Episode 62: Why You Should Start a For Profit Instead of a Public Charity

You can make a difference in your community as a for profit business. You’d probably make more of an impact than if you formed a nonprofit. This episode will explain how.

LINKS:
YouTube Nonprofit Program
Google for Nonprofits

OFFER: Borrow My Brain Calendly Link

NONPROFIT SPOTLIGHT: A Place Called Home

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 (00:30):

Hello fam. Welcome to On Air with Amber Wynn. Today I have a very interesting topic for you. It's called Why You Should Start a For-Profit Business instead of a Nonprofit. A little odd, huh? I am, I've decided to have this topic because when I meet with individuals who have decided they're starting a nonprofit, I meet with them with an open slate and I listen to their ideas. You know what they're trying to accomplish, and nine times out of 10 individuals are trying to shove a circle into a box, right? Someone's told them, or they believe that starting a nonprofit would be easier. And so they've decided, well, I want to do this, and so I'm going to start a nonprofit because I'll get this money to do it. And after our conversation, nine times out of 10, I said, Nope, that's not a good business model. 

Speaker 2 (01:32):

A nonprofit doesn't really serve you because what I'm hearing you say is that you really want to accomplish these things. You really want to do these things. And they're like, yeah, but if I start a nonprofit, I can get a grant to cover it, and I tell them the truth. No, you won't. And they're like, what? And you don't have to start a nonprofit to accomplish the goals that you want to accomplish. And so today's topic, I am going to break down why you should start a for-profit instead of a nonprofit. You're going to thank me after this conversation. I'm just saying. We're going to pause, but when we get back, we'll jump into the topic. 

Speaker 3 (02:15):

Are you a nonprofit organization with 501(c)(3) status? Are you using video to promote your cause and attract donors? If you answered yes to both of these questions, then the YouTube Nonprofit Program was created, especially for you. The YouTube Nonprofit Program allows you to activate your cause, broadcast a compelling story, and launch an effective campaign via YouTube. The program gives nonprofits access to YouTube tools that most users don't get; an embedded donate button, call to action overlays, annotations live streaming, and access to a community forum. So take advantage of this program for your nonprofit and you can really see the results in your video and overall communications. 

Speaker 2 (02:57):

Welcome back to On Air Amber, it's your girl, Amber Wynn, Philanthrepreneur. And today we're going to have that conversation. Today, I am going to say what no or not meaning nonprofit consultants will say to you, right? They're not going to say to you, you know what? You shouldn't start a nonprofit. You should really start a for-profit. Why? Because their livelihoods are based on you starting your nonprofit. Either they are there to help incorporate, they're there to help strengthen your board. They're there to help generate revenue through grants or development, whatever whatever. Listen, that is not my purpose. That is not my function. Yes, I'm a nonprofit consultant. Yes, your sister has got to get paid. Yes, all of that. My purpose though is to strengthen communities, and guess what? There's more than one way to skin a cat. Okay? So today we're going to talk about why you should actually start a for-profit instead of a nonprofit. 

Speaker 2 (03:56):

Number one, let's take two steps back. If your purpose is to make a difference, make an impact in your community, you can do that as an LLC or a corporation. You do not have to be a 501(c)(3) to make an impact in your community. Talking from personal experience, back in 2013, I started a nonprofit, the Institute for Nonprofit Management because I wanted to do what I'm doing right now, as a consultant. Your girl is not a nonprofit. I am. I have been formed as an S-corp. I have a corporation, and I am making a huge impact in my community. You know why? Because I am training nonprofit organizations on how to run their nonprofits like businesses. I'm helping them to strengthen their infrastructure. What does that mean? Systems are being in place so then they can produce the documents that funders are asking for. 

Speaker 2 (04:54):

I am providing technical assistance. I'm telling nonprofits the truth about what it is that funders want and what they need and how to get it and how to do it. That is important, because once you understand the formula, once you understand what it is that a funder wants and needs, then you can provide it for them. Then you can generate revenue. I do that as a consultant. I don't do it as a nonprofit. Back in 2013, I thought, well, let me start this nonprofit, then I'll get this money from the government and then my nonprofits because I know they can't afford it, they can just take my courses. It didn't happen because back then there wasn't an appetite for it. Now we're in the space, bless his heart and rest his soul, after George Floyd, there's money being invested in our communities, and so as a result, as a consultant, I'm able to impact nonprofits. 

Speaker 2 (05:47):

Why? Because funders pay me. Same model that I thought that I would implement back in 2013, but they weren't feeling it. They weren't feeling it because when you start a nonprofit, it's with the understanding that you know what you're doing. It's with the understanding that you understand that there is a business that you're starting. The reality, though, the reality and what funders believe should be the reality are so far apart, and my conversation with funders are, yet they should know, but they don't. They're starting their nonprofits because there is a need and they're trying to meet that need. They're not going through a master's program in nonprofit management. They're just jumping in, rolling up their sleeves and doing the work. Fast forward, if you have an idea, if you want to make a contribution in your community, say for example, say for example, you want to improve the arts in the community, so you have an arts program, you do not need to start a nonprofit in order to have an arts program. 

Speaker 2 (06:53):

You know why? Because you can get money, either a contract from the government, you can get sponsorship from companies that align with your mission or you can get grants. You do not have to start a 501(c)(3) tax exempt status. People are like, well, I've been told if you have a nonprofit, then I can give you a grant. So that's why I want to start it. If you have an LLC or a corporation, you can get your program fiscally sponsored. What does that mean? It means that there's an organization that has been established to help businesses qualify for grants. So what they do is they take your program and they put it up under their umbrella. So basically they're saying, I will accept this grant on behalf of this program and you will deliver it. They're going to accept the grant, they're going to do the reporting, the financials, and there's a shorter bandwidth, right? 

Speaker 2 (07:55):

Shorter time for you to launch because you have this organization that is specifically designed to help for-profits or nonprofits roll out quicker. You're using their financials, so there's a higher likelihood that you'll be funded. They have the expertise and experience and responsibility of providing the reporting to the funders, which you do not have. So there are more than one ways to skin a cat, and I'm saying to you, go in understanding that you don't have to start a nonprofit because when you start a nonprofit, you have to recruit a board because the board is responsible for running the organization. For those of you who don't understand that, you're going to take you a couple of years to figure it out. Then you've got to recruit the board. Then you got to make sure it's the right board members and all of that where if you have a company, you just get paid and you start and you roll, right? 

Speaker 2 (08:54):

That's that's what I did. I started my nonprofit consulting and now I am providing training services to nonprofits all across the country, and I don't have to worry about a board that's telling me, you've got to do this. You've got to do that, because that's their role, that's their responsibility, and if I don't do what the board says, then I can be fired. The revenue that comes in, it comes into Amber Wynn, and I decide what to do with it because I've invested my money in it, then I can get that money back. When you invest your money into a nonprofit, it has to go back into the nonprofit. So I'm just saying to you, don't just jump in thinking, oh, this is the only way I can do it. Oh, this is the only way that it can be done. I've been told this is how it has to … 

Speaker 2 (09:38):

Do your research. You can impact your community. You can open up a donor advised fund, right? You can open up a donor advised fund and the money can come into that donor advised fund and the donor will get a tax write off. But a donor advised fund for all intents and purposes is just like a bank account. So you don't have a board, and you don't have infrastructure, and you don't have staff. Those grants can be given out to whatever the donor advised fund is established for. I am saying to you, you may think that the only way that you can make an impact in your community, the only way that you can serve communities that are under-resourced, marginalized, is through a nonprofit, and I am telling you that that is not the case. I am telling you, if your goal is to own a business in the for-profit structure, you can own that business. 

Speaker 2 (10:38):

You can't in the nonprofit. If you are afraid of someone taking your company from you as a Founder, people have created this thing called a Founder's Clause. It does not hold up in the nonprofit because you can never own it. However, in a for-profit, there's something called a Founder's Agreement that talks about if you dissolve the organization, what happens to the assets that talks about you having a say so in the operations of your organization. If you're not there, it doesn't exist in the nonprofit sector, right? If you want to be President and CEO, you can do that in a for-profit company. You can't do that in a nonprofit company because a President is over the Board, the CEO is over the paid staff. Guess what? Paid staff reports to the President. Are you going to fire yourself? No. So you can't be the President and CEO. 

Speaker 2 (11:30):

So all of these things that the IRS has predetermined, not Amber Wynn, the IRS, these are the rules that you have to follow, and when you buck up against those rules. People try all the time, well, I'm going to be on the Board. I'm just going to not do this, and oh, I'm going to just trying to get around it. It doesn't work. What you get is struggle. You're not in the community like you originally wanted to do because you're trying to fit this circle into a box or this box into a circle and it doesn't work. Do what best aligns with your goals. If you want generational wealth, start a for-profit company. If you want to own a business, start a for-profit company. If you want to be able to pass something down to your kid, start a for-profit business. If you want a return on your investment financially, meaning if you put in $20,000, you want to get that $20,000 back, start a for-profit company. 

Speaker 2 (12:33):

There are so many reasons why you should start a for-profit company and not a nonprofit. There's probably more reasons why you should start a for-profit than a nonprofit, and I'm here just to tell you the truth today. Don't go in blind thinking you have to start a nonprofit to make an impact in your community because your girl right here is proof that that is not the case. You can connect with Funders, Corporate Sponsors, and you can get contracts. You can get revenue to cover your costs as a for-profit to continue to do the work that you want to do in your community. So you may say, how, and I'm going to say to you, I can't cover all of that in seven minutes, but what you can do is go to my website at www.amberwynn.net and you can click on “Borrow My Brain” and I will look at your structure and let you know if you should really start a for-profit or if you should start a nonprofit - that much I will do for you. 

Speaker 2 (13:34):

So I'm going to drop the link for my Calendly, and you can schedule some time. That makes no sense for you to go through two, three years struggling only to decide, mmm, I should have started a for-profit. We need you in the community making a difference, whether that's as a consultant, whether that's as a B Corp, whether that's as an LLC, whatever your business structure is, you can make a difference in your community. It does not have to be with a nonprofit. A nonprofit is a lot of work y’all. That's why your girl is not a nonprofit right now. 

Speaker 2 (14:10):

I am at this place in my life where I want to make a difference, but I don't want to work that hard and I work hard as a consultant, but I know that I work three times as hard as a nonprofit leader. So, I have made the decision to function as a for-profit and it works for me, and I'm saying it may work for you. Let's have the conversation before you get started, and if you've already started, there's no reason why you can't make that shift. If functioning as a nonprofit is not working for you, I'm going to say two things. Either you need to do the research and align yourself with an organization i.e. Amber Wynn Philanthrepreneur that can help you get your nonprofit on the right track, or you need to look at does this not work for me? Dissolve the organization and function as a business entity that works for you. 

Speaker 2 (14:59):

We got work to do in the community. We don't have time for you to be floundering out here trying to figure out what it is you need to do. All right, that is it for today. I can go on and on because I am passionate about this stuff, but I want you to go in open-minded knowing that it may very well be that if you're thinking about starting a nonprofit, that you might be best suited for starting a for-profit. When we come back though, we have a question coming out of, I believe it's Long Beach in our Ask Amber session, so we're going to pause and then come back and get your questions answered. 

Speaker 4 (15:38):

Nonprofits are building a better future for everyone, whether your organization focuses on bringing clean and safe drinking water to everyone on the planet or caring for people in your local community. Nonprofits like yours are making a difference every single day, but nonprofits also face a unique set of challenges; how to manage volunteers and operations on a limited budget, how to raise awareness about your organization and mission through storytelling and how to drive more engagement from donors to fundraise for your nonprofit. We believe that every nonprofit should be able to focus more energy on making an impact. Our mission at Google for Nonprofits is to equip nonprofits with the best of Google tools at no charge in more than 60 countries around the world. Your nonprofit can collaborate and communicate more effectively with smart, secure business apps from Google Workspace with Gmail, your nonprofit employees and volunteers can send email from your nonprofits custom domain. 

Speaker 4 (16:46):

Teams can stay connected from different locations by using Google Meet and Chat, and you can access and collaborate on documents from anywhere with Google Drive. Increase your productivity so you can spend more time serving your cause or community. Through Google for Nonprofits, eligible organizations can receive free advertising to run ads on Google search with ad grants. Ad grants enables your organization to appear in ads on Google search. When someone's searching for topics related to your mission, your nonprofit can receive free advertising to raise awareness, reach donors and recruit volunteers. Tell the story of your organization through video to create an emotional connection to your cause. With YouTube, nonprofits can expand their audience, reach new supporters, and connect viewers to their mission. And finally, imagine that your donors and supporters could see exactly where their donations are making a difference. With Google Earth and Maps, nonprofits can create compelling custom maps that help tell their story to the world. Nonprofits are changing the world. We are here to help. Learn more at google.com/nonprofits. 

Speaker 2 (18:12):

Welcome back to On Air with Amber Wynn. This is the time in our episode where you get to ask your questions. I always want to be relevant. I can talk forever, y'all know that, but I want to make sure that the content that I'm providing you is useful and helpful. So this is your time, so let's hear our next question on Ask Amber. 

Speaker 5 (18:38):

Hey, Miss Amber, this is Sierra and Raquel calling from Long Beach, California. Our question is about kids starting a nonprofit. Yeah, we've been doing community service projects all throughout high school. Woo, woo, St. Anthony! And now that we've graduated - Go class of 2023! We wanted to know more about starting a nonprofit specifically, can youth start a nonprofit? You hear about it all the time, kids starting nonprofits. Are there rules around youth starting a nonprofit? Yeah. Yeah. Thanks, Ms. Amber. 

Speaker 2 (19:07):

First of all, were they not the cutest? Okay, Sierra and Raquel. Okay, I'm sorry. I'm just smiling big here. First of all, I love it that youth are starting early thinking about being in community. I mean, they're excited about being in community. Yes, there are rules around it, primarily because you're minors. If you are under 18, you definitely can perform the programs, right? You can do the outreach, you can do the services, but when we talk about starting a nonprofit, meaning filing paperwork and signing on contracts and things of that nature, incorporate articles of incorporation. No, you can't start a nonprofit. You can't form an organization because you're minors, and as such, these entities won't approve it. You need to be an adult, so probably your parents will have to officially start the organization, meaning they'll be the authorized individuals on the contracts, on the articles and filing forms and things of that nature. 

Speaker 2 (20:17):

But once you're 18, you're definitely legally able to start a nonprofit. When you see on television, oh yeah, this kid has started a nonprofit. Their parents have started, they've incorporated under their names, but their child is probably the face. Their child is the one doing the work, and when they get 18, then they'll put them on the documentations and things of that nature. But that was a very good question. Thank you, Raquel and Sierra out of Long Beach, and I look forward to seeing the work that you're doing in the community. All right, so now we're going to shift to the next segment of the episode called Nonprofit Spotlight, and it's when I have the opportunity to shine the light on the most amazing individuals doing the work in the community, right? Fill in the gaps that companies aren't doing that the government can't do, and that's you my loves my nonprofit leaders. Today we're going to spot Shine the Light on an organization called A Place Called Home. A Place Called Home first swung opened its doors in 1993, a year after the LA Civil Unrest, and it was amidst an epidemic that made the streets of South Central unsafe for its children, and so what they wanted to do was to create a multi-service youth and community center, and it's evolved and grown on the corner of South Central Avenue and 29th Street. So let's check out A Place Called Home. 

Speaker 6 (21:52):

The mission of a place called Home is to prepare our children and the community for the future. 

Speaker 7 (21:58):

To create opportunity in a neighborhood where 88% of the residents live below the federal poverty line.

Speaker 8 (22:04):

Where the crime rate is 60% higher than the national average. 

Speaker 9 (22:08):

And nearly 50% of students don't graduate high school. 

Speaker 10 (22:12):

When I walked into APCH, it felt like I was home. As the daughter of immigrants, I understand how important this work is. Every child has that opportunity to pursue their dreams and to achieve a life that they can imagine for themselves. 

Speaker 11 (22:28):

We've started programs in workforce development, theater, digital media, life mentoring, rights of passing impact, serving our teams with the highest needs. We created a new performance art center, expand the community engagement, 

Speaker 10 (22:41):

Expanded our educational services. 

Speaker 6 (22:43):

We have three gardens. Our kids know where food comes from, how to make it delicious and what's good for them and what's not. 

Speaker 11 (22:50):

One of the things that sets APCH apart is our robust counseling program. Being able to have emotional support can make all the difference. 

Speaker 12 (22:57):

It just feels like home, and I just feel like I can express myself as much as I want. That's a really wonderful space to have. 

Speaker 13 (23:04):

This place was like a portal to get you into something else that's beyond your wildest dreams. 

Speaker 14 (23:10):

I'm planning to go to college for an APCH scholarship to study computer science. 

Speaker 15 (23:14):

I became a member of APCH at the age of 13. I went on to get two engineering degrees with the support of the APCH Shaheen Scholarship. I currently serve as a COO for a real estate development firm, and I'm a proud board member of A Place Called Home. 

Speaker 10 (23:30):

I am excited and honored to lead APCH into the future. We're excited. 

Speaker 6 (23:41):

We're committed. 

Speaker 9 (23:42):

And we'll be here day after day making a difference. 

Speaker 6 (23:46):

Every child needs A Place Called Home and we want to make sure that we reach as many kids as possible. 

Speaker 2 (24:05):

Yay. Thank you. A Place Called Home, Central and 29th. That's my, that's my stomping ground y’all. If you are interested in supporting, visit them at www.apch.org because they're out there doing the work, y'all. All right, so we're going to close out this session with my Mindset Minute. Mindset Minute is where I share just a minute with you about something that I've been thinking about today. I've been thinking about where should executive directors spend their time, and that's an ominous statement because if you are an executive director, you're like, I'm spending my time doing everything, and this is what I'm here to say. You shouldn't be. An Executive Director should not be delivering programs or writing grants as an Executive Director's role is more high level, right? You're supposed to be out there networking and creating collaborations, recruiting board members that's going to help you move your mission forward and bringing in revenue. 

Speaker 2 (25:13):

You should be in front of Funders so that you can talk about, be the ambassadors, brand ambassador about your organization, talking about all of the amazing things that your organization does so they can be inspired to then write that check. You should be out there, like I said, recruiting board members, recruiting staff members - high level, long term strategizing, being out there in that space where you're growing your organization. If you are doing the day-to-day, then guess what you're doing the day-to-day and not doing any visioning, not doing any strategic planning for the future. It's really just about right here, trying to keep the doors open. Now, you may say, yeah, all of that's wonderful and great, Amber, but I don't have the money. I have to deliver the programs. Well, there are other ways to deliver your program that will allow you the breadth and depth, the space to grow your organization, and if you want to learn more about that today, I am running a special, you can go to my website, click on “Borrow My Brain” for 60 minutes, and I can talk to you about how to shift your mindset from I have to do everything and I have to deliver programs and write grants too. How you can really start to build out your infrastructure so that you can delegate that, so that you can have somebody else do that so that you can generate revenue, right, to get the most important people in place who can then help you generate a bigger pot of revenue that's going to then help grow your organization. 

Speaker 2 (26:48):

I'm going to say that again, you want to focus on those things that's going to allow you to hire people who will then bring in revenue to then hire those ancillary positions that's then going to grow your organization. It is strategic. It's not going to happen overnight, but you have to put the strategy in place, put the strategy in place that's going to increase your capacity, remove you from the day to day so that you can do the high level work that's then going to allow you to grow your organization, and I can show you how to do that. So if you are interested, click on the link, borrow my brain for 60 minutes, and I can give you the strategy for that. That's all we have for today. I hope you enjoyed this episode, Why You Should Start a For-Profit Instead of a Nonprofit because it's something that I say quite often and I said, let me say it to my community so that they know that there are other options out there for making an impact in the community without the heavy lifting of starting a nonprofit. Thank you for your time today. I'm always excited to be in community, to be in your space. I appreciate you spending your time with me. It's 30 minutes that you could be doing anything, y’all, and I don't take that lightly. I appreciate you, I love you, and I want you to take care of yourself, like you take care of your community. See you next week. 

Speaker 1 (28:11):

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.