Episode 48: A Nontraditional Approach To Budget Savings - Leverage your Tax Exempt Status

Cost savings should be a part of every Fund Development Strategy. Tax exempt organizations have been given a special status by the IRS to incentivize donations. Learn how to leverage your organization’s tax exempt status, the right way, to maximize budget savings and increase your organization’s flexibility.

LINKS:

Constant Contact
donor Box Events
NONPROFIT SPOTLIGHT: ChildFund

Podcast Transcript

Speaker 1 (00:05):

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):

Amber Wynn. Hey, when you’re in it to win it. Good morning fam, it's your girl. And today we are continuing our series on a Nontraditional Approach to. Our topic for today, a Nontraditional Approach to Budget Savings. Now, if you are serious about strengthening your nonprofit organization, and I know all of you guys are, it comes down to your funding strategy and a comprehensive budget strategy includes generating revenue. And on the flip side, budget savings. And when I say budget savings, I mean you try your hardest not to spend money out of your budget. And what I've experienced a lot is nonprofits trying to buy everything, right? I need a grant so that I can buy equipment. I need a grant so that I can get this space. I need a grant so that I, and the IRS has given you, has granted you this tax exempt status for a reason. The IRS knows that what you do is important. What you do benefits the community, and so they've given you this special dispensation, if you will, so that people will be enticed to support you. It's called a tax benefit. And a lot of times my amazing nonprofit organizations forget that. And so today we're going to have that conversation, budget savings, leveraging your 501(c)(3). So let's pause for a second, and when we come back, we'll jump right into it. 

Speaker 3 (02:21):

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Speaker 2 (03:21):

Welcome back. You're On Air with Amber Wynn. This is your girl. And today we are talking about a Nontraditional Approach to Budget Savings. This is very important for nonprofit organizations because the IRS has gifted you with some like pixie dust. What does that mean? That means you have the opportunity to do things that for-profit companies cannot do, which is to offer your supporters a benefit, a tax benefit. But before we jump into that, I need to step back two steps to say it's really important that you understand how to use your powers for good. What do I mean by that? The tax benefit, some people say, Oh 100% of what you donate is tax deductible. You cannot say that because that is not true. You do not get to determine how much of a person's donation is tax deductible. The laws have changed, and so it's important that you are responsible and that you do not mislead your donors. 

Speaker 2 (04:32):

The appropriate thing to say is that the organization is a 501(c)(3) tax exempt organization and that their donation may qualify for a tax benefit. And then you want to suggest that they consult with their tax professional to determine how much they can claim. That is the responsible way to approach advertising the value of your tax exempt status. It is irresponsible and it just drives me crazy when people say 100% of your donation is, it's not, and it's not for you to determine. With that said, and putting that disclaimer out there, there are some things that you can do to use your benefit to reduce your budget spending. And that's the goal today, is to reduce your budget spending. Because the more money you save, the more money you have to do other things. For example, I had a client and she was hosting an event and then afterwards, a social afterwards, she's like, oh, well, we need to buy the wine and we need to buy the food. 

Speaker 2 (05:44):

And I was like, you need to ask somebody to donate that. They get a tax write off for that. A company can say that they're donating and get a tax write off for that, and you can save money. That $500 that you were going to spend to have this social or whatever, that $500 can go directly to your program. So oh, in the budget they put, oh, we want to buy a van because we want to take our kids. You better go to a dealership and ask them if they will donate a van, donate a van, donate a van, and let them go to their accountants to figure out if that can be written off. So I feel like most of the times when you shouldn't be saying it, you're saying, oh yeah, for these tickets, for events, 100% of this is tax deductible versus when you really should be utilizing it to substitute or subsidize your budget. 

Speaker 2 (06:44):

It's not being used. So this episode, that's what I want to focus on. I want to say instead of buying, ask for donations, right? I had another organization, they were like, oh yeah, well, we need to buy some Pampers for our participants. Our moms can't afford it. If you don't go and ask Pampers or Huggies for a donation, you know how good that's going to make them look? Well, I don't know. I don't why they would do it. They would do it because it allows them to say to the world, listen, we've donated over 15,000 diapers to help people in need. It makes them look good. And then they also get the tax write off. So the other thing I want to emphasize is don't beg. Don't beg. Your tax exempt status is an opportunity for a company or a person to partner with you, right? To partner with you in order to make a difference. And here's the thing. The other reason why companies and corporations donate is because it benefits them. Think about it. 

Speaker 2 (08:02):

The best time to reach out to a company is around tax time. Research has shown the highest time of giving is in December because people have to bring their taxes down before the end of the year. So December is a good time, but also April, right before taxes are due. So when you're thinking out your strategy, think out, Oh, what are the things we're going to need for the following year and ask for those donations. You can ask for products. You can ask for someone to underwrite the printing of your t-shirts and then have their logo on the back or up under the name and say, Amber Wynn supports the Boys and Girls Club, or Amber Wynn supports Girls Inc. or whatever, but they paid for the printing of the shirt. Now here's my formula. I go to the people who already either deliver the service or make the product. 

Speaker 2 (09:00):

So for example, I would go to Haynes T-shirt and say, Hey, can you donate some T-shirts? Because they already do it. They probably have a surplus. And especially during these times, these economically challenged times when people can't move products because it's inflation, things are too high, people aren't buying. This is one way to help companies bring down their taxes. So no one's buying t-shirts because they've got to hold onto their chips. They don't know where the money's going. They don't know how the economy's going to go. This is a perfect time to reach out to a company. Hey, can you donate some T-shirts? Yes, yes. Well, how many do you need? Because that's going to help them bring down their taxes. So that's a business practice, and I've told you a nonprofit is a business. It's just a business with a philanthropic purpose. So we got to look at things in ways that we can maximize resources. 

Speaker 2 (09:49):

The other thing is, besides having the tax benefit, it's really good for, it's really good for publicity. As I mentioned before, a company wants to say that they are a part of the community, and so that's why they would donate a van. On the bottom of the van you'd put This van was generously donated by Galpin Ford. Bam. That's visibility. People get to see that, and they get to write that off in terms of taxes. So, the perfect time recessions are really bad for for-profits, but they're really good for nonprofits because in a recession, companies can't move their products. So they need a way to balance things out. In a recession, a nonprofit can go to, even like services. If you think about it, Hey, an attorney, they'll do something pro bono. They get to write that off. They get to put that in their annual report, an accountant, marketing. 

Speaker 2 (10:46):

Sometimes people need to do work to build up their portfolio, but the benefit is that they can write it off as a business tax, a tax benefit. So think about the things that you need. First, ask the company if they would be willing to do it pro bono, tell them upfront, we're a 501(c)(3) tax exempt organization. We'd love it if you would do it pro bono, we would be more than happy to provide you with the donor acknowledgement letter. Here's the thing about the donor acknowledgement letter. It is a requirement because that's the letter that they have to give to their accountant to justify or prove that this transaction actually happened. I am going to put in the bio a link for a sample of the Donor Acknowledgement Letter so that you know what should be included. But you want to say to the company, Hey, we're a 501(c)(3). 

Speaker 2 (11:43):

Would you consider donating this to us? We'd be more than happy to give you a donor acknowledgement letter. In that donor acknowledgement, the original form, the nonprofit cannot determine the value of the donation, whether it's a product or a service. The nonprofit cannot determine that. The person or the company who's giving, they have to put in there how much the value of that product or service is. So, it's not up to you. If someone donates 25 shirts and they say it's worth $250, they make that determination. You say thank you, and you put that amount in your donor acknowledgement letter and you send it off, and then they give it to their accountant. So it's not your responsibility to determine the fair market value. It is your donors. They'll do what they do. You say thank you, and you give them the letter. The whole point of this conversation, guys, is you want to save as much of your money as possible. 

Speaker 2 (12:45):

The more you save, the more you're able to support your programs. So your first option should be, can you donate? Are you interested in pro bono, providing us with services that you can then write off on your taxes? Okay, so when we talk about a nontraditional approach to budget savings, I'm not talking about clipping coupons, although I'm not opposed, it's just a lot of work. I'm talking about actually leveraging the benefit that the IRS has provided you as a 501(c)(3) tax exempt organization. All right, we're going to pause right now, but when we come back, I have a question from Ashley. Ashley in New York. So when we come back, Ask Amber.

Speaker 4 (13:33):

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Speaker 2 (14:07):

Welcome back. You're On Air with your girl, Amber Wynn, resident Philanthrepreneur, and this is the time of the episode where you get to ask me your questions. If you have a pressing question and you want me to answer it, hit me up on all of my socials, any one of my socials. Let me know what your question is. I want to make sure that the information that I'm sharing with my audience is relevant. You know, I can talk all day, but I want to make sure that the information that I'm sharing with you is helpful. So, this week's episode question comes from Ashley. It's actually not even a question. 

Speaker 2 (14:48):

Ashley says, hello, Amber. My name is Ashley. I run a nonprofit here in New York supporting abducted immigrants, forced into sex work. A girlfriend in LA sent me a link to your podcast. The topic was on Founders Syndrome. It was her not so subtle way of telling me that I was basically sabotaging the organization. I found it. I have to admit it hurt, but it really opened my eyes and I started devouring the rest of your episodes. They've been so eye-opening, the way you explain things make them so doable. So I don't really have a question. I just wanted to thank you for this valuable resource and encourage you to keep sharing. Just like you say, the world needs nonprofits, the world needs Amber Wynn. Wasn’t that cute. So I shared that because first of all, Ashley, thank you so much. That really touched my heart and I shared it because I'm talking into a vacuum. 

Speaker 2 (15:47):

I'm talking to my engineer, Hey, Felicia. And so I don't get the feedback. If you guys don't DM me, you don't email me. I'm just here. And I'm hoping that it helps. So just when I got that email, I'm looking for questions and I'm like, Aw, thank you. So thank you so much, Ashley, and if anybody else has a question or if what I'm saying to you touches you and helps you send it the love, come on now. I need love too. Let's just keep it real. So I just wanted to share that. Please indulge me. Thank you. Appreciate you. All right, so we are going to keep it moving fam. Today, right now, in this moment, I get to do what I love to do, which is to give my nonprofits all the props that they deserve. You guys work so hard. It's a thankless job sometimes, like a mama's job, you do it, you love it. 

Speaker 2 (16:51):

You would give your life for it, and no one thanks you for it. Amber Wynn, thanks you for all the work that you do in the community, all the difference you make in the lives that you touch. Thank you very much. And in this moment, we are going to highlight a nonprofit who is doing that? It's the Child Fund International. And since their beginning in 1938, that's a long time. I was born in ‘68. Since their beginning in 1938. First, as China's Children Fund and later as Christian Children's Fund, their approach has evolved into one of community development focused on strengthening families and community structures that make up a child's environment. Let's hear a little bit more about ChildFund. 

Speaker 5 (17:36):

We need each other, now more than ever, because every someone needs someone else. We need each other because when we work together, we can do so much more, like connect more children with what they need to grow up healthy, educated, and safe. We need each other, because when you make someone's world better, you make everyone's world better. ChildFund, because we need each other. 

Speaker 2 (18:35):

Indeed, we do. If you are interested in supporting ChildFund, please contact them at www.childfund.org. Yay. All right, so we're going to wrap up this week's episode, talking about a Nontraditional Approach to Budget Savings. So trying to not spend your budget by leveraging your 501(c)(3) tax exempt status to get donations from companies, corporations, and individuals. And the topic for this Mindset Minute is stop begging. I said it. Stop begging. So many times, nonprofits will be like every little dollar that you give helps. That's begging, and it doesn't come from a place of value. It's not empowering. It's not inspiring. You have the opportunity to leverage your 501(c)(3). My suggestion, my recommendation, is that you use your tax exempt status the way that it was given as a benefit, right? So stop begging. Frame your ask as an opportunity. You want people to see what you are offering as an opportunity to make a difference, not as you know, a handout. 

Speaker 2 (20:01):

You are doing the work. The work is impactful. They should be happy to join you in making an impact, not, please help us without your donations our kids want this and our kids. No, no, no, no. Our kids are amazing. And with your help and your participation together, we can create X, Y, and Z and list what X, Y, and Z is. So it's one of my pet peeves as a Fund Developer when people beg, because it's not empowering. It's not inspiring, it's annoying, right? So stop begging, explain how partnering leads to X, Y, and Z benefits. Make them feel like they are part of something amazing. Listen, I am going to put another link in my bio with a couple of examples of solicitation letters, donation requests, so that you can get a feel for what I mean when I say write letters that are inspiring. 

Speaker 2 (20:58):

Write letters that demonstrate benefit. Because I know in the traditional world, people think that you have to do doom and gloom in order for people to support you, but it's not inspiring. No one wants to partner with a sinking ship. It's sinking. It may seem contradictory, but people want to be with winners. So you want to talk about all of the good work that you're doing, not about the work that you can't do, right? Not about what's not being done. You want to talk about partnering with you in a way that what you're doing can be expanded and you can make more of an impact. Okay? So that's my Mindset Minute tip, and it's real simple. Stop begging. All right. So, as we wrap up this episode, we've got a couple of more episodes on a nontraditional approach to, because let's just keep it real. That's how your girl rolls. 

Speaker 2 (21:58):

90% of the things that I do are not traditional. When you're traditional, then you're a part of this group that does things the same way. You don't stand out, therefore, you're lumped and grouped into this space of mediocrity. And nothing about your girl is mediocre, I'm just saying. So stay tuned, and if you're liking what you hear, please share. Share with the rest of your community. Subscribe, like, go check out my social media platforms. Go check out my website. I have free resources there. And be sure to click on the links today for my offers. I am providing you with a link to donor acknowledgement letters. You need those when you're asking companies to donate. You want to provide them with Donor Acknowledgement letters with your tax ID number so they can give that to their accountant. And then I'm also going to provide you with a sample of what a powerful Request for Donation letter looks like. You want to inspire, you want people to give because they like what they're doing. All right? So all of those goodies are going to be in my bio. Check out those links and come back and see me next week because I'm going to be here rooting you on, your biggest cheerleader. Woo hoo. 

Speaker 2 (23:16):

All right, guys. Enough of being goofy. I will see you next time. Remember, take care of yourself, like take care of your community. 

Speaker 1 (23:26):

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.