Episode 45: A Nontraditional Approach to - Compliance as a Part of Your Fund Development Strategy
Learn how to shift your approach to compliance by learning how effective reporting can lead to 3x your revenue. Compliance as a part of your Fund Development Strategy will shift the way you approach tracking, monitoring, and reporting.
LINKS:
NONPROFIT SPOTLIGHT: Scholarship America
Podcast Transcript
Speaker 1 (00:04):
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 (00:28):
Hey, fam, it's your girl, Amber Wynn Philanthrepreneur. I was gonna say on the ones and twos, but I just got this one mic. Hey, <laugh>. Good morning. So excited to be here. Today we are continuing with our series on a Nontraditional Approach to… Today's topic is a Nontraditional Approach to Compliance, <affirmative> Compliance. Now I'm just gonna give you a disclaimer, your girl is a little special. I am. When I hear compliance, I get excited. See, I told you I'm special. When you think of compliance, you think of reporting, you think of documentation, you think of audits, all of that. Well, today, today we're gonna flip the script and I'm gonna help you look at compliance through a different lens. A lens that focuses on fun development. And when we talk about fund development, y'all talking about money, and your girl loves to bring in money because when you have money, you have choices. So you know how we do it. We're gonna pause for a quick break, but when we get back, we're gonna talk about a Nontraditional Approach to Compliance.
Speaker 3 (01:40):
This is you and this is your business. From invoicing your first client to your 10th client to your hundredth client, you'll need to get paid quickly. Pretty soon you'll be ready to hire some help, and you'll need to pay them. As your business grows, Wave is there to grow with you.
Speaker 2 (02:11):
Welcome back. If you're just joining us, you're OnAair with Amber Wynn, Philthrepreneur, and we are continuing our series on a Nontraditional Approach To, and we're taking nontraditional approaches to starting and running and funding our nonprofit because all too often my nonprofit founders get in their head that they're supposed to do things a certain way. So they think that they're supposed to have a gala, they're supposed to do a golf tournament, they're supposed to hire people one at a time, get them on payroll. And what it's doing, it's creating a clog, right? Because the reality is, the reality is my nonprofit founders don't have their infrastructures in place. But besides that, the reality is because there's no funding there, my nonprofit founders are bootstrapping. So they're doing this, doing that, getting donations halfway doing that, not doing it the way that it's supposed to be done.
Speaker 2 (03:16):
So we're taking a nontraditional approach to doing things so that you as a founder can get to your mission. You can accomplish your goals faster, and not only faster, but more efficiently and more effectively. It's one thing to run towards something, and in the midst of running, you stumble and you fought. We're not down for that. We're talking about doing things in a way that gets you to the end game quicker but more efficiently. And so today we're talking about compliance. Now, traditionally, compliance is defined as laws, right?. And for the nonprofit sector, laws are put in place to protect the public, right? And ensure that people don't abuse their financial advantages. When you have a 501(c)(3) tax exempt status, you get certain advantages, right?. You're not required to pay federal taxes for one, right? You're allowed to receive donations. You are allowed to do certain things that for-profits allowed to do.
Speaker 2 (04:30):
So, some of the things that you have to do as a nonprofit, you are required to file your 990s, that’s what we're gonna say is the nonprofit tax filing. Basically you're sharing with the IRS where your money's come from, where your monies are going. <affirmative> You are required to pay state payroll and employment taxes. Don't know if many of you know that in terms of donations, you are required to register in order to solicit in any state. I could tell you now, probably 99% <laugh> of my clients don't register when they fundraise but you are supposed to. You're supposed to register with the Attorney General's office when you're going to do any type of fundraiser. You are supposed to pay Workers Comp Tax, unemployment related regulations and anything related to maintaining your tax exempt status. Those are the traditional things that you think about when you think about compliance.
Speaker 2 (05:34):
And those things are still going to apply to you. Those things are still going to be an effect as a nonprofit, aligning yourself with the IRS, making sure that you don't lose your tax exempt status, that is compliance. I'm not taking any of that away. And I'm not saying you don't have to do it, you do. That is what you have to do in order to be a nonprofit business. But today I wanna talk to you about a nontraditional approach to compliance with compliance serving as a funding stream, a fund development strategy. There you go. Compliance serving as a fund development strategy. What do I mean by that? Well, there's this cycle. I want you to envision, envision you getting the money from a grantor a funder, right? They're giving you the money. Now, you went through all that it took to get that money, right?.
Speaker 2 (06:32):
You did the research to make sure that you aligned with the funder, you wrote the grant once you got the grant, you know, delivered the programs. That's a lot of work. It's a lot of effort. And so from a compliance perspective, I want you to think about how you can powerfully position your organization for reoccurring funds. And that happens in the compliance phase, right? Because at the end of your grant, your funder is going to say to you, All right, did you do what you say you were gonna do? You did? Show me, prove it to me. And that's in your reporting. In the beginning when you submit your grant, you said, I am gonna serve 500 youth. So in the end, you need to demonstrate to your funder that you served 500 youth. And if you didn't, you need to explain why, right? They gave you $500,000.
Speaker 2 (07:29):
In the end, you need to provide financial forms, statements, documents that shows how you spent that money, right? So that they can say, Okay, you spent it according to what you said in your grant. All of this comes back to reoccurring funding. You've gotten favor with this organization, you wanna stay in favor. And how you do that is through compliance. Let me give you an example. When I was a program officer, I had 15 grantees, right? And of those 15, there were five that were stellar. I can tell you clockwork, their reports would be in early most times that they would have documented proof. I didn't have to chase them down for receipts. They provided me with the data so that when I went back and advocated or reported out on them, I didn't have to guess, it was right there for me. Those were exemplary grantees.
Speaker 2 (08:30):
If we had discretionary money, which happens quite often, by the way, if we had discretionary funds, and the board said, Well, we wanna get rid of this money by the end of this fiscal period. Amber, who do you recommend? Guess who I would recommend? Those five exemplary grantees. I'm saying this to you because it matters how you show up to the funder, right? You wanna powerfully position yourself. The funding community is very small. I would have people say to me all the time, Oh, what do you think about this person? Or what do you think about this organization? Excuse me. And I would say, hmmm good work, not good work ethic. And so you know what that means, right? We don't want grantees who are gonna be problematic. It's a lot of work managing a portfolio of grantees. So when we talk about compliance as a fund development strategy, I'm saying to you, when you get that award letter set up your systems in advance.
Speaker 2 (09:33):
If they say they want you to track attendance, then have a folder, whether that's electronic or hard, have a folder that's going to collect all the sign in sheets. If they say they want you to track your receipts, have a folder for your receipts. All of the things that they put in that agreement. If you know that at the end of each year, if it's a multi-year grant that they want a report or they want one every month set up in your system, and then guess what? Don't try and write your report the week that it's due. Don't do that to yourself. You're setting yourself up for failure. You're not gonna be able to produce the sexiest story. You want your story to be sexy. Give yourself 30 days at least, so that you can gather all of the information. You can reach out to your accountant.
Speaker 2 (10:22):
I'm sure you're, you're not your accountant's only client. If you ask them for a report in a week, first of all, it's disrespectful. You know what I mean? Give them a month. So what I'm saying is when it comes to compliance, take it seriously. Take it as a part of you setting your organization up powerfully to get more money. Because if you got that $500,000 and you lost it because you couldn't get your reports in on time, you couldn't get your documentation in on time, that is a waste of time and effort. And that is a waste of an opportunity to generate reoccurring funds. On top of that, as I stated before, you may be missing out on discretionary funds. When I was an Executive Director, I always got the discretionary funds because my program officer knew, Hey Amber, I know it's October, it's the end of the year, but we've got $25,000.
Speaker 2 (11:19):
Is this something you think you can spend by the end of the year? Yes ma’am. Yes indeed. Why? Because with the regular reporting, I got my paperwork in time and she didn't have to worry about come December if she was gonna have to chase me down to get this information. Are you following me? So when I talk about compliance is a part of a fund development strategy, it is. Lastly, as I said before, nonprofit funders talk. So, if Amber Wynn is stellar and they are featuring me in their newsletter, or they're featuring me on their website, guess who else is seeing me? <affirmative>, other funders. So for me, my portfolio goal was to be exemplary. I wanted to be the standard. I wanted my program officer to say, This grantee is amazing. Not only does she do amazing work, but she makes my life easier.
Speaker 2 (12:17):
The program officer has to report back to the Board. So if she's got 15 grantees, she's not trying to chase you down. Don't make their jobs more difficult than it needs to be. And so a nontraditional approach to compliance is your strategy to reoccurring and or additional funding. I want you to sit with that, and I want you to think about that. So when you get funding, you go in knowing I'm gonna be the best grantee. I'm gonna get my reports in on time. I'm gonna make sure my report questions are all answered. I'm gonna make sure that I have financial statements, copies of my receipts, so that I'm positioning my organization to receive recurring funding from this funder or discretionary funds from this funder, or referrals for other funding <affirmative>. Now, can you see why I get so excited about compliance? When you look at it as a strategy to get more money, you already have the money from this organization. What can you do to keep it? It is exciting. I told y'all I was weird. I'm weird, but I'm about my people. You are my community, and I don't want you to look at compliance in the same old traditional way. All right? So we're gonna pause a minute, but when we come back, guess what? It's Ask Amber, your time to ask me your burning questions; when we come back.
Speaker 4 (13:48):
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Speaker 4 (14:14):
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Speaker 2 (15:00):
Welcome back. You're On Air with Amber Wynn Philanthrepreneur, and today we're talking about a nontraditional approach to compliance. I shared with you some techniques and methods you could use just to powerfully position your organization for more funding. What I'm gonna do for you also is give you a Nonprofit Compliance Checklist. There'll be a link in my bio for you so you can just keep yourself abreast of some of those things on the local, state and federal level that you're supposed to do to keep your organization in compliance. All right, so now's the time where you get to Ask Amber your pressing questions. And you know what, if you have a question for me, just reach out to me. This question is from Sochi from Huntington Park and she reached out to me on Instagram. But you can reach me on any of my handles. You can reach me on my website www.amberwynn.net, on Instagram at amberwynn philanthrepreneur, on Facebook at amberwynn philanthrepreneur, or twitter@amberwynn.net. Today's question, Sochi. Hi, my name is Sochi calling from Huntington Park. My question is about taxes. My accountant says the organization has to pay taxes for the sale of our hoodies that we sell to support our programs but he insists that we have to pay taxes. Do you understand why? And if so, can you explain it to me? Sochi, that is a really great question. So what your accountant is saying is that even though your nonprofit organization is tax exempt, it is tax exempt from paying federal taxes, right? Sales tax and property tax.
Speaker 2 (16:55):
But as it relates to the activities of the organization, if it's not directly in alignment with your mission, meaning what your mission says you do, if your fundraising activities aren't those things, then you'll get taxed on it. I can explain this better with an example, and I'll use your organization cuz you didn't give me any details. So if your organization is a youth program and you do after school tutoring, career exploration and college access, and you sell hoodies to help fund the organization, you will be taxed on those hoodies if you exceed, I think it's like 35% right, of what your gross annual sales are. You will be taxed because selling hoodies is not a part of your mission. Your mission is college access, it's tutoring and it's career exploration. It's not selling hoodies. How? However, if you had your youth run a store and the hoodies were a product in the store, or if you had your youth design the hoodies and do the screen, what did they call it?
Speaker 2 (18:25):
The screen stuff, I don't know the screening, you know what I'm talking about on the hoodies. And then a part of their project was to do a business plan and then to pitch those and then to sell them. That is a part of your mission because now you're giving them the skills under career exploration to be entrepreneurs or to be people in a sales position. So if you can see the difference, one is just straight sales. Yes, it's going to support your program, but that's not what the IRS says you can do. The other is, if you have your youth who are learning how to be entrepreneurs or learning business because that's one of your areas, then that way you won't be taxed. I hope that helped you understand. But if your accountant is telling you you have to pay taxes, rest assured you have to pay taxes cuz they know the law, right?.
Speaker 2 (19:26):
What I'm gonna suggest to you is to think about just modifying your program so that if sales is a part of what you do, have your youth participate in that. And all that's gonna do is give them more experience and that'll help you in terms of taxes. Now, you know I'm not an accountant and I'm not advising you as an accountant, but I'm just saying look into that and ask your accountant if that will take care of the situation. <affirmative> You’ll getting me caught up today, <laugh>. All right, So we're gonna keep it pushing. If you have a question, I'd love to answer it. Send it to me and we'll get it On Air. The next segment, as you all know, is my favorite segment, <affirmative>. It's when I get to feature a nonprofit. My nonprofit organizations work hard, y’all. You guys are in the community doing the work, and a lot of times you just have your head down just doing the work. The problem with that is that people who need your services, they don't know that you're out there doing the work and funders who know nothing about you aren't able to write you a check. So this is my way of just giving you guys visibility and supporting you. Today's nonprofit is Scholarship America. Scholarship America works directly with students, parents, colleges, businesses and communities to help students fulfill their college dreams. Since it was founded in 1958, Scholarship America has distributed more than$ 4.9 billion and scholarship to 2.9 million students and counting. Let's hear from Scholarship America.
Speaker 5 (21:13):
We'll come right out and say it. Paying for school is hard and stressful. For some students it can even stop them from pursuing their education dreams and that just can't happen. At Scholarship America, our mission is supporting every student in all sorts of ways, and scholarships are one of the biggest. It's right in our name. In case you hadn't noticed. As a nonprofit organization, we've awarded scholarships to millions of students, almost 3 million actually. And not just to those with high grades or specific skills or big stories. We believe scholarships should be accessible to every student, including you. And you can find a lot on our browse scholarships page. There are lots of scholarships waiting to be found and starting your application is a snap. If a scholarship calling your name isn't open yet, sign up for notifications. So when it's time to apply, you'll know and always know, your search is safe with us.
Speaker 5 (22:10):
We'll never sell your data, ever, because we're just as annoyed by spam as you are. If you ever get stuck, head to our resources page where you can get smarter about applying for scholarships with things like our student self inventory tool and helpful do’s and don'ts. Scrolling on social media; follow Scholarship America on Instagram, where we're posting open scholarships, success stories and encouragement that's centered on you, the students we do everything for. There's a scholarship out there just for you at Scholarship America. We're here to help you find it. So, avoid the information overload, overcome application anxiety. Just visit us online today. See you there.
Speaker 2 (22:54):
Hey, so if you wanna support or you wanna get more information about Scholarship America, follow them or find them at scholarshipamerica.org. Thank you guys for all that you do to help kids get into college, cuz it ain't cheap. Y'all know that much, right? All right, now it's time for Mindset Minute. It's where I pause to share just some thoughts that I have about a specific topic. This week we've been talking about a nontraditional approach to Compliance where I talk about leveraging compliance as a fund development strategy. And what I wanna share with you is a big part of that strategy is your Program Officer. So traditionally people look at program officers as like the bad guy, right? It's like the principal, the person that they get sent to if something is bad. Do not look at your Program Officer that way. Look at your Program Officer from the perspective of a potential brand ambassador.
Speaker 2 (23:56):
As I shared with you earlier in the episode, program officers are responsible for managing a portfolio of grantees, and it's their job to go report back to the board of directors about the progress or challenges of the grantees in their portfolio. They're expected to know what's going on in your organization, so cultivate them, because technically they are the gatekeeper to your donor, to the funder. You want to turn them into your biggest ambassador. Let me tell you how I do it, right? I contact my program officer at least once a month, and it's always, always something positive. I'll call my program officer and say, Hey, Giddie, guess what? Six of our youth graduated. And she'd be like, Oh my God, that's amazing. Yes, yes, yes. I'm gonna send you pictures. So I'll send her pictures because they have monthly meetings. And so maybe she says, Hey guys, Amber was so excited she reached out and look, here's pictures of these kids that they graduated.
Speaker 2 (25:02):
And they'd be like, Aw, that's what you want. I would reach out to her and I'm like, Hey, Giddie, guess what? We're having an event if you're able to come through, come through. And guess what she would, I wanted her to come through because I wanted her to see me in action. I wanted her to see my girls in action. I wanted her to have her own personal connection and ties to these girls, to my organization so that if it ever came down to it, if she had to pick between my organization and another organization, she's gonna always pick mine because she has a personal tie, right. So she would come out to the events, and as I shared with you earlier, I would always, always, always, reach out to her with success stories. I want her to see in action, tangible proof of what it is that I did.
Speaker 2 (25:51):
So, when we talk about mindset and shifting, don't see your program officer as somebody scary, as somebody who's looking to find things wrong. See them as your advocate. See them as your potential brand ambassador. But more importantly, give them things to brag about. Give them things to say, This organization should be funded, they should be given those discretionary funds. Always turn their reports in on time. Always give me success stories. And then the other thing is, if you're doing all of this nurturing, when you do run into challenges, because as we know, you will. When you reach out to your program officer, they'll be more understanding, right? As a matter of fact, they'll try and help you find solutions because they know that typically you're bringing them good news. So you wanna build up that social capital with your program officer. All right, So that's it for my Mindset Minute. Today we've been talking about a Nontraditional Approach to Compliance.
Speaker 2 (26:51):
We're doing this series on a Nontraditional Approach to … To help nonprofit founders and leaders just approach nonprofit differently so that they can ease the load, get to their goals a whole lot faster and be more efficient. If you like what you heard today, please be sure to subscribe. Make sure that you click the link so that you're notified when I have a new episode coming out cuz this is some good stuff, y’all and I wanna make sure that you and everybody in your network that you think would benefit from it, can. So subscribe, share, and make sure you come and see me again next week because I have another episode on a nontraditional approach. We'll see you next week guys. Bye.
Speaker 1 (27:41):
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.
