Episode 37: The Thing About Titles: Founder v Executive Director
The thing about titles in the nonprofit sector is that they matter . . . to the IRS and to Funders, because titles in the nonprofit are tied to specific roles and responsibilities. They also come with power. Learn the importance of titles and why you should know what each title is responsible for in your organization.
LINKS:
Nonprofit Ready
Nonprofit Elite
NONPROFIT SPOTLIGHT: Write Girl
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 Philanthreprenuer Amber Wynn.
Speaker 2 (00:31):
Hey fam, it's your girl, Amber Wynn. I'm excited to be here this week. I'm always excited to be with my fam and to share my 30 years of knowledge in the nonprofit sector cuz, you know, the world needs nonprofits. But it needs nonprofits that are continuously bringing in money so that they can support their infrastructure, pay their people, make sure that the ones who are delivering the services are cool. You guys do an amazing job of taking care of the community a lot of time, it's at your own personal sacrifice. And so I am here to provide you with the roadmap to long-term sustainability and impact. It's an honor, it's a privilege. And today we are gonna talk about the thing about titles. That is the topic of our episode today. The thing about titles, because what I keep seeing with my nonprofit leaders is that y'all making stuff up. And in the for-profit sector, it's not really a big deal because there's not the same type of oversight. As a nonprofit, you don't own it. You are under the auspices of the IRS and so titles mean things. And so when we come back, cuz we gotta open up with the sponsor, but when we come back, we're gonna dive into the thing about titles, the thing about titles, when we come back, that's what we're gonna dive into.
Speaker 3 (02:06):
Starting a new career in a new sector with unfamiliar job titles and new jargon can lead to frustration and burnout.
Speaker 3 (02:16):
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Speaker 2 (03:27):
We're back, and in this episode we're talking about The Thing About Titles. We're talking about titles because they matter. In the for-profit sector, you have some really creative names out there. You've got the Chief of Fun and you've got your Chief People Officer and you've got all of these different names and they don't really matter, per se, because there's a different type of regulation going on in the for-profit sector. However, in the nonprofit sector, those titles mean something. The IRS, when they have things like Executive Director, Program Director, Program Manager, those titles, they mean something. And so if you are submitting an org chart, which a Funder will ask you for, and you've got these really wild titles, it's hard for a Funder to know if you really know what you're doing, right? Because there's an expectation for Programs Director, programs with an S versus Program Director. Programs with an S.
Speaker 2 (04:33):
Mean that there's a Director that is over multiple programs. If there's a Program Director, there's one Director and there may be multiple Managers. So it's a classification issue, right?. So I'm bringing this up because I'm seeing a lot of these really wonky titles. Yeah we're the Executive Board and then we have this team over here. And no, you can't do that. You can't do that because when a Funder looks at your org chart, when they look at how you describe your positions and they see all of these wonky titles, the first thing they're gonna think is, okay, these people don't know what they're talking about. They don't understand that they are a public charity and that they are governed by the IRS. So I want you to just be very, very careful about going into this nonprofit sector and thinking you can just make things up willy-nilly because it's going to be one of the things that's going to prevent you from getting money.
Speaker 2 (05:31):
Now, let's be clear, if you know me, if you've been listening to me, I'm about that dollar because when you make money, then that means that you are stable. That means that your staff is stable. So I'm gonna talk about the things that's going to potentially prevent you from generating revenue and something as simple as titles can prevent you from generating revenue. Let me explain. So as a Founder, as a Founder, you will always always always be the person who started the organization. Whether you're there or not, you will be that person. But the Title Founder describes the person who started the organization. There's no function that is associated with that with the IRS, but if you choose to get paid, then you would be the Executive Director. I'm gonna talk to you in the next episode about the difference between being a CEO and an Executive Director.
Speaker 2 (06:33):
But for this episode, you choose to get paid, therefore you choose to have the title of Executive Director. Well, Executive Director has a function, there's a classification, there's responsibilities, there's expectations. So if you come in and say, Well, I'm the chief of the kingdom, I don't know, they make up all kinds of names in the for-profit sector, then IRS is not sure that you know what you're doing. They know what an Executive Director's supposed to be doing because there are job descriptions for Executive Directors. Now, there's a tendency for nonprofits who really don't understand the importance of titles, They'll say, I am the Executive Director slash Founder. That's perfectly fine because you are the Founder and there's nothing attached to that title. But if you put President slash Executive Director, that's a whole different meaning. We're gonna dive into that in the next episode.
Speaker 2 (07:31):
But for this episode, it's important that you understand that if you are the Executive Director or you are the Chief Executive Officer, that those titles are tied to responsibilities that the IRS and Funders are looking for. Listen, a Funder is responsible for reporting to the IRS, so they have to be certain that the organizations that they're funding understand that and follow IRS rules. You may be providing amazing services in your community, but when you submit for your grants and they're looking at your titles, they're not gonna dive deep to see if you're really doing these programs. Remember, there is always more applicants than there is money. So just on paper, this could be one of the reasons why your grant is getting denied. I want you to eliminate all of the possibilities for you to get denied by a Funder. And when we talk about small things like titles, they may sound small to you, but they're huge for a Funder.
Speaker 2 (08:37):
A Funder needs to be comfortable knowing that they are providing financial support to a bonafide nonprofit. A bonafide nonprofit is not gonna have a title of Chief of Fund. This is not gonna happen. There's too many regulations that go along with it. So this episode and next episode, we are going to talk about The Thing About Titles. All right, so when we come back we have a question from one of our amazing nonprofit leaders out there in the community with our Ask Amber. But we're gonna pause right now and when we come back, we're gonna continue talking about titles.
Speaker 4 (09:19):
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Speaker 2 (10:40):
Hey fam, we're back and today we're talking about The Thing About Titles. And now this is your time to get your questions answered with the Ask Amber section. You can contact me on any of my socials, you can email me, you can DM me. This question is from a nonprofit leader and she hit me up on Facebook and this is her question. This is Janet. Hey Janet. Janet wants to know, as the Founder of the Nonprofit, what protections do I have to ensure no one can come in and take over my organization? I heard there was something earlier called a Founder's Clause I could put in the bylaws to give me veto power. Is that true? No. No, that's not true. Let me start off by saying you'll forever be the Founder. As I said earlier in the episode, no one can take that away from you.
Speaker 2 (11:41):
What a lot of people don't realize is when you start a nonprofit, you're starting a public charity. And the purpose of the public charity is to benefit the general public. It's not designed to benefit a person. So you can never own it. If you can own it, that means that it'll benefit you. So a public charity is not designed to be owned. So as the Founder, you will always have that title, but that's basically all you get with that is a title. There are no protections. You may invest $5, $10, $20, $120,000 of your own personal money, but you are doing that knowing that you can never own it. You can never pass the Nonprofit down to your children. It's not something that you can own as a five, as a 501(c)3 tax exempt organization. It is a public charity and you can never own it.
Speaker 2 (12:38):
So Janet, when you're asking me how can you ensure that no one can come in and take over it, the IRS has created the infrastructure for a 501(c)3 and it goes like this. You have the governance, the governing entity, which is the Board. And the Board has the power to hire and fire the paid staff, the implementation side, which is the Executive Director or the Chief Executive Officer. The Board is responsible for hiring and firing you. So if you, as the Founder, if you've decided you wanna get paid, you're gonna take on the role of Executive Director. And if you are the Executive Director, then the Board can hire and fire you. And that's where all of this comes in, right? Someone may advise you, Oh, well put in the bylaws that you have veto power. Listen, you don't. Veto power means then that you have more power than the structure that the IRS has created.
Speaker 2 (13:37):
And you don't. The Board, the most powerful person in a nonprofit is the President of the Board of Directors. Because the President runs the organization. At the end of the day, as the Executive Director, you should be going to your President saying, Hey, this is what we're thinking, da da, da. Because this is the way the IRS has created the organization. So I've had way too many people call me in tears saying, The Board fired me. This is my organization. I put in my blood, sweat and tears. I put in my own personal money. All of that may be true, but ignorance is no excuse for the law. Meaning, you may have done these things, you may have done them with great intentions, but at the end of the day, when it goes to court, a Judge is gonna say, Well, you don't have a right because this is the way the IRS created the organization.
Speaker 2 (14:35):
If you are a 501(c)3, then that's what, those are the rules you have to follow. It is important, and this is one of the things that I really emphasize in all of my courses when I'm talking to brand new Founders, that you do your research. A lot of people start nonprofits thinking they can make it up as they go along, or believing half of what somebody else said and another half of what. It is your responsibility when you start this organization to know the IRS rules. And so Janet, I am so sorry if I were to say anything to you. If you wanna make sure that you are protected, the only thing you can do is just do a really great job. Because a Board, their responsibility is not to do the day to day work. So trust me when I tell you they don't wanna fire someone cuz they don't wanna do the work.
Speaker 2 (15:23):
If you're doing your job as an Executive Director, then they're going to make sure that they support you and they reward you. If you're doing things that benefit you, that don't benefit the company. If you're making bad decisions, it is their fiduciary responsibility. Meaning legally, they are responsible for making sure that this nonprofit that's serving your community is run ethically so they have the legal responsibility to fire the person in that role. So all that said, be very, very sure that you know what you're stepping into when you start a nonprofit. You can never own it. You can never pass it down, you can never hand it over. It is not yours to give. So, that was Ask Amber. Janet, thank you so much for hitting me up on Facebook with that question. If any of you have questions that you wanna ask me, hit me up on all my socials or you can email me at amber@amberwynn.net and I am happy to take your questions.
Speaker 2 (16:24):
That's what I'm here for. I have a lot of information in this head of mind and I wanna share that information with you so that you can make better decisions so that your organization is strong. Yeah, all of that. All right, so now we're at the point of the episode that I really enjoy the most, and this is when I get to spotlight my nonprofits and this nonprofit I'm gonna spotlight today is really cool. I don't know for those of you out there who really don't know me, but I am a writer at heart. I'm an English major, and this organization is called Write Girl, W R I T E. And Write Girl is a Los Angeles based creative writing and mentoring organization that spotlights the power of a girl and her pen. And it's a thriving community with 200 volunteer women writers serving more than 500 girls annually. And they match girls with women writers who mentor them in creative writing. And every year they produce dozens of workshops and panel discussions and special events to help girls get creative and get through high school to get to college. So let's take a look at Write Girl.
Speaker 5 (17:44):
Write Girl has been helping girls in Los Angeles for nearly 20 years. Girls tell us, Write Girl is the one place where they feel inspired to be creative and empowered to share their voice. Teen girls are particularly vulnerable, especially during the intense upheaval of recent events. Write Girl is responding by bringing the Write Girl experience online, offering high-energy online workshops and one-on-one video mentoring.
Speaker 6 (18:13):
I saw this organization, which is about writing expression, creativity, mentoring,
Speaker 7 (18:18):
I think what they do for teen girls. I wish there had been something like that when I was coming up. I
Speaker 8 (18:22):
Know when I was young, like any encouragement was helpful. So anything I can do to help encourage other people, I will.
Speaker 5 (18:28):
Write Girl supports hundreds of girls with an uplifting community of women writers. Help girls write their way to brilliant futures. Please make a donation at writegirl.org.
Speaker 2 (18:49):
Thank you, writegirl. If you wanna support this organization, visit them at ww.writegirl.org/donate. And if you would love to have your nonprofit spotlighted, highlight it, whatever the word is, then contact me on my socials. What I need for you to do is to provide me with a video that's no more than two minutes. Make sure that the final page has your contact information. I'm on YouTube, I'm also on Anchor, so we want people to be able to find you. That's the whole purpose of spotlighting our nonprofits, is we want your potential customer or client to find you. But we also want Funders to find you. You're doing the work, you’re in the weeds, and sometimes you need somebody to toot your horn. So I'm here to toot toot your horn and let everybody know about the amazing work that you're doing in our community. So be sure to check out other nonprofits.
Speaker 2 (19:47):
And if you want me to spotlight you, email me at amber@amberwynn.net and let me know what's going on. All right, now it is time for our Mindset Minute. So I'd like for you as a Founder, and if you are a nonprofit leader in another position, Executive Director or whatever, I'd like for you just to take two minutes to think about what is your goal. Really, what is your goal? If you wanna run the organization, then your goal is to be an Executive Director because the Executive Director runs the organization. But if you want to be in control of the organization, if you wanna set the vision for the organization, then that's gonna be the President, right?. If you wanna get paid, you have to be the Executive Director because the President doesn't get paid. It's a volunteer position. It's something that this person is doing to make an impact in their community.
Speaker 2 (20:51):
But you need to know what the difference is, right? Don't make up the rules as you go along, because all that's gonna do is to get you into trouble. And then you'll have to find somebody like me who's gonna have to undo all of that stuff. It is important that you put in the time to do the research to understand what the expectations are. I can't say that enough. When people start, I have a consulting firm, the first thing they make you do is market research. Who are your competitors out there? They make you put together a business plan. They make you look at all of the elements of your organization. And that's not a requirement for nonprofits. And I think it's missing because what happens is we get people who start things not really understanding what the expectations are. What is your goal?
Speaker 2 (21:45):
For me, when I started my nonprofit, I knew that I did not want to be the Executive Director, cuz I know how much work it takes. But as the President, I wanted to be responsible for helping, supporting my Executive Director so that she could get in the community and do what she needed to do. As the President, I understood my role. My role was to fundraise, to make sure that the programs were actually happening, right?. So I am going to implore you to do the research. Go into this, if you're starting a nonprofit, understanding what your ultimate goal is. If your goal is to start a business, a nonprofit is a business. It's a business with a philanthropic purpose. But if it's to start a business that you can own, then start a for-profit. If your goal is to make an impact in your community, go visit my website, check out my blog.
Speaker 2 (22:40):
There are six other ways that you can make an impact without starting a business that you're gonna have to fundraise. If you know that you're passionate and you want to develop programs and deliver programs and you're good at operations, then yes, being an Executive Director is what you wanna be. A lot of times my nonprofit leaders fall into these roles. Well, I wanna get paid, so I have to be the Executive Director, but they don't have the executive director skills. And so that creates a whole lot of issues. What I'm saying to you right now, before you invest one dime, before you file your paperwork, is really, really sit with yourself and think about what your goal is. What it is you really wanna do. And if you have any questions, I'd be happy to take 10, 15 minutes. I have on my website an opportunity for you to reach out to me and we'll take a call and talk through it.
Speaker 2 (23:40):
Cuz I'm quick to tell somebody, based off of all the things you told me, you don't need to start a nonprofit. What you can do is X, Y, and Z. That's why I'm here. I'm here to support you. So before you jump into this, or if you've just jumped into this and you're not sure, give me a call and we can talk through. I will be very honest with you and I'll say, Here are my recommendations. At the end of the day, you're gonna make your own decisions, but sometimes you just don't know what you don't know. And that's what I'm here for, to support. The hardest working people in this world are nonprofit leaders. So that's what all I have for you this week but we have two episodes talking about The Thing About Titles. And in our next episode we're gonna talk about the importance of that President slash CEO role because we have a tendency in the nonprofit sector to migrate some of those titles. And as we learned in this episode, titles matter. So I hope you join me next week. But until then, I'm going to wish you an amazing week, and I'm gonna say to you, take care of yourself, like you take care of your community. I'll see you next time.
Speaker 1 (24:56):
Thanks for listening. If you enjoyed this episode, subscribe and leave a review on iTunes. Head over to www.anberwynn.net/podcast for the links and resources mentioned in today's podcast. See you next time.
