend a lot of money on things that aren't -- you're putting under resource development, whether or not they fit there, but sometimes I'll see a lot of public relations types of things, like T-shirts, giveaways that you have at a table or so forth. 

You want to ask yourself what's the return. So as you're deciding what are the expenses that are classified as resource development, you ought to also be looking at, do I have a return coming on that, because the expectation is that you are increasing your resources. Not just developing funds for one time, but actually developing new resources. So you might identify as a specific resource development issue, who it is that you're meeting with in order to maybe receive Community Development Block Grant funds for your home modification program, so you're going to talk to the cities and counties that receive those funds, you're going to be meeting with them, you're going to be making proposals to them, you're going to meet with corporations to discuss sponsorships. Some of you may have a membership structure within your center so that you're soliciting memberships, so that you are raising funds that way. Fee for service is a big one. What are the kinds of things you're doing to develop fees for service? Grant writing certainly fits here, and there's a lot of grant writing that's done. 
	
On slide 19, the board minutes should reflect your goals around resource development. You should be able to show that it's a plan and that you're measuring its success. So think in those terms when you think about resource development. Remember, fundraising isn't allowed, so you should not call anything fundraising unless you're paying for it with discretionary dollars. So really think and make some decisions around what resource development is as opposed to fundraising. 

We don't have any guidelines at this point from our funder around the definition for resource development. There has never been one. What a lot of folks have said in response to that has been, "Well, then we get to decide for ourselves what that that definition will be, right?" You know, I would just urge you to make sure that you've thought that through; that you have a plan; that you have policies; that you're including it in your strategic planning or your work plan; that you have some things in place so that the board minutes or your budget or other things show what you're spending on resource development and then what return you're getting on resource development.
  
>> JOHN HEVERON: It is a reality that whenever you get into a new resource development activity that the costs happen right away. The income does not happen right away. So it's going to be a little skewed, at first. That should be reflected in your budget. That expectation should be reflected in your budget. But ultimately, you want to be able to show that you are recovering your costs and generating excess revenue. That's the objective.

>> PAULA McELWEE: Like I said, we don't know exactly how this is all going to be interpreted. This isn't addressed in the other information we have, but we did have some folks whose program performance report last year when it was received by the Community for Independent Living staff, there were some questions about whether events were really resource development or fundraising. So there is at least some conversation going on about whether there are some things that are now being done that should be classified as fundraising. We don't have any real clear picture of that yet, but it's good to know that there's at least conversation going around when is it fundraising? Or is it somebody's fundraising as opposed to resource development? So you'll want to really be able to really make your case, if you're reviewed, about why you thought this would develop resources and to show, hopefully, some progress on building your revenue as part of that. Go ahead, John.

>> JOHN HEVERON: Okay. I was just going to say, Paula and I not only are a good complement, but we've had some great trainers in the form of agencies that have reached out to us and told us about their problems or concerns or questions. And it makes us better. It makes us step back and say, "We need to dig into this," and then share the best practices here. 
	
One thing that we have found is that if you demonstrate that you understand the key concepts, you will have a better result when funders audit your programs. You need to be able to discuss internal controls over federal awards, documenting costs for cost allocation, and procurement procedures. If you can speak to these topics, then you're really going to fare a lot better. If you're not able to discuss these topics, if they seem confusing to you, the audit just isn't going to go well. That's the history we've seen.

>> PAULA McELWEE: And when we've looked at -- sometimes when we talk to ACL, sometimes we have that conversation afterwards, or sometimes it's even evident in the written report, and there are not a lot of them out there yet because they've just started this comp process, this process of doing a comprehensive review of the centers. But certainly, these terms are common terms that you see in the regulations on a regular basis, and you should see in your policies and procedures. It does not bode well if somebody gives them a blank look, then they say, "Well, tell us about your internal controls." You should be immediately able to say, "Well, we always have two people touch almost every transaction and here's my policy." So you can respond to that, not say, "Uh, internal controls? What are you talking about?" That's not going to bode well for you if you have that kind of response. 
	So if at any point you're uncomfortable about any of this, spend the time to educate yourself because it's going to help you with your conversations with your accountant, whether that's internal or external, and it's going to help you with your regular audit that you have annually, and it's going to help you if you are reviewed. In all of those situations, you need to know some of this basic language that is used. You need to know that you have the document costs and how did you document the cost allocation? These are basics that you need to be able to know. And not just you, of course, your bookkeeper or accountant, if you have an internal bookkeeper, that maybe is not as a CPA would be, they need to come up to speed on this if they haven't yet. You certainly need to be able to meet with program managers, you need to know how they make requests for fulfillment of goods and property. What is it that they do? Your policies will say all this, but you also need to have it that everybody understand what the policies say. And what one of the tools to help you is the updated manual.

>> JOHN HEVERON: There's a link to it right here, and it's really valuable. All of the areas we're talking about, or most all of the areas we're talking about, can be found in the Fiscal Procedures Manual. But we need to really emphasize that this is just the starting point. You need to make this thing yours. You need to make a commitment to it. So, you know, if you were to copy and paste it, you've made a lot of commitments, and you need to follow all of those. So don't just do that. That's not a good strategy.

>> PAULA McELWEE: Especially when it comes to the responsibilities of staff. We've put in titles for people. You may not use those titles. And you need to know that each of those people that's named to do the different procedures needs to be the one doing it in your place. So change it if it doesn't agree with what you're doing, you need to either change what you're doing or change the policy to be in agreement with what you're doing. Because if the two don't agree, it's as if the policies didn't exist. And what a reviewer will tell you at that point is, "Yeah, you have written policies, but you're not following your written policies." So it doesn't matter what you wrote. They will hold you accountable, by the way, to your written policies in addition to the regulations. They have the right to do that because you developed the policy, and it's supposed to be your operations, you know, how you actually operate. So if you don't follow those policies, that can also be cited in your review. Let me look. 

This manual does, we believe, cover virtually all the requirements, but the detail has to be real. You have to live and breathe and do what you said you would do in that manual. Did I go too far? I think I skipped one. There it is.

>> JOHN HEVERON: And we sort of said this, but it really is important. I guess we can say, Paula, that when ACL reviewed this program, that was one of their concerns that we really emphasized, the fact that you can't just copy and paste this policy and put your name on it. You really need to customize it for yourself. It will save you an awful lot of time compared to developing all of these policies, very significant time. And these are also great practices, but they need to be customized for you.

>> PAULA McELWEE: As Tim mentioned, they're available to you in multiple alternative formats on the web page that has to do with this training, so you should be able to access them there. Before we're done today, we're going to ask you to compare them to your own policies and procedures and identify if you've got some gaps going on there. So just kind of keep in mind that these are key, and they're really going to help you to get things going where they need to go.

>> JOHN HEVERON: So we'll go through these next slides very quickly because these are all in the manual, but after the introductory material, we talk about board staff and consultant responsibilities. You should ask whether any of your board members are uncertain about their responsibilities. Do they get involved in tasks that seem more appropriate for staff? What do you do? Do you make it a part of your regular board meetings to educate them? And so, again, you're going to find all of these in the manual.

>> PAULA McELWEE: Yeah, and you can use this for board training, by the way. There are some elements of this manual which you can pull out and actually spend to train the board on those responsibilities, that they have a fiduciary -- they have a financial responsibility to your organization. 

And then we also look at the key responsibilities of everybody else. What's the Executive Director do? What does the accountant do? An outside CPA, if you use them? What are each of those responsibilities? Now, you might think about this, though, besides the written policies, where else might you document these responsibilities? Oh, the job descriptions ought to be at least enmeshed with these requirements, right? You ought to be able to see that duplicated over here. All of the performance evaluation might look at some of these responsibilities and you'd be able to cross-check, right?

So when you look at an implementation, the implementation doesn't just mean doing the thing that it says in that policy. It also means it's consistent with your other practice across the board. They don't all have to be written in the policy. Some of them may be written in other places or duplicated in other places, but they better match or at least mesh. Slide 21, if anybody's following along that way.

>> JOHN HEVERON: So then the manual gets into internal controls with very specific procedures for accessing records, segregation of responsibilities. You're going to need to adopt your version of that based on your staff. You may not be capable of doing some of the things that are mentioned in the manual or if your staff is sufficient, you may be able to inject some even better controls that are mentioned here. But your policy should be very specific regarding how the duties between staff and even board members, in some cases, in the case of small agencies, will be used to create good internal controls.

>> PAULA McELWEE: They need to be specific enough that they can say, "Ah, you're doing what you said you were going to do." 

Understand the value of internal controls, why we do what we do. It helps to know what goes wrong. So we're going to tell you some of the things that we've seen go wrong. Things that have happened when people have stolen money or defrauded a center or another nonprofit that we're aware of. So kind of keep this in mind. Incoming receipts can be taken or deposited into an unknown account. Especially if they're unexpected receipts, like a contribution that just comes, and it's a surprise, somebody decides that they're going to put that in their own account, they endorse it to that account, and it gets moved, you know, to that account. And no one is the wiser because they didn't know it was going to come. So that always is a greater risk. But any incoming cash or check poses a risk.

>> JOHN HEVERON: If you have special events where cash is collected, often, there aren't good internal controls. And another technique is to generate a refund by overpaying a bill or by paying it twice, and the refund can be misused.

>> PAULA McELWEE: This one doesn't happen as much as it used to, but kickbacks of different kinds of payment or a gift to an employee because they chose a certain vendor. Sometimes the person who's giving the contract would give some kind of a kickback. You know, yes, I'll clean your offices. If you pick me, I'll also clean your house once a month or whatever.
  
>> JOHN HEVERON: Check signatures can be forged and improper payments made. Banks don't really check. They've got your signature, but they don't really check that. They can't. Phony invoices can be generated and submitted for payment.  

>> PAULA McELWEE: Payroll checks can be prepared for employees who no longer work for the organization or who are fictitious, especially those of you who offer a large personal attendant program where you don't know all of your employees. This would be a list, and you probably need a check or a balance process for double-checking all new employees as they come on payroll so that you can avoid any of this. And then also you need to know when they're no longer working so that you can avoid them continuing to get checks. 

We mentioned fundraising events. Credit cards can be used for improper charges or credits can be made -- from that over payment, John mentioned a minute ago and moved to the wrong place. 

Supply purchases, I love this one. Somebody goes out to get all the supplies, and then they bring them all in, and they leave in their truck the things they needed for home. While that's small, it's still an evidence of what an employee believes about what they can or can't do, what they think is right or wrong. So it's a pretty good evidence. Are you checking against them? When somebody comes in with the groceries, you just sit down real quick and check off everything on that receipt, so that somebody has checked the items. Especially if you do a lot of purchasing right now. There's a lot of purchasing going on with the CARES Act of household goods and food. And how is that being accounted for so that you know that somebody isn't skimming some of those supplies off for themselves instead of going through whatever the usual process is? 

And facing various risks in the form of fraud, theft and errors on the part of insiders that misuse technology to steal assets and personal information. And personal information, John mentioned some of them, but you have the bank accounts of all your employees if you do direct deposit.

>> JOHN HEVERON: Right.

>> PAULA McELWEE: So it's a pretty big number of things that can be stolen and used. I don't know about technology creates efficiency, some days, we're not so sure. [Laughter] But also, opportunities for fraud. People who understand it can go in and change the record in different ways.

>> JOHN HEVERON: So the payee or the amount can be altered on a check, and it's important that you follow up, that you check these and follow up quickly, because banks have liability if you get to them quickly. If you don't report it promptly, the bank's liability is reduced, especially if there are multiple issues that you haven't brought to their attention.
  
>> PAULA McELWEE: One of the things that I urge people to do is to have someone else do the bank reconciliation, which can be your check register against the images on the account, right? So just think in terms of, okay, you're printing out a check register, has a check number, who it's to, the amount. And the thing that's usually changed is the payee or the amount. So if you're running down those images on your account, you can actually check all of those checks. And you guys don't write that many checks anymore. It's not that big of a deal. So it's really an important thing for you to take the time to do. I know, I'm preaching. I'll stop. 
	
But anytime there's fraud related to all this, you have to catch it soon or your liability increases. Be sure that you're checking because if you're not checking, then it's problematic. Including your mobile devices. If you're depositing checks from your phone, then that bank account is on your phone. Does your phone have sufficient security? I thought mine did, but my grandson -- he's three -- my grandson can do things on my phone sometimes that I don't understand how he got in there. Maybe his face looks like mine. Do you suppose it's the facial recognition?

>> JOHN HEVERON: All right. The Association for Certified Fraud Examiners talks about the most common fraud schemes, which are billing schemes -- by the way, these are across all industries, but billing schemes for fictitious goods, improper benefits derived from a conflict of interest, and inflated or improper expense reimbursement, overstated hours, fake employees who don't actually exist or maybe have terminated but continue to get paid and that money diverted, theft of cash on hand, usually small amounts, but it can add up. And then intercepting, forging, or altering checks or electronic payments.

>> PAULA McELWEE: Well, that was a lot of hints for you about things that can go wrong. So I'm going to turn it over to Tim to tell us what questions are coming up.
  
>> TIM FUCHS: Absolutely. Thanks. This is Tim. I was just looking through them. We've got some good ones. So just one second, I'm going to pull these out to a different document so I can read them a little easier. Thanks again for bearing with us this morning, again. Finally -- it took me about an hour a half. I'm finally able to send emails again. In fact, I'm preparing to respond to a few of you. If you wrote to me this morning and asked for the confirmation and felt like I was ignoring you, I was ripping my hair out trying to get it back to you all. I think most of you got it before I got blocked, but if you had an email into me and you didn't hear, that's why. And I just about ten minutes ago, I got the ability to send emails again, so thanks for your patience. 
	
Let's look at these questions, though. We've got some good ones here. I'm going to start with the oldest ones. Debra asked, right as the training was beginning: My center is state funded, so is this information even going to be relevant to me? I think you've already given some examples of this, but Paula, could you just talk about some of the specifics for state-funded centers and how we'll try to spell that out during the week and what will still apply to them?

>> PAULA McELWEE: Most things still apply unless we say with federal funds. But even that probably still applies. Now, what state funding is varies from state to state, so I can't be certain that yours is state general fund dollars. State general fund dollars would have their own requirements that will be very similar. But they will have their own requirements and their own -- you should get from them the requirements, assurances, and stuff with the grant, and that will clarify that for you. But if it's Part B funds that flow through the DSE as a part of the state plan for independent living, those funds are still federal dollars. If it's innovation and expansion funds, they're still federal dollars. The funding that you're getting from VR for either a school age program or other kind of job placement, it's still federal dollars so the fact that most of the money we get is still federal and not state general fund would mean that most of these things would still need to apply. 

The DSE, the Designated State Entity, that some of that money flows through may add their own requirements, but at a minimum, they would use the requirements that we're talking about, so all of these will be applicable to you.
  
>> TIM FUCHS: Okay. Thanks. All right. To the next one. So Diane is asking: Can some employees and board members with disabilities receive services from their SILC?

>> PAULA McELWEE: Absolutely. It is not a conflict of interest. Even though sometimes people want to say that. It's not a conflict of interest unless you give them something special that nobody else gets.

>> TIM FUCHS: Great. Next question from Jackie who is wondering if you could provide an example of an SOC 1 report or point to a resource. I know you gave that acronym when you said it. If you could remind us of that, too.

>> JOHN HEVERON: Let me look up for one over the break. That would be an easier way to do it, Tim.

>> TIM FUCHS: Okay. We'll get back to you on that. Two questions come from Paul, the first is: Do expenditures of subrecipient funds such as Part B funding count towards the $750,000 threshold for a single audit?
  
>> JOHN HEVERON: Yes.
  
>> TIM FUCHS: They do?
  
>> JOHN HEVERON: Yes. That's federal money. Regardless of the fact that it passes through the state, as Paula just said, those are still federal funds.

>> TIM FUCHS: Paul's next question was really about the differences between fundraising and resource development, which I think you circled back on this and gave some good examples after Paul submitted this. If Paul or anyone else has follow-up questions, just let us know. But I think we did cover that. 

Diane, related question, are pins, bags, T-shirts with a SILC logo an allowable resource development expense or are they considered an unallowable advertising expense?

>> PAULA McELWEE: Good question. You have to make your own case for what is allowable and not allowable. Can you make a case that that's outreach and you can do better outreach if you give away those items? I've seen people who have done that, especially at youth events, because youth won't come to your table unless you have stuff. That's what they tell me. Can you make the case? Because if at the end of the day somebody audits you and looks at that on the surface, especially if you categorized it as public relations or advertising. They're likely to say it's not allowable unless you make a case for why it is allowed. Outreach is an allowable expense if you can make a case that this is truly outreach, then maybe you can make a case that it's allowable. But if it falls under public relations or advertising, it is not an allowable expense. John, does that fit?

>> JOHN HEVERON: Yes, there are some exceptions even for advertising. We're going to talk about that later when we get into allowable cost categories.

>> PAULA McELWEE: Tim, we lost you. You're muted.
  
>> TIM FUCHS: Sorry about that. Trying to use my spacebar to click unmute, and apparently it didn't work. Thanks, Paula. I was just saying the next question comes from Susan, who is wondering: Is there a benchmark for return on investment for development dollars? Is there a timeframe for when we should see a return on investment, a best practice or an average?

>> JOHN HEVERON: We get more information about fundraising than resource development. So in the fundraising world, they usually talk about a cost not to exceed one-third. But that's once your program has matured. And it's not at all uncommon that your costs will well exceed your revenue in the early stages.
  
>> TIM FUCHS: Okay. Good. Paula, true or false from Lydia: For Centers for Independent Living, resource development will create program income.
  
>> PAULA McELWEE: Oh, good one! The answer is, it depends. Because if it completely is self-sustaining, then that's not program income. So if you get to the place where the resource development results in a project that is self-sustaining without putting any federal dollars into the staff that sustain it, without putting any federal dollars into anything else, including indirect costs. So if it gets to the place where it pays for itself, including indirect costs and all staff time, then it's not program income. But if you use indirect costs and staff time and it's paying with federal dollars, then it is program income. And we'll talk about program income slightly more before we're done, but that's the short answer.
  
>> TIM FUCHS: Okay. Thanks. So let's see. Michael asks: If you utilize federal funds for expensing resource development costs, what is the appropriate way to record the income? You essentially just answered that one. I'm sorry. I hadn't had a chance to read that one yet. 

Okay. A couple of people had problems downloading the fiscal procedure manual. Go ahead and give that another shot. If you still can't do it, I'll be happy to email it to you now that I can use my email again. How exciting. Cheryl said -- this is an interesting question -- Cheryl's asking: Would the fiscal policy template be a good starting point for a brand-new SILC getting set up? I think that would really be a target demographic for that policy manual, but Paula, I'm interested in what you think about that.  

>> PAULA McELWEE: I think so. We're in the process of kind of analyzing some other things too that are helpful for new people, which often, new people coming into a center creates that new need for looking at policies and procedures, especially if they come into a not real sophisticated situation. I don't know. I think I'd certainly start there. We don't have a lot of new centers starting out, but I'd certainly offer it to the one or two that I'm aware of, early on, as a resource. So sure. You can compare your current policy to our policies and edit your current policies or you can get rid of your current policies and start with outs and still edit them. You could do it either way, so I guess it would work either way.

>> TIM FUCHS: This is Tim. Any organization that wanted to use that, you have to go through it with at least your finance committee, maybe your board to some extent, especially on policies you're not sure of, and make sure that it's specific to your organization and will work for you. No matter whether you've been around for 35 years or whether you're brand-new, it seems like it would be a good starting point as long as you know you have to go through that process with it. 

Okay. Next question is from Paul. Here's a good one: What standards for mobile device security should we be following, and how do we tell if our mobile devices are sufficiently secure to do mobile deposits or banking? John, do you want to take that one?

>> JOHN HEVERON: First of all, you should have some sort of password protection for any device that can access your organization's email, your organization's bank account, or practically speaking, your own bank account. Also, if you can access organization information, again, email, whatever, the device should be set up so that access can be remotely removed. And ideally, remotely removed without locking your phone up completely. So you still want to have access to your own information. I guess that's a little more complex than just having remote wipe [phonetic] access.

>> TIM FUCHS: Okay. Good. Thanks. All right. Next up, Dori was wondering if it's possible to print the closed captioning. Yeah, if you need a copy of the transcript for these sessions, there's two things I want to say. First of all, if you need that as an accommodation in place of notes or to review information, or you need that as a learning aid, I'd be happy to forward it to you. I should have those within a few hours. Now, we will post the transcript along with the final videos, but that post-production is going to take some time, so that would not be immediate by any means. If you want to request the transcripts, the easiest thing to do, unless you already put that into your accommodation notes when you registered is to email me, Tim@nicl.org, "I'd like a copy of the transcript," and I'll send those out to you all as a group when I get them. 
	
John, Gloria is asking: When it says approval for equipment purchases of over $5,000, is that per item? And is there a specific form we're to use to submit or request or can it simply be an email?
  
>> JOHN HEVERON: Well, it's generally on a per-item basis. Not necessarily always, but generally, on a per-item basis. And I just want to point out, that's the federal limit right now. Your policy, your internal policy, has to stipulate that that's your capitalization threshold too. So if your policy says $2,500, the fact that the federal limit says $5,000, you have to follow your lower threshold, your policy.
  
>> PAULA McELWEE: But as far as permission, usually, an email to your project officer is sufficient.
  
>> TIM FUCHS: Great. Okay. Thanks. Last question we have currently, and then I'll review how to ask questions for folks that joined late: Are there new regulations being put in the uniform guidance book for the CARES grant allocations? I don't think that's the case, but Paula, do you want to say anything about CARES guidance?

>> PAULA McELWEE: Yes, the CARES Act, there are not new financial regulations related to that, but there are changes that happen on a fairly regular basis, and we will talk about a couple of those as we go through. They're not CARES Act related, but there have been updates.

>> JOHN HEVERON: I've got something on that, Tim, that I'm going to want to take a look back at. There may be something new in the compliance supplement. I think there will be something new in the OMB compliance supplement for that.

>> TIM FUCHS: Okay. Thanks, John. We've got 12 minutes until our break. Those are the questions we've received so far. I wanted to quickly go over this. Obviously, you guys are making use of the "ask a question" feature in the media site platform, but there are a few other ways if that's not accessible to you or if you're not on the webinar. You can email your questions to me at Tim@nicl.org. If you're on the phone today, you can press star pound and it will actually raise your hand and we can unmute your line. As I said at the beginning of the call, I want to save that option for folks who are only on the telephone today as an accommodation just because we wouldn't have time to unmute everybody's lines for live questions, but if you can't access the other question options, that's a good way to do it. And finally, the StreamText link, where we're running the captioning at StreamText.net, there's a chat box there, and I'm seeing some activity there just in terms of people logging in and viewing, but you're welcome to submit questions or comments there, if you'd like me to voice them during our Q&A breaks or discussions.
	
So let me just give a minute, since I've just got those instructions out, and see if we get any other questions. Hilda reports -- this is interesting -- Hilda reports, Paula, that for a high-dollar amount purchase they were required to submit a -- in caps -- a large purchase request form.  

>> PAULA McELWEE: I haven't seen one, so I would love to if you want to send me a copy. That's the first I've heard of that. I just know you need the prior approval, but if they have a form, that's good too.

>> JOHN HEVERON: I wonder if that's in their own policy, they're being required to follow that.
  
>> PAULA McELWEE: Could be, or could be the DSE, the designated state entity that gets the money could be requiring it as well. It could be it's now being required at the Office of Independent Living Programs. I just had not seen it.

>> TIM FUCHS: This is Tim. That's very interesting. Hilda, if you would like to enter that in the chat or the questions, we'd love to note who that request came from.
  
>> PAULA McELWEE: And what the form looks like. 

>> TIM FUCHS: And Paula wants to see the form. 

>> PAULA McELWEE: Yeah, because I want to know if they're asking new questions. 

>> TIM FUCHS: Thank you, Joey. Joey pointed out; I misspoke when I was going through the question instructions. Star 9 to ask a question on the phone. Apologies. 
	
Jackie is wondering: When is that OMB compliance expected or is it already out, John, or do you know?
  
>> JOHN HEVERON: I'm not sure. The 2020 compliance supplement came out, but they didn't specifically address the CARES Act so there's going to be an addendum on that, and I'll see if I have any information.

>> TIM FUCHS: The plot thickens, Paula. Hilda reports that request came from their ACL program officer, and she's going to copy it to you.

>> PAULA McELWEE: Great.

>> TIM FUCHS: Fair enough. Paul's asked if we could go back to resource development versus fundraising. We have a few extra minutes, and he said it would be helpful to talk about some examples of the differences between fundraising and resource development, one of which is not allowed, and resource development being allowed in certain circumstances.

>> PAULA McELWEE: Let me repeat what I said because we do not have a definition that tells us what is and is not allowed. There is no such thing right now. What we know is that fundraising is not allowed and resource development is allowed. The other thing that we know is that last year, there was some scrutiny with some of the program performance report, what used to be the 704 reports, because you're asked to tell about your resource development activities on that report, and some people, a few people, you know, I don't know, two different program officers, cited that as a problem when it was an event. And so that's what we know for sure, is that there at least is some internal discussion at ACL around this, because why else would they be questioning an event, right? That's all we know. 

Right now, we're continuing to operate as we've always operated until we have other guidance. So we continue to operate that hey, resource development is required for centers. You get to establish for yourself what constitutes resource development but just know that there's some scrutiny around events that are specific concerns, so we may expect that that's going to be questioned at some point in the future. But there's no required corrective action around it. There is not clarification available to what is and is not fundraising and what is or is not resource development. We don't have that yet. When we have it, we will spend some time training on that specifically, but right now, we don't have it. 

So you need to do your own definition, because there isn't one, and then you need to stick with your own definition. And my suggestion is, events may be problematic. Now, it depends on how you deal with your events. If you're in a big gala that is meant to, you know, make money because of sponsorships or big-ticket dinners and so forth, that may be different from an annual event where you recognize community members who have been helpful, when you give awards to people. You know, it -- I don't know. We don't know. That's the end of the conversation. We don't know.
  
>> TIM FUCHS: Okay. Thanks, Paula. All right. Oh, and Richard Petty offered just one quick thought on examples of an allowable cost. In one instance, we gave an example of purchasing T-shirts and buttons, indicating youth are attracted to booths with these items. Perhaps we should note we know of organizations that did do this successfully. And then each SILC needs to do their own research and ground work to back up any decision they would make about that.
  
>> PAULA McELWEE: So you need to document why you feel it's outreach and not public relations or advertising. If they see that expense, and you called it advertising, they'll say advertising of that sort is not allowed. Start there. Public relations is not allowable. Advertising of that sort is not allowable. We're going to talk about it this afternoon in a little bit more detail about allowable and not allowable. So is it outreach or is it advertising? If it's outreach, then you can make the case that it's outreach, then it would be successful to say it's allowed. 

>> TIM FUCHS: Okay. And Jill was wondering if there was a basic glossary for definition of terms for foundational level things related to this content. What is Part B, what is Part C, an independent living glossary. I've been searching since I saw your note come in, Jill. I could have sworn we have a resource for that.

>> PAULA McELWEE: We do. I'll find it for you.

>> TIM FUCHS: Paula looks like she's got her finger on that. We will get that out to you all.
  
>> PAULA McELWEE: Maybe.
  
>> TIM FUCHS: Maybe, yeah. I was like, oh, yeah, I've got it right here.
  
>> PAULA McELWEE: I've always looked for it under A B C. It's not there. So I don't know if there's still -- somebody on from the office who could take a look at that. Dion, maybe you would be able to find that glossary of acronyms. Oh here it is. I found it.

>> TIM FUCHS: While we look for that, I will just acknowledge, I mentioned as the training began, that we've got a lot of people that normally wouldn't be able to join us for this, and we also recognize, we've got a wide variety of experience levels in the room, right, in the virtual room this week. So we want to acknowledge that, and I don't want anyone to feel like they need to preface or explain that they need a primer on some of this stuff. These trainings are often attended by new staff, and this is a great experience for folks who are new or newer to their role. Maybe folks who have years of accounting experience, new to the nonprofit world or new to SILC. [cross-talk] Don't feel you need to explain that to us. We get it. Paula, alphabet soup. Independent living acronyms -- that is exactly what I was thinking of.  

>> PAULA McELWEE: It isn't everything, though, it may not have everything, but it has Part B and Part C for example, and it has most of the most commonly used abbreviations.
  
>> TIM FUCHS: Awesome. I'm going to put that into the media site chat, Ilru.org/alphabet-soup-independent-living-acronyms.
Obviously, not everything is in there, so if there are other questions, just let us know. Okay, probably our final question, coming from Heather, same topic, fundraising. Fundraising is not allowed with any federal funding. That's the cutoff. If a program is completely self-contained and does not utilize any of the federal funds that fundraising for that is acceptable. Is that right, Paula?
  
>> PAULA McELWEE: When we say something is not allowable or not allowed, we're talking about not allowed with federal money. So if you have other resources, you can spend those other resources in any way you want. Just make sure that both the direct and the indirect costs are paid through this what we would call "discretionary money" or other money that is not federal. When we say "not allowed," we mean not allowed with federal dollars, and we will go into some details with a couple of things this afternoon as well.
  
>> TIM FUCHS: Folks that are newer to this call, Paula, we need to remember, too, that when we talk about those things and those activities, that would include not only cash out but staff time and equipment as well, right?

>> PAULA McELWEE: And indirect costs. So that project's share of indirect costs. This also applies to other nonallowable costs that we'll mention this afternoon, like lobbying. You're allowed to do lobbying, in fact, their advocacy is lobbying is an aspect of advocacy, which advocacy is required. However, you can't lobby with federal funds. You can do some other things with federal funds, but you can't lobby. All the direct costs, all the staff time, and all the indirect costs have to be carved out and paid for with discretionary money and no federal dollars can be used for that. It's the same principle, it's just different topics.  

>> TIM FUCHS: We are at the top of the hour, and coincidentally, that's was the last question we received.

>> PAULA McELWEE: That's perfect timing.  

>> TIM FUCHS: Great job, you all. To our audience, thanks for bearing with us on our slow start this morning, but John and Paula, you've done a great job of giving us an overview of what we will cover this week and some of our preliminary topics. Thanks to all of you, too, for a good Q&A. That was some great discussion and we will continue that. So we will come back in two hours, at 3:00 Eastern. And we'll have an opportunity to continue our discussion. We'll be looking in more detail at that updated fiscal procedures manual, and then before we break today, we'll have more open questions for you all. 

Let us know by email during the break if you have any questions or anything you missed, and we will see you in two hours. Thanks so much, everybody. Talk to you soon.
  
>> PAULA McELWEE: Thanks, everybody.