Episode 89: What You Don't Know, You Don't Know - Things to Consider Before Starting a Nonprofit
Did you start your nonprofit organization because you thought it would be easy? Or, you thought you'd get grants to help you serve your community? People start nonprofits without understanding that there are rules that must be followed, infrastructures that must be in place, and systems that can produce information, in order to qualify for funding.
Click the link here to access the free calendar detailing how to start your nonprofit in 90 days or less: https://www.amberwynn.net/90-days-calendar
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SPONSORS:
Nonprofit Elite: https://nonprofitelite.com/
SmallBizPro: https://www.smallbizpro.net/
NONPROFIT SPOTLIGHT:
This episode's spotlight highlights the nonprofit "Parenting Black Children" Program. This program provides wellness kits, training, and family fun events to increase awareness of developmental disabilities, mental health, and special education resources.
Check out Parenting Black Children! 👇🏿👇🏿👇🏿
Website: https://accessnonprofit.org/
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Apple Podcasts: https://podcasts.apple.com/us/podcast/on-air-with-amber-wynn-philanthrepreneur/id1462577181
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Got Questions? "Ask Amber" on any of my social media platforms or email me at amber@amberwynn.net.
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Thank You Everyone!
Podcast Transcript
Speaker 1 (00:10):
Welcome to On Air with Amber Wynn, where nonprofit leaders learned 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):
Hey fam, it's your girl, Amber Wynn, your resident, Philanthrepreneur, and today we're going to talk about what you don't know you don't know. Sounds a little confusing, but it's really simple and I'm starting this episode talking about it because a lot of time my amazing, committed, passionate founders jump into starting a nonprofit without a lot of pertinent information. And what happens is they end up closing their doors within two years, they self-fund and burn out their friends and families by having them donate and volunteer. In this episode, I really want to just shine the light on some of the things that you should know before jumping into starting a nonprofit. For example, did you know that even if you found it, meaning start your nonprofit, you can't own a nonprofit, you don't own it. People say it all the time. My nonprofit, my nonprofit, my grandma's nonprofit, my dad's nonprofit, it's not theirs, a nonprofit, a 501(c)(3) is a public charity.
(01:41):
That's why when you form your documentation, it says in your bylaws that should the organization be dissolved, you've got to donate all of the assets to another 501(c)(3). That means if you've invested $20,000 of your hard earned money into this nonprofit, if you dissolve the organization, you don't get to keep that money. Why? Because it's a public charity. People are going to be pissed at me, but I'm telling you the truth, and if you don't believe me, you can go straight to the IRS website and it'll say right there, a nonprofit cannot be owned, not by a person, not by an entity. It is a public charity and its purpose is to serve the community.
(02:24):
If you want to generate a salary, yes, you can get a salary from a nonprofit. If you want to pay staff, if you want to do things, give out scholarships, absolutely, you can do all of those things. But the purpose of a nonprofit is not to make you rich and it won't make you rich, but you need to know that you will never, ever, ever own a nonprofit even if you started. The other thing you need to know is if you are the founder or the executive director, if you're getting a salary and you're reporting to the board, you can be fired. That's super important to know. I've had clients call me in tears. I put all my time and all of my money into this nonprofit and this board fired me, and there's absolutely nothing that you can do. People will stack their boards with people that they know, and that's all good and fine until it's time to start raising money because typically the people that you know and love you have no knowledge, no skills with fundraising.
(03:33):
So the purpose of a board is to help you fundraise so you won't really skirt by not being fired, by putting your friends and family on the board. What's going to happen is you're going to get burnt out and then you're not going to raise any money. So people ask me, well, what I'm supposed to do, because I don't want people to fire me, you've got to run a bonafide organization. That means you need to have a recruitment process where you get to question and interview the people on your board and get a feel for them. You've got to have clauses for being able to get rid of them, but you can't just stack your board with friends and family because if they don't have any nonprofit experience, then there's a high likelihood that your nonprofit will not grow. But you needed to know also that if you are receiving a check and you're fulfilling the role of executive director, you do report to the board and you can be fired.
(04:30):
The other thing I wanted you to know is if you sit on a board that you are fiscally responsible for the organization. So if something happens and you don't know about it, it means nothing. You are responsible for that nonprofit organization up to and including jail time. So people ask me all the time because I write grants and they think they're going to pit me, and that's not going to happen. But will you join my board? I look at their financials, I look to see if they have d and o insurance, which is directors and officers insurance, and if they don't, then Amber Wynn is not going to be on their board because my personal assets are not protected. So you need to understand that if you are a board member and you're sitting on a board, that you need to be protected because it is your fiduciary responsibility to manage this organization.
(05:22):
So as I said, today we are talking about what you don't know. You don't know. I'm your girl, Amber Wynn, your resident, Philanthrepreneur. You can check me out on all of my social media platforms. I've got a website, www.amberwynn.net, Instagram. You can check me out on Facebook and Twitter, and I am here for you. My amazing founders and nonprofit executive directors. Today we are talking about what you don't know you don't know because what you don't know could get you into a lot of trouble. But before we jump into all of that, I want to pause and we're going to go to commercial.
Speaker 3 (06:04):
You're a school, a foundation, a healthcare provider or an environmental group, a museum, a church, a shelter or a community service. You're starting a nonprofit on a startup budget, and you need to get this right the first time. No mistakes, no misunderstandings, and no costly. Do-overs at Nonprofit Elite. We know what you need because we've been there too. Accurate information, mistake free filings and peace of mind assurance that your 501(c)(3) application will be successful. This is what we do and we are very good at it all backed by our industry leading guarantee and 100% IRS approval rate. But forming your nonprofit and obtaining tax exempt status is just the beginning. Once you're up and running, nonprofit Elite will consolidate the bulk of your operations into one place, including your accounting, compliance, website, fundraising, and more. We do the work of several full-time staff for just a fraction of the cost so that you can remain focused on advancing your mission contact nonprofit elite for expert preparation of your formation documents and 501(c)(3) application and for a full range of accounting, fundraising, and administrative solutions.
Speaker 2 (07:24):
Welcome back. You're on air with Amber, and today we're talking about what you don't know you don't know. And I wanted to cover something because I guess the number one question that I get, as soon as a person files their 501(c)(3) tax exempt status and they're approved, the first thing they say to me is, how do I get a grant? And so it's important that you understand that having a 501(c)(3) tax exempt status is not enough to qualify for a grant. There's two things you need to understand. One, eligibility versus qualification. You're eligible. So a person or a nonprofit without a 501(c)(3) tax exempt status can't even apply. So the fact that you have the 501(c)(3) tax exempt status means that you can apply you're eligible. Does that mean that you qualify for a grant? The answer to that is no. There are so many nonprofits out there, honestly, we don't need another nonprofit.
(08:23):
But the reality is there's so many nonprofits out there doing what you've done maybe a little bit differently that you are in competition. Funders are not responsible for funding nonprofit organizations. I know that sounds weird, so I'm going to repeat that again. It's not the purpose of a funding agency to fund the nonprofit. Their purpose is to accomplish their mission. Now they partner with other nonprofit organizations to help them accomplish that mission. And if you look at it from that perspective, then I think you'll have a shift in your mindset because you'll understand that they're not obligated to give you anything. They look at what you can produce, what their return on their investment is, because how funders look at grants, they don't look at them as free money. They look at them as an investment in an organization that's going to help them accomplish their goal.
(09:16):
Some of my biggest success in grant writing was when I realized that I needed to connect with the funder, meaning I needed to tell them how I was going to help them accomplish their goals. A lot of time people when they write they grants, they're like, oh, if you don't give us money, then the door is going to close and these babies won't get fed, and that's doom and gloom. A funder is not interested in that. You need to tap into how you are going to help them accomplish their goals. So back to the topic, you get your 501(c)(3) tax exempt status and now you are eligible, but it doesn't mean you qualify. What you don't know you don't know is in order to qualify for that grant, you have to have a track record. You have to have a track record that demonstrates to this funder.
(10:04):
If they give you $250,000 is not just going to go into your pocket, it's going to go into the community. And how did they know? Because you've gotten $10,000 before or you've gotten sponsorship money, $5,000, or you've gotten people to donate and you've taken that money and you've put it into the community. So when a funder asks you for financials, that's what they're looking for. They're looking to see how you've managed your money so that if they give you money, they know that you're going to manage it properly. So you need to know that it takes more than just a 501(c)(3) for you to qualify for a grant. Alright? Then also, I want you to know that you are competing when you jump into this big pool of nonprofits asking people for money. It's not just you, it's Amber Wynn, it's Jane and Bob and all of these different people who've more than likely been doing this for a long time.
(11:01):
And so when you come into that space, you need to really just understand that you're competing. And so you've got to put all of the best things about yourself out there. And so you need to have a really good website. You need to have an engaged social media platform because these are the things that a funders are going to look at to determine whether or not you qualify. They want to know that if they give you money, there's more than just one client that they're going to serve, right? So it's important to understand you are competing. You need to create your competitive advantage. I'm telling you all of this stuff because before you jump into this world of nonprofit, you need to understand that it takes a lot of work. Now, the beautiful thing is that I'm here to assist you. I love my founders, I love my executive directors, and my goal is to support you.
(11:54):
Having been an executive director before, it is a daunting job. It is a thankless job and it is a lot of work. And so sometimes you just need to understand and just to get through all of the muck and mi and confusion that is called the internet. There is so much information out there, but you don't know is this the right information? Is this the right information? And I'm here to guide you. As a matter of fact, my offer today for all of my people out in internet world is a free calendar. It's a calendar that supports my workbook and it's called How to Start Your Nonprofit The Right Way in 90 Days or Less. And it's a calendar and it walks you through 90 days of how to start up your nonprofit. Not only how to start it, but how to run it. And the reason why I created this is because there's so much information out on the internet that people would come to me and say, well, I thought I did this, and I, and so if you follow this calendar, then you'll set your nonprofit up Powerfully for Success.
(13:00):
It talks about setting your infrastructure, meaning starting a bank account and putting together your website. Then it talks about board recruitment. You should do all of this stuff before you file. Now, no worries if you've already filed because you can still follow the calendar and get your nonprofit back on track. My purpose, my function here is to provide founders with the roadmap for creating a sustainable nonprofit organization. And that calendar is going to help get you through it. 90 days get you back on track. So I'm going to put in the link, put in the comment section, the link for you to download your free calendar, and you can use that to help get you back on track. Alright, so just wanted to say again, if you're just now joining me, I'm Amber Wynn, your resident, Philanthrepreneur, you're here with On Air with Amber. You can hit me up on all of my social media.
(13:59):
You've got my website, my Instagram, my Facebook, and my Twitter. This is the part of the session where you get to ask me your questions. It's Ask Amber, and if you want to leave me a question, you can hit me up on all my social media and ask me a question. The question that I have today is basically what we are talking about. How do I get a grant as a new nonprofit? Well, if you're a new nonprofit, I'm going to tell you the fastest way to fund your nonprofit is to not try and get a grant. There's seed money out there, $10, $15, $25,000. Those grants are specifically for brand new nonprofits. So you would Google Seed Grant, SEED grant, those are a whole lot easier to get. They typically come from foundations and they are designed to give you an opportunity to manage a small pot of money and then use that as your foundation to secure bigger money.
(15:03):
But my recommendation is not to try and get a grant coming straight out the door. My recommendation is that you leverage your board members and you come up with five different funding streams for your organization. Whether that is corporate sponsorships or it's going to be scholarships, is it's going to be naming opportunities. Five different ways to bring in money. And when you bring in money, then you need to create an accounting system that you can then show to a funder because they're going to always ask you, where are your financials? If you have money coming in, even if it's a small amount, you still are demonstrating that you're managing money. So the goal here is not to secure a grant, but to create your infrastructure so that you can then qualify for money. So that was the question for today's episode. If you have a question, feel free to hit me up at amber@amberwynn.net with your question.
(16:00):
And maybe I'll answer it online. I mean live here online. Alright, so the other thing that I do here is I feature nonprofits. As I said in a previous episode, my nonprofit leaders work so hard and sometimes they work so hard, they keep their head down in the weeds and they're not out there. In order for you to get into the space of funders, they need to see you. Visibility is really important. That's why your website is also important. So today I would like to actually spotlight a nonprofit called Parenting Black Children Program. This nonprofit actually was founded, it's a project of parenting black children. It's a project of excess nonprofit, a 501(c)(3), founded in 2005. PBC is a team of parents special education teachers, social work interns, disability advocates, church ministers supporting parents and caregivers of African-Americans with developmental disabilities who work in partnership with the Regional Center to provide support group and network for parenting for parents and caregivers. They provide wellness kits, training and family fun events. PBC is dedicated to increasing awareness, outreach and education of developmental disabilities, mental health and special education resources. Thank you PBC, parenting Black Children for All You Do to support parents and caregivers of African-Americans with developmental disabilities. For more information, please visit welcome@parentingblackchildren.org or give them a call at (626) 387-3853.
(17:52):
All right, so that was our spotlight. If you are interested in me featuring you, then send me your information at any one of my social media channels. My goal is to make sure that you get the visibility that you deserve. And then also, I'd like to, again, thank my sponsors. We had Small Biz Pro and Nonprofit Elite. It's important that you create the infrastructure that's going to help you be successful in the nonprofit sector. And Small Biz Pro has that infrastructure with their platform. Nonprofit Elite is one way for you to improve your nonprofit leadership skills. And it's free. You can get certificates, you can get the information that you need. So thank you to my sponsors today. And then finally, as we wrap it up, what you don't know, you don't know for this mindset minute, I'd like to just pause for one second and just encourage you to take ownership of your success.
(18:55):
And the way you do that is by educating yourself because you are responsible for your nonprofit organization. People will say, well, I didn't know that a nonprofit is a business. It's just a business with a philanthropic purpose. As its leader, the founder, the executive director, ignorance means absolutely nothing. You can still go to jail even though you didn't know. So I'm just going to encourage you to access some of the resources that I have, access the resources that are out there. Go check out Nonprofit Elite, find out as much as you can about your organization, because here's the other thing, the more you know, grow knowledge is power. When I work with my clients and I say to them, here's the roadmap for how to do X, Y, and Z, which is typically to diversify your funding streams, I'm all about the money. If it don't make dollars, it don't make sense because I know you're doing the work, you're doing the work, and you're not even being paid for it.
(19:54):
So if I can help you bring in multiple streams of revenue, then that means that your organization is going to be more solid. That means that more people in your community are going to be served. So in this mindset minute, I want you to just think about who you are as a nonprofit leader and where you want to take your organization and own that. And in that space of owning it, you're going to go out and get more information so that you know exactly what it is you're supposed to be doing. Don't listen to your cousin, don't listen to your uncle. Don't listen to your friend with good intentions. Find out what the truth is about being a nonprofit leader so that you can be the best leader that you can do your research. I'm always going to tell you that I believe that I'm one of the smartest people that are out there when it comes to nonprofit. That doesn't mean that I'm always right, and that doesn't mean that the recommendations that I give fit you. It is your responsibility as a nonprofit leader to seek out that information and to do what's best for your nonprofit organization. So that's all I got for my nonprofit minute. I'd like to thank you guys for joining me today, and I'd like for you to come and check me out again on my next episode. It has been a blast, and I'm looking forward to seeing you again next episode.
Speaker 1 (21:15):
Thanks for listening. If you enjoyed 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.
