Episode 22: A Sustainability Mindset: Invest in Your Nonprofit
A nonprofit is a business. It’s just a business with a philanthropic purpose. Like any business it takes money to make money. Learn what this means for a nonprofit.
NONPROFIT SPOTLIGHT: Youth Alliance
Podcast Transcript
Speaker 1 (00:05):
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 (00:26):
Hey fam, it's me, it's Amber, and I'm back. I'm back today talking about a Sustainability Mindset, and I've been focusing on mindset a lot because I come across a lot of Founders in particular who either started their nonprofit believing something that really wasn't true, and I apologize for that. I get a lot of that. Well, I thought all I had to do was this, or I was told all I had. Don't I just need to. No. Misinformation. Misinformation causes a lot of grief in a lot of organizations. So it's my job as your resident philanthrepreneur to get you to the truth. Because once you get to the truth, you can course correct and then you can set your organization on a path towards success. Success for me is pretty simple. Number one, you have consistent revenue coming from outside sources. A lot of my amazing nonprofit Founders and Executive Directors are self-funding your nonprofit.
Speaker 2 (01:33):
This is a public charity. That doesn't mean that you <laugh>, that's not supposed to mean that you are funding that charity. That charity is supposed to be funded from outside sources. So, in this episode, we're focusing on Sustainability Mindset, and we're going to talk about investing in your nonprofit. I want you to think about that because I want that investment not to be you self-funding the organization, but you investing in software and equipment and training, investing in things that's gonna move your organization forward. Everything can't be donated. Everything can't be somebody giving you something. And I think that's where a lot of my nonprofits get stuck and it prevents you from growing. But before we get into all of that, we're gonna pause for our first commercial break. But when we come back, I'm gonna talk to you a little bit about why nonprofit doesn't mean no profit.
Speaker 3 (02:51):
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Speaker 2 (04:11):
Hi, we're back. For those of you just joining your on air with Amber Wynn, your resident Philanthrepreneur, and all around cheerleader for amazing people called nonprofit leaders. And today we're talking about a Sustainability Mindset and in particular investing in your organization. So what I get quite frequently is Founders who start their nonprofits not really understanding that it's a business, right? So, one of the top searches on Google is how to start a nonprofit with no money. And I just want to tell you, you can't. You shouldn't and don't, right? If you have no money, and I'm talking at least $25,000, don't start a nonprofit because what happens is you start off in this hole and the more that you invest your time, the deeper that hole gets. Because in order for you to deliver programs and services, it costs, it costs to run a business, you need to have systems in place so that you can produce financial statements.
Speaker 2 (05:22):
That's what a Funder's gonna ask for. You need to be able to pay staff, you need to be able to purchase equipment, material supplies, t-shirts, all those kinds of things. And those things aren't just handed to you as a nonprofit. But a lot of the time nonprofit Founders believe, Oh, I'm gonna start this nonprofit and I'll get a grant for that. You can get a grant for some things, but you can't get a grant to sustain your nonprofit. And that's where all of the issues happen. So, from a sustainability mindset, I need you to understand that everything can't be donated to your organization. There are some things that you have to invest in. You need to spend money to make money. So maybe you have 500 donors. You need to spend money on the CRM, the client relations management system to keep track of those individuals.
Speaker 2 (06:16):
You need to spend money on Constant Contact so that you can stay in communication with those individuals and so that they have a method by which they can donate to you. You need to have a banking account that has monthly fees and you can't expect people to donate to cover those things. Those things are basic costs. So in order for you to sustain your organization, I really need you to think about what that means. That means that you have expenses that are your responsibility. Everything can't be donated. And here's the other thing that happens. If you are waiting for people to donate their time and their services, then you are beholden to them. You can't strategize. You can't say, we're going to shift to meet the needs of our community. Because shifting to meet the needs of your community means that you're ready to then deliver those services.
Speaker 2 (07:13):
But if you're waiting for somebody to donate money or to donate their services, you don't know when or if that's gonna come. So now you can't be responsive to your community. So some of those things you have to create yourself. Yes, you can fundraise for it so that you have unrestricted funds, and then that way you can respond to the needs of your community. But if you're waiting for people to donate services and donate time, then you're waiting. And so it's just important that as a Founder, you understand everything can't be donated, everything can't be given, and it won't be. And if that's what you're waiting for, and if that's how you're operating, then you're strangling your nonprofit, right? Nonprofit doesn't mean no profit. It means that you need to generate funds to support your organization. So I've just been experiencing a lot of that, right?
Speaker 2 (08:11):
I've been experiencing a lot of people saying, Well, how can I get that donated? Well, how can we get that funded? And it creates a sense of lack. If everything has to be given to you or donated, then you are coming from this space of lack, and I want you to be powerful. I want you to be able to respond to your community. And so to that, I would say understanding that as a tax exempt organization, you do have a powerful opportunity to generate funds from the outside. Do it in such a way that it's gonna move your organization forward. You need to create a strategic plan that says, Here's what we're gonna do. Here's when we wanna do it. Here's who it's gonna benefit. And then create a fund development strategy that's going to fund that, right? You're gonna have corporate sponsorships, you're gonna have gifts, you're gonna have financial donations, you're gonna have grants.
Speaker 2 (09:04):
You're gonna generate money so that you can meet each and every one of those strategic goals, but you're not gonna just sit there and expect people just to donate their time and services, right? So there's a balance. Wonderful. Someone wants to donate their time. But here's the last thing I'll say about that. When people donate their time and their services, then they wanna do it their way. So for example, if you need someone to create a strategic plan, you want them to donate their services, they're gonna create it the way that they want to because they're donating their time. Versus if you have a gala and a portion of the money from that gala is going to go to fund a strategic planner that you're going to pay for, now you can say to the strategic planner, This is what we want. We want that. We want this.
Speaker 2 (09:55):
How much does it cost? And if it's too much, then you say, Gimme half of that. Or you can say, That's great, plus we want this. But if the strategic planner is donating their services, then they can say to you, I'm gonna give you one hour, and that's it. And is that enough? So just understanding the freedom and the control that you have when you're purchasing a service versus volunteering. The other thing is the person can come in and start and not finish, and there's nothing you can do cuz they're volunteering their services. But if you're paying for the services, you have a lot of recourse. You're paying for the service, you can write them up, you can call Better Business Bureau. You can smear their reputation and they don't want that. So making decisions where you can ensure the results of what you wanna do, that's the position of power that you wanna come from.
Speaker 2 (10:46):
All right, I'm gonna get off my soapbox, but I just really wanted to emphasize that because from the space of long term sustainability, if you are waiting for people to give you things and you're not purchasing things and holding people accountable, you're gonna get stuck and you're not gonna be able to advance in your organization. And we don't want that. Why? Because the world needs nonprofits right now, the world. Your community needs you right now. But right now we're gonna pause and go into our second commercial, and when we come back, we're gonna come back and you get to ask your question of me. So I'll see you in a few.
Speaker 4 (11:22):
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Speaker 4 (11:48):
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Speaker 2 (12:33):
Welcome back. You're on air with Amber Wynn, your resident, and this episode we are talking about a Sustainability Mindset. This is the time of the episode where you get to ask your pressing questions. And I'm so excited about this question today because it's really important as a nonprofit in your fundraising space that you understand this. The question for Amber is, are all donations tax deductible if the organization is a 501(c)(3) nonprofit? A lot, most times when I'm looking at solicitations from nonprofits on the website, on newsletters, the statement will read something like 100% of your contribution is tax deductible, or 100% of your donation is tax deductible. And what I want to caution you is that that's not <laugh> necessarily true, right? Especially with the tax changes that just happened recently, not everyone is able to deduct taxes for their contributions. And I'm gonna spend time specifically on tax donations because it's very complicated.
Speaker 2 (14:00):
But generally speaking, even if you have a ticket, you have a gala and you're selling the ticket and the ticket is $175, that $175 in its totality, it is not tax deductible. Only a certain percent of that. The honest truth is only probably about $14 of that is tax deductible. So you don't wanna mislead your supporters by saying that it's 100% tax deductible because you don't know that. You don't get to determine that. Yes, you're a 501(c)(3) tax exempt organization, but not everything that you offer or provide whatever is tax deductible. That is something that them and their accountant have to determine. What you wanna say is you wanna say that your gift may qualify as a charitable deduction for federal income tax purposes may because it may not, but it may. And then that way you don't have people coming back saying, I could only write off $14 of this $175.
Speaker 2 (15:13):
You said that the entire thing was, and you don't know because you're not their accountant. So just to be safe, use that language, your gift may be, and then advise them. Advise them to consult their tax accountant or their tax professional and make that determination. So, what we don't wanna do is alienate our supporters. What we don't wanna do is give out false information. And as a nonprofit, you should know that. You should know that you can't tell your supporters what to do, what's legal or what's not. You should know that not all of your fundraising things are not 100% tax deductible. That's your responsibility. Okay? So thank you for that question. Now we're going to go into the part of the episode that I love the most, and that is highlighting nonprofits in the community doing the work. There are so many nonprofits out there doing the work and people don't know it.
Speaker 2 (16:20):
It's a shame, because there's so much need in the community. But because my Founders and Executive Directors are typically in the weeds doing the work delivering programs, they don't get enough light shined on them. So that's my job. I want people to know if they have a need out there, that there's a nonprofit out there to fill that need. And I want Funders to know that nonprofits are out there doing the work and they could use your support. So for this episode, I'm shining the light on Youth Alliance After School Programs and the Youth Alliance after school programs provide a continuum of support that includes after school, summer and late night prevention programs, early intervention, bilingual counseling, and case management intervention programs serving at Promise. And I love, love that. I hate the word at risk. I hate it. It's so stigmatizing. But I'm not gonna get on that soap box. At Promise Youth in the juvenile justice system, teen parents, as well as parent and system leaders, engagement in education. Let's take a look at Youth Alliance after school programs.
Speaker 5 (17:34):
When we were founded in the nineties, it was the peak time of juvenile crime and gang violence across the country. It was the narrative of the super predator. And we knew that this was certainly true in our community, that our young folks and young men of color in particular were being criminalized instead of being able to have access to higher education and other opportunities. And so it was a group of young people and elders and community leaders that came together in order to disrupt this cycle and to invest in our young people in our communities of color.
Speaker 6 (18:11):
Youth
Speaker 5 (18:11):
Alliance.
Speaker 2 (18:11):
So that was a Youth Alliance. And the Youth Alliance programs are located in targeted schools, 16 sites actually in neighborhoods in South Santa Clara and San Benito counties. To learn more and donate, visit them at www.youthall.org. So it's not Youth Alliance, it's site.youthall.org. Go check them out and support this amazing organization. Now it's the time of the episode where I spend just a minute with you to talk about your mindset. This whole episode has been about a mindset, a sustainability mindset. But this specific minute is going to talk about getting around it. And what do I mean by getting around it? I have Founders who come to me and they want something and I say, Okay, well in order for you to get that, you need to put this in place. And they're constantly trying to figure out ways to get around it, how to get around doing something.
Speaker 2 (19:17):
Well, can I just do this? Well, can I just say that? And to that, I say, No, stop trying to get around things, Do things the right way, because inevitably what's gonna happen is you're gonna get stuck, right? I'll give you an example. I had an organization come to me. They had one of their elected officials encourage them to apply for a grant. Amazing. It's very rare that a Funder says, Here, come get some money. If they're asking you to do it, then they mean they believe in you and they want you to apply. And it kind of wink wink means that they wanna give you the money. So they're like, Oh, my council member told me to apply for this is $25,000. And when you get the guidelines, it says, Here's what we need. And so what the Founder said was, Can we just put something together and make it up and say this and that?
Speaker 2 (20:18):
And I said, No, you can't get around it. Because the reason why they're asking for this information is to determine your eligibility. If it's not a generally accepted accounting practice, they're gonna know it and you're gonna be kicked back. And what you don't wanna do is give them something shotty. You don't wanna give them something that's not right, because then they may not ask you again. So what I recommended to them is to go through their receipts and to go through all of their expenses and get an accountant to create this system so that they could then produce the document, Oh, that's gonna cost money. I don't wanna do that. How much is that gonna cost? It's gonna cost. But once you get it set up, this is not the only organization that you can apply for. Now you have a system in place where you can apply for other grants, cuz they're all gonna ask you for the same thing.
Speaker 2 (21:13):
And so it happens quite frequently. Well, how can I get around that? Well, can I just do this? Well, No. What did your mama say? If you stay ready, you don't have to get ready. I need for you guys to get in the mindset that in order for you to get that money that's out there, you need to be ready. So, stop trying to get around stuff and buckle down, fundraise so that you can pay for systems that will then allow you to generate more money. Once you have that system, then you can use that for other opportunities. So, when we talk about a sustainability mindset, it's about really investing in your organization, doing the things that you need to do so that you can grow. Not trying to stay small, not trying to not spend any money, not trying to get people to give you things and do things for free, but really functioning powerfully as a business.
Speaker 2 (22:13):
Is it gonna take money? Absolutely. But take that money from your fish fry and take that money from your GoFundMe and invest it into your organization's infrastructure. Because once your infrastructure is solid, then you can go for more money in different areas. See it as an investment in the growth and sustainability of your organization. Listen, I'm not saying that this is easy. I'm not saying that it's not hard work. I'm saying it is hard work. I'm saying it is challenging, but I'm also saying this is what you need to do in order to sustain your nonprofit organization. So just do it, suck it up, do it. Get your organization on track so that you can make the difference in the community that you really wanna do. I know that you guys have big visions, big goals for your community, but you can't do it if you living small.
Speaker 2 (23:02):
So, okay, I feel like I was really on one today, I was, but it's because I feel it deep down in my soul. I feel it deep down in my soul. And I just want you to know that living small is not gonna get us to where we need to be. I can say as a community, as a city, as a state, as the world, we gotta go in powerfully. So that's why I focused on the sustainability mindset. We need to just shift and think bigger so that we can really make the difference in the world that we wanna see. I know that you're doing the work. I'm not saying that I see you doing the work. I just want you to work smarter, not harder. Okay? So invest in your nonprofit and let's get out there and do the work. All right? So I'm gonna sign off right now, and I'm gonna say to you what I always say, because I mean from my soul. I want you to take care of you, like you take care of your community. And until the next episode, I'm out.
Speaker 1 (24:03):
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.
