Episode 38: The Thing About Titles: President v CEO
The thing about titles in the nonprofit sector is that they mean something. Don’t think that having an inappropriate title won’t impact your funding. Funders may view mislabeled titles as an indication that you don’t understand the nonprofit reporting structure. If the President hires and fires the CEO, if you have the title President/CEO it sends a red flag to the Funder. Titles in the nonprofit have different meaning in the for profit. Learn the truth about how it could impact your bottom line.
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NONPROFIT SPOTLIGHT: Girls Who Code
Podcast Transcript
Speaker 1 (00:03):
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):
Hey fam, it's your girl, Amber Wynn coming to you here today. And we're talking about part two, The Thing about a Title. Today we're gonna talk about using President/CEO. It happens all the time. And from a Funder’s perspective, I'm gonna share with you what that means. A lot of times people do things just mimicking and not really understanding what all of the nuances of the little different parts of the nonprofit sector mean. But it's important for you to understand that there are more applicants than there is money. And as a Funder, we have little tricks of the trade that we use to really determine whether an organization is a bonafide, if they know what they're doing, if they're a safe investment. I'm gonna say that again. Funders have tricks of the trade that we use to determine whether or not a nonprofit really understands what they're doing.
Speaker 2 (01:40):
We can look at a budget and know whether or not an organization is solid. We can look at an org chart and know whether or not a nonprofit is solid. When they ask you for financial statements, they're looking to see if you are solid. And one really easy quick fix is the title of an organization. Listen, if I'm gonna write you a check for $250,000, I need to know that you as the leader understand all of the regulation that comes along with that $250,000. I'm not giving out money because I have nothing else better to do. I have funding goals as a Funder and I need to write that check to a person, the leader of that organization, who I believe is going to give me a return on my investment. So when we come back from our first sponsor commercial, I'm gonna talk a little bit more about the President and CEO and what all that means from a Funders perspective, but more importantly from the IRS, okay. So when we get back, we're gonna talk about part two, The Thing About a Title.
Speaker 3 (02:53):
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Speaker 3 (04:01):
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Speaker 2 (05:26):
We're back. Today we're talking about The Thing About a Title, because titles matter. And this is really, really important guys, I want you to understand. You are in competition for small pot of money. And as a Funder, our responsibility is to pick the most capable, most experienced, most logical organization that we believe based off of the information that's been given to us is going to give us a return on our investment. That means you have to look the part. How would you feel about taking your car to an auto mechanic and on the wall, the thing that you're trying to get a catalytic converter is misspelled. Is that gonna make you feel good about your mechanic? If this is what you do every day, you receive the box or whatever, nine times outta 10, even if you can't spell it, you see the spelling right there.
Speaker 2 (06:24):
I know for me, I'm not gonna feel comfortable. This is the one thing that you specialize in and you can't even spell it right? Well, it's the same thing for a Funder. Seriously, you're saying that you're a nonprofit leader, but you don't know the rules and regulations that the governing agency expects you to do. So those are valid reasons to not fund your organization. You could be doing the most amazing work in the community, but it doesn't matter. You know why? Because during that process, when a Funder is going through all of the different grants, that's all they have. They don't have the opportunity to talk to you. They've gotta screen out. Just like for a job when you're submitting resumes, you're gonna go through all of those resumes to get to the short list. It's the same thing for a grant. And I'm here to tell you things as small as a title make a difference because the title matters.
Speaker 2 (07:19):
I see this a lot. A lot of nonprofit Founders will put President/CEO. Let's talk about CEO first. Back in the nineties there was this big push to change the title from Executive Director to CEO because nonprofit leaders felt like we weren't getting the same type of respect and we do the same amount of work. Running an organization as a Chief Executive Officer does in a for-profit, you're not gonna get any argument from me there. I believe that nonprofit leaders probably do a little bit more, right? Because we don't tend to have the same resources. The challenge with the title is when you have Chief, it means something. Typically Chief Executive Officer has up under them a Chief Financial Officer, a Chief Operational Officer, a Chief Informational Officer. So you've got a C-suite, that's what the chief stands for. That's why they call them a C-suite.
Speaker 2 (08:23):
So you have the CEO at the top and then they're managing that next level of C-suites. But then up under those, then you typically have your Presidents. And then up under that you have your Vice Presidents. And then up under that you have your Directors and then up under that you have your Managers and so forth and so on. So in a nonprofit that typically doesn't happen. You'll have the CEO, which is typically your Executive Director, and then up under that you'll have a Program Director and then a Manager. So it doesn't have the same weight because you don't have the same infrastructure. So yes, you can take on the title of Chief Executive Officer because it is the highest ranking paid position in the organization, but if they ask you for your organizational chart and they see CEO and then they see Program Manager and then Program Coordinator, there's gonna be something that's off.
Speaker 2 (09:21):
And what it suggests to a Funder is that you really don't understand the inner workings of a nonprofit because your titles are off. And if your titles are off, there's a high likelihood that the classification is off. And if the class classification is off, then that could result in fines from the labor law. Like all of this is connected and it's deep. I'm not trying to fund an organization that could be fined for misclassification. Misclassification happens a lot in the nonprofit sector because there's a lot of 1099s being issued because nonprofits can't really afford, I'm talking about the small ones who are just starting out, can't afford the mandatory taxes that come with workers' comp, ssi, unemployment, and so they 1099 their people. Well, that comes with the classification. If you are a 1099 employee, that means you get to come and go as you please, and the employer doesn't really control what you do.
Speaker 2 (10:22):
So all of this is tied into a title. All of this is tied into a title. And as a Funder, these are the things that we look for. We look to see if you understand how to run a business. Running a business means that you know titles come with roles and responsibilities and classification issues. So that's the thing about Chief Executive Officer. If you are a Chief Executive Officer, then that means that you should have a C-suite that you are then managing and then that C-suite is managing their down line. That typically doesn't happen in a nonprofit, problem number one. The second thing, when you have a President/CEO, remember President is the highest ranking person in a nonprofit. The President is responsible for managing the Executive Board. The Executive Board consists of the President, the Treasurer, and the Secretary. That's on the nonprofit side. And then under that, you have your regular Board, but their role is to support, hire and fire the implementation side, which is where your Chief Executive Officer or your Executive Director would swim.
Speaker 2 (11:37):
Now, if you are the President/CEO, are you gonna fire yourself? The answer is no. So if you are the President and the CEO, then as a Funder, that's a red flag to me because I know the role of the President and the Board of Directors is to support, hire and fire the Chief Executive Officer or the Executive Director. So that's showing me right there that something is off. This is important. You don't understand that when they're asking you for an org chart, it’s not because they have nothing else better to do. They're looking for the telltale signs of this organization. Is it structured properly? Does it make sense? Can we trust that there are systems in place that are gonna give us what we need to feel comfortable with writing that check? Cuz that's a lot of money. If you don't know that your President is responsible for hiring and firing the Executive Director, then I'm going to think you don't know other things cuz that's really important.
Speaker 2 (12:43):
So I'm not gonna fire myself. So I'm saying to you, don't make it up. A lot of time it's innocent. I'm the President and I'm the CEO. You are if it's a for-profit company. But if it's a nonprofit, then you can be the Founder/CEO or the Founder/Executive Director, but you should not be the President/CEO of a nonprofit. And people say, Oh, I've been doing this for years and no one… Yes, yes, it's possible. What I'm saying to you though, if you're gonna be my client, if you're gonna be in my tribe, if you're going to do things the right way, I am saying that's all it takes for a Funder is to see that you have President/CEO as your title to be a reason to put you in the no pile. My goal is to have you go in strong, is to have you be a contender and make it past the eligibility screening.
Speaker 2 (13:43):
That is a perfect reason to say maybe this person doesn't really understand the nonprofit sector. So just be mindful. And my recommendation, my suggestion is you choose if you choose to run the organization, then you choose not to get a salary and you choose to be the President because the President's responsibility is to set the vision. It is the highest ranking person in the nonprofit. And you can choose to do that because you know that you don't wanna run the organization, you're gonna keep your nine to five, you're gonna volunteer your time and you're gonna run that organization. It's gonna be your vision, it's gonna be your ideas, and you're gonna support the Executive Director. However, if you decide that you want to run the organization in terms of the day to day you wanna secure a paycheck, then go in knowing that you will be reporting to your President, that your President is responsible for evaluating the work that you do as the highest ranking paid person in the nonprofit.
Speaker 2 (14:48):
And when you do that, understand that there is a possibility that if you're not doing your job well, that you may be fired. It is a decision that you have to make, and I'm saying have to because your community needs you. And so if it comes down to you're fired and then the organization crumbles, then what was the purpose? What was the point? I am here to support you. That means you follow the rules, you run your organizations the way that the IRS has determined you should so that you can deliver your programs and services to the community. That's it at the end of the day. So if you're making things up, that means that you're not looking the part. That means that the Funder's looking at your org chart, they're looking at your grants and they're saying, This person has no idea what they're doing.
Speaker 2 (15:39):
I'm telling you as a Funder, I've done that. I've looked at grants and I'm like, this person has no idea what they're doing, making stuff up, titles, and oh, we have an Executive Board, but we also have an Advisory Board and we also have a Corporate Board. They've got all of these things that aren't in alignment with what the IRS would say is a functional organization. So you gotta do the work because if you're trying to get funds, you have to look the part. The thing about a title is that it means something. So if right now as a nonprofit leader, you are functioning in the role of CEO, that's fine. I explained to you earlier, the challenge is about that. I would recommend that you be an Executive Director. If you're the Founder, then you are the Founder/Executive Director and stay within the boundaries of the IRS because at the end of the day, you can be a Chief Executive Officer/President, but that may prevent you from getting your money and that defeats the whole purpose. All right, enough of me on my soapbox. I think you get it. I think you understand that the IRS has certain rules and that Funders are looking for you to abide by those rules. When we come back from this short break we're gonna take questions. We have a question from Roger about the Board and oh, this is perfect about the board and what type of titles and positions they can hold in the organization. So when we come back, we're gonna go to Ask Amber.
Speaker 4 (17:30):
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Speaker 2 (18:12):
Hey, we're back. This is part two of The Thing About a Title and right now we're gonna take your questions. It's Ask Amber, it's your opportunity to ask me your burning questions. They don't even have to be burning. They could be something that you've heard or you thought about, you want some clarification around. This question is from Roger. Rogers is in Upland. He emailed me and he says, Hi, my name is Roger. My organization is fairly new. It's about two years old. The Board is ready to hire staff. Yay, Roger, congratulations. Because they've been delivering programs, they want to function as both the board member and paid staff. My question is, is that okay to do? This is a great question. So it's two parts. Number one, typically when a board when it's your inaugural board, your first board, those are the people who are gonna roll up their sleeves and they're gonna do the work.
Speaker 2 (19:12):
So yes most times they're gonna be delivering your programs. They understand that it's your first board. Generally speaking, boards go through three phases. You've got your Inaugural Board, that's the board that's gonna do a lot of the hands on programming. Your second board is when the board starts moving away from actually delivering services to being more of a governing board. So they're going to be supporting the paid staff. And then you have that third board, which is like your Institutional Board, and those are typically your high powered people and they're writing checks and they're making connections. That's where you wanna get to. So it seems as if Roger is in that Inaugural Board where the board has been doing a lot of the hands on and now they've done a great job at fundraising and they're ready to get paid. But problem is, according to Roger, they want to hold both board positions and staff positions and no, that's not okay to do.
Speaker 2 (20:12):
They're gonna have to choose. Since they have the experience they may be great candidates to be paid staff, but remember as we mentioned earlier, the board is responsible for the visioning and the guidance and making sure that the organization is operating ethically. The paid staff, however, is responsible for taking that vision that the board made and implementing it. That's the day to day operations. What typically happens, and I have this happen a lot during my board trainings, you'll have the board she's like, Oh, well she's the Board Secretary/Director of Operations. No, no, you can't have that. Either she's gonna be on the board and volunteer and not get paid, or she's going to be on the paid staff. The other thing that typically happens is you try to reward your board members for all of their hard work for the past two years.
Speaker 2 (21:07):
And when you move them from the board to these paid positions, you give them director titles. That is a mistake, but it is a common mistake because you know that they've been working hard and so again, you wanna reward them. That takes us back to the classification issue. You start a person out at director level, you need to give them a salary that commiserates with that title. So a Director is not gonna come in at $15 an hour. That's going to be your Coordinator or your Specialist or whatever. So that's why it's, I typically say hire somebody new because you can hire them at a coordinator title and then have them move up to a specialist and then have them move up to a supervisor and then have them. You don't wanna bust your budget. It's been two years. Your board is just now getting used to fundraising.
Speaker 2 (22:04):
If you have six people in Director's position, then you're paying them between what, 60, 70. That's a lot of money to fundraise for versus if you hire them as a coordinator and you're making what, 30, 40. So you just really wanna be strategic and meaningful and keep them separate. If your board wants to participate in the governance part, Roger, then they need to decide to be volunteers. If they wanna get paid, then they need to drop their roles and responsibilities as a board member and just become paid staff members. That's the way it goes. There’s no combining both cuz that's going to get you a red flag and from a funding perspective, a Funder's gonna be like, Oh no <laugh>. Oh no. They understand that a lot of times when you start off your board is going to act in the capacity of a staff member.
Speaker 2 (23:02):
But when you start assigning titles, now you're moving into that zone of labor law and it's really important and a Funder doesn't want to get caught up in that because the first thing that's gonna happen is you're gonna get fined and what do you wanna do? You wanna take my grant money to pay your fines and that's not what I'm giving you money for. I'm giving you money to deliver programs and that's how we have to look at it as Funders. We've gotta look at it as protecting our assets. So Roger, I'm going to first of all again applaud you, but I'm going to say you've gotta tell your Board that they've got to decide. All right, so that is that for that. Now we're gonna move on to my favorite part of the episode where I get to feature the most amazing people in the world, my nonprofit leaders.
Speaker 2 (23:52):
Today we're going to spotlight an organization that is closing the gap in the technology world, right? It's called Girls Who Code. Through their online resources, campaigns, books and advocacy work in the US and around the world, Girls Who Code is reaching girls around the world and they're on track to close the gender gap in new entry level tech jobs by 2030 through their in-person programming, including their summer immersion program, clubs and college loops. Half of the girls that they serve come from historically underrepresented groups including girls who are black, Latinx from low income backgrounds, non-binary individuals. Let's take a look at Girls Who Code.
Speaker 5 (24:44):
It's important for more women to be involved in tech fields because having that representation, a different perspective is something important in the world. In any career, I thought I was interested in tech field, but I wasn't so sure In high school we didn't have a lot of tech courses, so I was looking for outside resources.
Speaker 6 (25:03):
We know that jobs and tech are the highest paying, fastest growing in our country and frankly around the world. If women are left behind, then that's a world of economic opportunity that they're being denied for themselves and for their families and we know that that has to change. At Girls Who Code, we're on a mission to close a gender gap in tech and to change the image of what a computer programmer looks like and does. We work with girls across the country and now internationally who have come from communities that are historically underrepresented. Girls of color, black and Latina, and from low income households and Girls Who Code absolutely gives them that confidence and pride and convinces them that they can do anything. You're learning computer science every day. You get to see how people work. You have guest speakers who are these powerful women in tech who come in and talk to you. You get to go on field trips and see how tech changes lives. I cannot think of a better experience and that's what we give girls who go through this program. It's also about the sisterhood, the confidence, the bravery, a lot of what people call soft skills that are critical to them persisting in the field.
Speaker 5 (26:22):
We're definitely going in a really positive direction for women in tech fields, especially with programs that do form camaraderie between women. It's really great to have that kind of teamwork so that they can pursue those aspirations without feeling like they're alone.
Speaker 6 (26:39):
Girls Who Code is making a tremendous impact in the communities that we serve. Girls get a chance to see themselves as technologists and they can bring those resources back to their communities and make a change.
Speaker 5 (26:51):
Yeah, you're going to encounter difficult problems and it's okay to even fail sometimes. As long as you did stick through it, you have succeeded.
Speaker 2 (27:09):
Thank you Girls Who Code. If you'd like to support this organization, visit them at GirlsWhoCode.com. So we're gonna move into the last part of our episode and this is my Mindset Minute. This is when I pause and I share some of my thoughts about something in the nonprofit sector. And I've been thinking about this for a while because I think sometimes I may give out mixed signals. One of the things I always say is a nonprofit is a business. It's just a business with a philanthropic purpose, but that's not completely accurate. It is a business, right? You have to do things like operations and HR and marketing and finances, which is some of the responsibilities that you'll have to do in a for-profit or company. But I wanna be very clear and say this, If you want to start a business, then start a business. Meaning start a for-profit company, right?.
Speaker 2 (28:17):
Don't try and morph your nonprofit organization into your own personal business. It's not gonna work. And what's gonna happen is it's gonna put you in a bind that you just don't wanna wanna get in. A lot of times people start nonprofits thinking, Oh it's my business and I'm gonna this and I'm gonna that and it just doesn't work. I've been in the business for 30 years and I've seen all types, right? Well, can't we just this and can't we just that? No, you can't. You can't because the IRS says you can't. And at the end of the day, a Funder is going to do what the IRS says versus what you think they should do. And I'm gonna use myself as an example.
Speaker 2 (29:00):
I started a nonprofit and the nonprofit does exactly what my consulting firm does. The nonprofit's goal was to work specifically with Executive Directors. Cuz having been one, I understood the plight, and what I wanted to do was to have government and corporations give me money so that I could then train nonprofit leaders because I know the struggle. Professional development in the nonprofit sector is a challenge because you're trying to run programs and give your people salaries. So my thought was, alright, I'll just have the grant money come in. And it turned out not to be that easy. Funders believe that if you start a nonprofit, you understand that you're starting a business and you understand that the monies that they give you are for programs and not for running your organization. So they're looking at me, why should I give you money to train them to run an organization when that's what they're supposed to do?
Speaker 2 (29:59):
Not really understanding that people start nonprofits with great hearts, not really doing the research and understanding. So there was a whole disconnect then that was in 2013 and after a couple of years of not really being successful at funding that vision, and mind you, I'm an amazing grant writer. I shift, I shifted my model to starting a consulting firm. And a part of that also is when you don't get money for your programs, then you don't get that 15, 20% for your salaries. And so, you know I'm all about that money, alright? So, having a consulting firm, this is where I am. I have people now, I think in we’re in a different time than in 2013 with all of the upheaval, with all of the social injustice, with all of that. Funders are now understanding the challenges in our communities. And so as a consultant, they just write me a check and I deliver the training to the nonprofit organizations.
Speaker 2 (31:03):
It's not a problem. I only get 15% and then the rest goes to programs. I get it all. So I'm saying all of that. I'm sharing my personal business. For those of you who are like, I wanna do this, but I don't know if I can do it without getting grant money; you can. You can, if you are delivering a product that brings value, right? I bring value to the nonprofit sector, but I am not a nonprofit organization. I am a for-profit consulting agency and Funders will write me a check so that I can deliver culturally responsive asset-based training to nonprofit leaders. So if you think that starting a nonprofit is going to allow you to get all of this money, I want you to really just think it through because there may be a better fit for you as a consultant, as a for-profit business where you're not struggling to get this type of funding sources.
Speaker 2 (32:11):
If you're not sure, just reach out. We can do a discovery call. I can hear what you're trying to do. I can look at potential business models that may work for you. Cuz nothing is worse than starting a nonprofit and it's not really a nonprofit type of company. I mean, there are ideas I'll say off the top, Well, why are you trying to be a nonprofit? And if that is the case, just give me a call, reach out Amber@AmberWynn.com or go to my website www.AmberWynn.net and we can talk it through. All right guys, I'm gonna wrap up and I'm gonna say to you, Be sure that you take care of yourself, like you take care of your community. We'll see you next time.
Speaker 1 (32:58):
Thanks for listening. If you enjoyed this episode, subscribe and leap review on iTunes. Head over to www.amberwynn.net/podcast for the links and resources mentioned in today's podcast. See you next time.
