Episode 13: The Nonprofit Success Journey: Stage 7 – Build a Sustainable Nonprofit
Are you self-funding your nonprofit organization? Learn what it takes to get consistent, outside funding that leads to a sustainable nonprofit.
NONPROFIT SPOTLIGHT: Didi Hirsch
Podcast Transcript
Speaker 1 (00:06):
Welcome to On Air with Amber Wynn, where nonprofit leaders learn to fuse passion and commitment with proven business strategies to create long-term funding, impact, and sustainability. And now, here's your host and resident Philanthrepreneur, Amber Wynn.
Speaker 2 (00:30):
Welcome to On Air with Amber Wynn, your resident Philanthrepreneur. And I'm in full sass mode today. Why? Because we have made it. We've made it to stage seven, the nonprofit success path. And I'm super excited. And if you've been rocking with your girl, I'm here to say congratulations. Stage seven is building a sustainable nonprofit. And what's interesting about this stage y'all, is sustainability means being able to continue to fund your organization over time. And a lot of my nonprofit founders jump right into funding without strategically planning for long-term consistent funding. What do I mean by that? I mean, there are fundraisers, but the fundraisers aren't connected to the budget. And it's choppy. It's choppy. And this stage, stage seven, is going to talk to you about how to keep your doors open long-term. Cuz here's the thing, you can start a nonprofit, you can get your community just really comfortable with you being a resource, but if you're not getting outside funding, if you're self-funding your organization and you're doing your community a disservice, cuz at some point you won't be able to maintain your household and maintain your nonprofit.
Speaker 2 (01:55):
And so what's gonna happen is you're gonna close your doors, and then what's gonna happen is you won't be a resource for your community. So stage seven is about building a sustainable nonprofit. The world needs nonprofits, the world needs you. And so I made sure that stage seven talked about how we're gonna keep your doors open forever. A part of a sustainable nonprofit is succession planning. Sometimes people start nonprofits thinking that it's their business—it's not. It's a public charity. And at some point in your evolution, you need to think about the organization being around, even if you're not around. That is a part of a sustainable organization. If you drop dead tomorrow, heaven forbid, what's gonna happen if you've been funding your organization yourself, if you've been the only one making sure that the services are delivered, if you die tomorrow, then your community is gonna miss out on your resource. And so we don't want that. So today, stage seven, we're gonna talk about building a sustainable nonprofit. But before we jump all into it, let's hear from one of our sponsors.
Speaker 3 (03:10):
This is you and this is your business. From invoicing your first client to your 10th client to your hundredth client, you'll need to get paid quickly. Pretty soon you'll be ready to hire some help and you'll need to pay them. As your business grows, Wave is there to grow with you.
Speaker 2 (03:43):
And we're back. And today we are talking about stage seven, which is the last stage of the nonprofit success journey. We have stage zero, which is thinking about starting a nonprofit all the way through to building a sustainable nonprofit organization. And I'm a fund developer, right? I'm not a fundraiser, I'm not a grant writer. All of those things come up under the umbrella of a fund developer. I believe. You gotta do a whole bunch of things to keep your organization going. And as a fund developer, my primary focus is on the dollars. And people get a little irritated with me because, oh, it's a nonprofit. You're not supposed to make a profit. You are supposed to. You're supposed take that revenue that you make and put it back into your organization. But nonprofit does not mean no profit. It means that the money that you generate goes back to build out your organization.
Speaker 2 (04:39):
So today we're talking about building a sustainable nonprofit. And what that really comes down to is creating a funding strategy that generates consistent funding from outside sources. You can consistently fund your nonprofit organization, but that's not sustainable. Number one, because that's gonna impact your quality of life. And I am your cheerleader and I am your coach. And I am here to tell you that your quality of life should be just as good as the quality of life you're providing your clients. And so the way that you do that is you make sure that you have money coming in from the outside to fund your programs, to fund your operations, to fund purchases of vehicles and resources and supplies. And so sustainability can only happen if you have a diversified funding stream. How many funding streams is every nonprofit supposed to have? At minimum? Wait for it.
Speaker 2 (05:38):
Wait for those of you who set 10, you were correct. Not one, not two, not three, 10. I said it. Why 10? 10? Because number one, if you're just getting grants, it takes anywhere between six months to 12 months to get that grant funded. You can't survive off of money you don't have then if you're getting corporate sponsorships, it's a chunk of money, but you need money coming in all the time. Diversified funding stream for a nonprofit is the same as diversifying funding stream for a for-profit. You need multiple ways for revenue to come in so that you can keep your operations going. So when we talk about sustaining your nonprofit, that's essentially what we're talking about—having 10 or more funding streams. We wanna make sure also that you are constantly reviewing your annual budget, constantly. When we call a budget a financial statement, it's because it has a purpose.
Speaker 2 (06:43):
The first purpose is to let a funder know how much it costs to run your organization. But the second most important purpose for you as a founder is to use it as a tool to help you determine what your priorities are. If you look at your budget and you see that we haven't been able to purchase that van, but that van is essential to your programs, then that becomes a priority. If you look at your budget and you see, okay, in our bank account we have $70,000, but to pay the rest of our staff, we need 120. That's gonna help you shift some priorities. So that annual budget is supposed to be used to help you look real time at what's going on in your bank account and what you need to do as a leader. Also, that budget is gonna help you create that strategy.
Speaker 2 (07:34):
Cuz you know my saying—hope is not a strategy. You need to look at what you need to do short term, medium, and then long term. So when we're talking about building a sustainable nonprofit, it can only be sustainable if you understand how much you need to keep your organization operational. Some founders are out there like money come in, money goes out, money come in, money goes out. That's not sustainable. You need to have a reserve so that if anything happens, cough, cough, pandemic, and you have to shut down your organization. You have some money that you can be agile around. Running an organization is sort of like running your household. They tell you you're supposed to have six months of savings in the house just in case something happens. You can stay agile. It's the same thing. You can't be living hand to foot because you've got people who are dependent upon you.
Speaker 2 (08:25):
The world needs nonprofits. And so I'm here to share with you that in terms of sustainability, the goal outside of having the diversified funding sources is to make sure that they're consistent. How do you do that? I'm so happy you asked. It's by creating a fund development plan. A fund development plan. And that's gonna be my offer for you today. I'll put it in, I'll put a link in the section on how to develop your fund development plan. Now I developed this resource probably four or five years ago when I was executive director. We hired somebody to come in and create this strategic plan. It was like 25 pages with 16 exhibits and appendices, and it just never got used. And I'm like, okay, thank you board. But I could have done something with that $25,000. And so I created this fun development plan. It is a one-pager, it's an Excel sheet and it gives you everything you need to know at a glance.
Speaker 2 (09:37):
So if you're having a staff meeting or if you're having a board meeting as the founder and executive director, you know exactly everything you need just from this one plan. So this fund development plan, let's talk about it. It's about five columns. And the first column is where you identify your organization's expenses. So these actually are gonna be your budget line items, right? Because you need to know how much money it costs to run your organization. I'll have people say to me, Oh about $25,000. That's not running an organization, that's not a salary. Who can live off of $25,000? Then we're not even talking about programs. When we talk about sustainability, sustainability means that your organization is fully funded. Salaries, benefits merit increases, all of your supplies, everything is fully funded. If it's not fully funded, then your organization is not sustainable. So when we talk about that, when we identify all of the expenses, we wanna make sure that they're all there.
Speaker 2 (10:47):
So that's the first column. The second column is you wanna prioritize what is important. So you're gonna list everything, but you can't pay for everything cuz you just don't have the money. We wanna make sure you understand what needs to be funded, though. We don't wanna exclude anything because that's gonna mess up your fundraising strategy. So first column, what needs to be funded. Second column is the priority. This is how you determine the priority. If it's zero to six months, it's urgent. If it's a year to two years, it's important. And if it's three years and on, then it can wait. So for me, salaries would be important. You wanna fund a salary right away, but it's gonna take some time cuz that's a hunker chunk of money. So you are gonna put in that second column, important. And now you have a strategy. You're not focusing all your energy on zero to six months getting overwhelmed because you're trying to fund everything.
Speaker 2 (11:47):
You are very clear—you're gonna fund all of those things that you clicked on for zero to six months. That's gonna be utilities, that's gonna be rent, that may be mileage, all of those things that have to be funded right now. And that's how you create your strategy and that's how you let your board not get overwhelmed, that they've gotta fund a $300,000 budget cuz it takes $300,000 to fund it. But you are saying to them, but we're not doing it all at once. So the next column is when are you gonna fund it? So it's urgent, it's important or it can wait. So now you're gonna say, so if it's urgent, we're gonna fund it in Q1. If it's important, we're gonna, we're going to fund it in Q4. So now your board, your volunteers, you can breathe because you have a strategy on when it is you're gonna do your fundraisers and then you get to plan them out.
Speaker 2 (12:46):
And that takes us to the next column, which is what is the funding strategy? Remember we talked about having 10 different funding streams. So you're gonna identify what those funding streams are. And now in this category, you're gonna drop them into this column and say, We're gonna have a golf tournament, we're gonna have a GoFundMe, we're gonna have naming opportunities. You just list them all. And this is where it's key. Whatever that funding strategy is, it needs to cover one of those budget line items. You don't wanna have opportunities to fund a budget line item and not being intentional. So some people will have a fundraiser and say, Oh, we just need to raise some money. No, no, no. Your fundraiser needs to be attached to a line item. For example, that golf tournament, as a board, your board needs to determine, we're gonna raise $80,000 from that golf tournament.
Speaker 2 (13:44):
40,000 of it is gonna go for our executive director, 40,000 of it is gonna go for our program director. And that's how you fund your organization. With this fund development plan, it's laid out—what the expenses are, what the priorities are, what funding strategy is gonna fund it. And then the last column is who is going to lead the committee. This column I created, well, I created the whole plan, but I specifically put this column on here because as founders, especially and as executive directors, we tend to take on too much. And so this last column is to help give you work-life balance. You have this column and you want your board and your volunteers to look at all of the funding strategies and select which ones they wanna chair. Why do you want them to select it? Because you don't wanna burn your people out.
Speaker 2 (14:35):
If they can go in and you have 10 funding strategies and each person picks two, one to lead and one committee to sit on, then they're not gonna be burnt out, and they know for the rest of the year what their commitment is. So you're not calling them up, Can you go to this fundraiser, and then next month can you come to this fundraiser? And then the month after that, can you buy this chocolate? We're trying to raise funds. That's how you burn your people out. That's when people stop picking up your phone calls. So this fund development plan has been designed to accomplish multiple goals, but mostly for me, it was making sure that we had work-life balance, diversified funding streams, consistent revenue coming from outside sources, and making sure that every expense in your budget is covered. It’s so sexy, I just have to say it. I know I've tooted my own horn, but it's sexy. So I want you, when we are talking about long-term sustainability, to think about the whole package, not just here and now. And this fund development plan is gonna get you there. All right? So we're gonna pause for a minute to hear from another sponsor, but when we come back, we are going to answer the question from Ask Amber. So I'll see you when we get back.
Speaker 4 (15:54):
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Speaker 4 (16:20):
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Speaker 2 (17:05):
Welcome back to On Air with Amber, your resident Philanthrepreneur, your girl on the scene. I got you. I'm so excited. I'm on full sass mode today because we have reached stage seven of the nonprofit success path. It's zero to seven and it helps nonprofit founders to get rid of the overwhelm, to get over, to get past the stress of trying to figure out this thing called the nonprofit. It's a lot. People make it seem like it's easy. Oh, just start a nonprofit and you can get grants. And it's not that simple. I'm never gonna lie to you. I've been doing this for 30 years. I've done everything from emptying the trash can to giving out money. And I'm not gonna lie to you. It's not easy, but it is doable. And so we've reached the top of the mountain top and let me just tell you, when you reach stage seven, it's not over.
Speaker 2 (18:00):
It's constant. It's just like a business. You're constantly reinventing yourselves. You're constantly trying to create a solid foundation so that your organization can go on and on and on. And at this point in the session, we're gonna do a section that's called Ask Amber. And it's where you get to ask me any question that you want and if you're interested in asking me a question, hit me up on social media, post it there let me know what it is that you're interested in hearing about because I can talk all day about anything nonprofit cuz I just love it and I've been in so many different positions, I can talk from that experience, but I wanna make sure that I'm covering topics that are interesting to you, right? Cause at the end of the day, that's what I'm here for, is to support you. But today's question and ask Amber is how do I answer this question on grants? How does your organization plan on sustaining this program after funding ends? So when you apply for a grant, usually in the end the funder wants to know how are you gonna continue the program when they stop giving you money? Invariably, I have funders say the same thing. Well, you need to give me more money. That's not the right answer. When we talk about mindset, and we're gonna talk about this in our Mindset Minute. Funders expect you to fund your nonprofit.
Speaker 2 (19:36):
Nonprofit founders have got to shift their mindset in thinking that the funder's purpose is to give them money. It's not the funder's purpose is to meet their funding goals and objectives and their partnering with agencies and organizations out there who align with their mission. Once we get our nonprofits to the place where they understand that it's not the responsibility of the funding agencies to fund their nonprofits, we’ll be in a better place. They wanna know, Okay, I'm gonna give you $250,000 for three years to fund this program, but how are you gonna continue funding this program after I give you the money? And you can't say, I'm gonna reapply and you give me more. What you need to let them know is that they're not wasting their investment. If you can't share with them how you plan to keep this nonprofit program going, then that's a waste of their investment.
Speaker 2 (20:32):
They've given you $250,000 over three years and once they stop funding it, that program's going to end. Why would you do that? You wouldn't. So what they wanna know is what do you have in store to keep this program going? How would you answer that? They're like, Well, I don't know. Well hope it's not a strategy. You need to know and you need to go in with the strategy. And if I were answering this question, this is what I'd say. Well, number one, we have different grants out there looking to continue to support. That's one I would give them the names of the funding agencies that I'm actually reaching out to. You don't just write a grant to one nonprofit funding agency. You write to three or four and you customize those grants, and you don't know which one is may fund you. So you've got other feelers out there, but that's not enough because like me, they know you can't live off of grants.
Speaker 2 (21:33):
So you wanna tell them that, number one, we've got grants out. But then number two, our board is committed to this program. And not only are they providing a give, which our board dues, but they're constantly out there looking for resources to help fund the program. Which is why in the beginning when we talked about building your leadership, you need to have people who are out there looking for resources to fund this program. That's why the IRS discourages you from having friends and family on the board because they're not fundraisers. So it all starts to tie in together. But from a funder's perspective, to know that the board is committed to keeping this program going by sustaining it with their board dues, which are unrestricted, that says a lot. Another thing that I would say is we're gonna do other things like request corporate sponsorships, looking for opportunities like advertising and naming opportunities.
Speaker 2 (22:35):
I'd let them know all of the things from those 10 diversified funding streams that I'm gonna do to help make sure that this program is funded. And then lastly, I may look into some of those 10 funding sources that I'm doing and share that with them as well. So they just wanna know that you have a plan for keeping the nonprofit program going after their funding ends. And I think that's completely reasonable, right? So alright, let's move on to our next section, which is the Nonprofit Spotlight. As I am the biggest cheerleader for nonprofits out there doing the work in the community. And this organization has been around for quite a long time here in LA County. It's Didi Hirsch. And Didi Hirsch is a mental health services organization that's provided free mental health, substance use disorder, and suicide prevention services since 1942. They are a mainstay in our community, and I'm excited to provide the spotlight on them because they do the work. Y'all check it out and you can check it out for yourself. <laugh>,
Speaker 5 (23:53):
When I was really young, probably four years old and didn't know words like stigma or trauma or alcoholism, I was trying to figure out the world and what was normal and not normal. And I was playing marbles with a boy and I asked him, Does your daddy beat your mommy too? My older sister took me aside and said, Don't ever talk about that. So that's the first time I learned there are things that stay in the family and that aren't supposed to be known in the outer world, that they're not okay. When I got to be in my twenties, I realized that I needed help. And I realized there were psychologists and psychiatrists and people like that. I think the idea that if I took medication, it would mean I was really, really sick and I didn't wanna be a really sick person. I finally got up the nerve to try medication. I remember saying to the psychiatrist afterwards, I thought, Why did I wait so long? And I mean, there's something called internal stigma. I mean, we grew up in our society and we all absorb it. And so the research shows that by knowing people, then your whole attitude towards something changes. So telling your story is the most powerful thing you can do. <affirmative>
Speaker 2 (25:09):
That’s DiDi Hirsch, and if you guys wanna support them or you need more information, consider making a donation. Please visit them www.didihirsch.org or call them at (310) 751-5455. And now we're gonna wrap out this episode with the Mindset Minute. And really it comes down to, at the end of the day, hope is not a strategy. We're talking about stage seven and building a sustainable nonprofit. And hope is not a strategy. As a nonprofit leader, it's important for you to know that your organization is a business and that your business requires revenue to operate. You need to own the responsibility of that. It's not enough to say, Well, I didn't know that. If you are running this nonprofit organization, you need to do the research to understand what it is at the IRS and what your funders expect of you. That is your responsibility as a leader. And then secondly, you need to learn what needs to be done.
Speaker 2 (26:21):
If that means developing your board, if that means developing your fund development strategy, if that means creating an annual budget, you need to own that. You need to be responsible for learning what that is, and you need to get it done because your community depends on you. And if you don't have the foundation, if you don't have what it takes to keep your organization going in your community, you are doing it a disservice. Stopping starting, stopping starting is disruptive to your community. So I want you to know that I'm here for you, that I am a resource. Visit my website@www.amberwynn.net to learn more, to learn what you should know, but it is your responsibility and I'm going to encourage you to own that and take it on powerfully. And that's it. I'm so excited. We're wrapping up the nonprofit success path. If you've missed any episode, be sure to go back and check them out because I really want you to stage your nonprofit to know where you are so that you don't get overwhelmed and you can just focus on being in that one stage and moving up to the next and up to the next until you're to this stage of creating a sustainable nonprofit.
Speaker 2 (27:37):
All right, I'm proud of you and I'll see you on our next episode.
Speaker 1 (27:46):
Thanks for listening. If you enjoy this episode, subscribe and leave a review on iTunes. Head over to www.amberwynn.net/podcast for the links and resources mentioned in today's podcast. See you next time.
