Avoid These New Founder Mistakes
Starting a nonprofit can feel exciting—but too many founders dive in without understanding the landscape. In this episode, I’ll walk through the rookie mistakes I see over and over again, and how to avoid wasting time, money, and your reputation.
Episode 158 | Avoid These New Founder Mistakes
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🔦 NONPROFIT SPOTLIGHT 🙌🏿
In Due Time Coalition Pt. 2
👉🏿 https://www.induetimeco.org
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🚀 RESOURCES TO HELP YOU RUN A SUCCESSFUL NONPROFIT 🚀
The Nonprofit Mastery Academy
https://thenonprofitmasteryacademy.com/get-funding/
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Speaker 1 (00:01):
Starting a new nonprofit can feel exciting, but too many founders dive in without understanding the landscape. In this episode, I'll talk through the rookie mistakes I see over and over and how to avoid wasting time, money, and your reputation.
Speaker 2 (00:19):
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 1 (00:42)
Welcome. It's your girl. And today we're talking about these mistakes that new founders are making and how to avoid them. Listen, the passion is not enough to sustain your nonprofit. Yes, you have a commitment to your community. Yes, you have ideas. You may even have programs, but it is not enough to sustain your organization. A lot of times, my new founders come into the space eager to provide the support, stand in the gap, and all of that is amazing, but it is not enough to sustain your organization. Here's the number one rookie mistake that founders make when they start their nonprofits. They think they're going to start this nonprofit and immediately start getting grants. That is not the way it works. This is what I want my new founders to understand. When you step into the nonprofit scene, there are probably 10, 15 other nonprofits doing the same thing that you're doing.
Speaker 1 (01:42):
Are they doing it the same way that you're doing it? No. But if they've been doing it for 5, 10, 15 years, what they have over your organization is a track record, and that's what funders are looking for. It's not enough to have a 501(c)(3). You have to have a track record. You have to have systems in place because a funder's not just giving away money. Grant money may not have to be repaid, but grant money is not free. The reasons why a funder gives a nonprofit money is because they have proof, meaning the nonprofit has proof that they can deliver on their promises. So when you first get a 501(c)(3), can you get a grant? You can if you have an amazing grant writer, right? But the reality is you increase your odds of being able to secure grants or any type of funding when you have a track record.
Speaker 1 (02:36):
So one of the rookie mistakes that new founders make when they come into their brand new nonprofit is thinking that they can immediately get a grant. You can get small grants from Target and Best Buy and the Rotary, but that's not enough to sustain your organization. Getting those $500, $5000, $10000 is like $20 when you go to the store and you break that $20, that's it. Next thing you know, you got some soda, you got some chips, and that $20 is gone. That's the same thing that happens with those really small grants. It's a good thing to get money, but we want to talk about sustainability. I want you to be in a place where you're not working your day job and then working your nonprofit. I want you to be in a place where you're not working your day job to cover the expenses of your nonprofit, because what that creates is poverty in your household, and we don't want that to happen, right?
Speaker 1 (03:38):
So passion is not enough. You need to understand the landscape. You need to understand that when you step into this new arena of nonprofits, that you understand what it is that the IRS expects of you and what it is that a funder expects of you. And when we come back, we're going to dive into this myth that, oh, yeah, I know I'm going to start now and then I'm going to get funding later. It's a myth that keeps nonprofits spinning in this place called nonprofit poverty, right? And we don't want that. So when we come back, we're going to talk about what you should do instead. When we return, most founders don't realize that there are more applicants than there is money. This fact impacts a nonprofit's fundability. Nonprofit founders should administer research on their competitors, determine if their community is oversaturated, and identify their competitive advantage before they start a nonprofit.
Speaker 1 (04:36):
Check out How to Validate your Nonprofit Idea, a step-by-step guide on how to administer the research you need to validate your idea before spending hundreds of hours and thousands of dollars only to struggle to fund it. Get your copy today. Welcome back. It's your girl, and today we are talking about the new founder mistakes that we want you to avoid because what they do is they get you on this path where you made that wrong turn and then you made another wrong turn, and next thing you know, you're off on somebody's road. There's no light, there's no electricity. It's just not a safe place to be. We want you to be on the right path. We want you to hit your marks, and in this space, there are a lot of myths. People who don't even understand the nonprofit sector will say, you need to start a nonprofit and get a grant for that.
Speaker 1 (05:29):
And people start their nonprofits thinking, it's just that simple. Before we broke for the break, I was telling you that you need more than a 501(c)(3) to qualify for a grant. Are you eligible? Yes. Yes. If you don't have your 501(c)(3), you can't even apply, but just having a 501(c)(3) is not enough. There's this myth out there that, oh, yeah, I understand. I'm going to have to self-fund my nonprofit for a while. If you start your nonprofit the right way, meaning if you build out infrastructure, if you have a credible board, if you have systems in place, if you take the time to test run your organization and get some success under your belt, then you shorten that time to funding your organization. What do I mean by that? You don't want to start your nonprofit and try and figure it out later, because what happens is then you start making mistakes that pile upon mistakes, that pile upon mistakes.
Speaker 1 (06:35):
And the more mistakes you make, the further you get away from looking like a viable nonprofit. Let me give you an example. When a funder is reviewing applicants, at some point they're going to run out of money. Let's just say I'm giving away $500,000. I have 20 nonprofits who are applying for grants for a hundred thousand dollars. I'm going to run out of money. I can't fund everybody. And so when we are reviewing our applications, we're reviewing them just like we do a resume for a job. You have one job, but you have 25 resumes, you're going to start looking for reasons to eliminate them. My new founders are the easiest to eliminate. Why? Because they don't understand that there are rules. So if you think you can start now and figure it out later, what it does is it just takes you further and further away from looking like a bonafide nonprofit.
Speaker 1 (07:28):
So what happens is you start a nonprofit and it's [email protected]. Dot com means company. Dot org means organization. So an organization is the extension you want to have for your nonprofit in this sector. That's what it means. You own a nonprofit. Some nonprofit founders believe that they're just going to start now and figure it out later, and that couldn't be the furthest from the truth. What happens is when you start a nonprofit and you start making things up, then you start looking less and less like a bonafide nonprofit. Let me give you an example. For those founders who don't understand that there are rules and regulations already established by the IRS, they'll start their nonprofit with a Gmail. A Gmail, it'd be [email protected]. Dot com stands for company for profit. If you understood the landscape and how important these little things mean, you would start your nonprofit with a dot org.
Speaker 1 (08:35):
Dot org stands for organization, and that's what a nonprofit is. It's an organization. If as a funder, I only have a certain amount of money to give away, I'm going to look for reasons to eliminate your application. It has nothing to do with who you are. It has nothing to do with the work that you're doing. It is me as a funder not being able to fund all of the, so my new founders will just start it and figure it out later, and it takes a while because now you're going to have to go back, undo all of the mistakes that you did so that you can look like a viable nonprofit. So that's why it's important for you to understand passion is not enough. You have to understand the landscape. So if you're going to start with building out a viable nonprofit that's going to get funded faster than later, then you want to understand the rules and the rules exist.
Speaker 1 (09:27):
Now, I have a lot of people who come to me and say, oh my gosh, Amber, why should I have to pay for all of this information when it's out on the internet for free? There's tons of information. Some of it's accurate, some of it perpetuates the myths that keep nonprofits struggling. I'm saying to you, if you are passionate about serving your community, then you should be passionate about getting the most accurate information out there. You can get it for free, but you can also get information that's going to steer you in the wrong way. Let me give you an example. I had a founder say to me, oh, well, I was told, oh no, I heard that there is a nonprofit founder's clause out there that will make it so where I can always stay on the board or where my voice is always the last voice and I get veto.
Speaker 1 (10:21):
A nonprofit has special exemption because a public charity cannot be owned. And if you don't know that, if you just started and figure it out later, you're going to think, oh, well, I'll just put in this founder's clause. The Founder's clause does not work in a nonprofit organization because the nonprofit cannot be owned. But you have gone off there. You put in this nonprofit clause so that you think you can protect yourself from being fired because the board can hire and fire the executive director. So if you're the founder serving as the executive director, your board can fire you, but you've made things up and so you're like, well, I'm just going to put this founder's clause in place. The founder's clause belongs on the for-profit side. So if you're following me, you're understanding that it's important for you to understand what the rules and regulations are in a nonprofit.
Speaker 1 (11:18):
You don't want to start making things up because the more you make things up, there's more than things you have to go back and undo. So we're talking about today how to avoid these mistakes that my founders typically make. When we come back, I'm going to talk about why infrastructure is the most important thing that you should focus on when you’re first starting your nonprofit. When we come back, a nonprofit is a business governed by agencies on the local, state, and federal levels authorized to revoke a nonprofit's tax exempt status for non-compliance. Don't put your funding in jeopardy. Get the Nonprofit Compliance Checklist to make sure you don't forget to file required forms to the agencies that can derail your operations for months. Compliance is 50% of a nonprofit's funding strategy. Getting the grant is half the work, but keeping it and getting it renewed is the other half.
Speaker 1 (12:13):
Don't spend hours writing grants only to have them rejected because your tax exempt status has been revoked. Keep your organization active and in good standing. Order your copy today. Welcome back. Today we're talking about the mistakes that our founders make when they first start their nonprofit. Listen, you start with this passion because there's a missing in your community. Typically because something personally happened to you, you didn't get the support that you need. We are grateful for our nonprofit leaders who are doing the work in the community. As a nonprofit consultant with over 30 years of experience in the nonprofit sector, I am saying to you, what we don't want you to do is to waste time, money, and energy. If you think that you can run your nonprofit off of passion, if you think that you can run your nonprofit with the volunteers solely, you don't need to generate a lot of money, you're setting yourself up for a whole lot of work. I have people say to me all the time, well, wouldn't a funder want to fund an organization that is volunteer driven or volunteer led? And the answer is no.
Speaker 1 (13:27):
Surprise, surprise. Why is that? Well, when a volunteer volunteers their time, they can come or they can go. There's no accountability with volunteers. So if I'm writing your check for $250,000 and it's based on volunteers, I don't know for sure if those individuals will show up or if they do show up, is Amber going to deliver the program the same way that Sam does? Will Sam deliver the program the same way that Angel does? We don't know. When you have paid staff, there's a higher likelihood that your staff is trained, that they have some sort of expertise why you hired them. When you have volunteers, Amber's just happy to be there and lend her support. She may not necessarily be trained in the areas in which you need the support. She's a warm body. She's going to do the work. So funders tend to prefer organizations where it's paid staff because now we have accountability.
Speaker 1 (14:30):
Your people are coming to work, right? Because they're getting a paycheck. Your people are going to be trained consistently, right? Because what you do, you train your staff every year, every quarter, every month, whereas volunteers, they come and go, there's a lack of continuity, but my founders believe, oh, yeah, we'll start it. We'll have our volunteers come in and we'll just do the work. It is the number one mistake that my founders have thinking that volunteers are better than paid staff. The other thing is, generally speaking, your volunteers are going to get burnt out if you don't have some system in place. Now, because I get this question all the time, I have a resource for you. It's how to build out an effective volunteer program. Funders understand that in the beginning, you may not have the resources to hire staff, but what I'm saying to you is if you're going to run your programs using volunteers, a funder needs to hear and see that there is structure.
Speaker 1 (15:34):
So I'll drop the link in my bio, but if you're going to have a volunteer-led nonprofit, there needs to be structure. There needs to be a person that is designated to do the outreach and to do the recruitment and to train your people. If Alicia is training Amber, Sam, and Angel, then there's a higher likelihood that they're going to deliver the program. The same way. If you have contracts in place where your volunteers say, I'm going to commit for three months, you can say to a funder, no, no, no. The program's going to run for three months and our volunteers are committed for those three months. They're going to go through a training. So they're structured there. So again, funders understand everything's not going to just start up right away, but you need to put things in place. And as a founder, sometimes you don't think about that.
Speaker 1 (16:26):
You're like, well, we have volunteers. Consistency, continuity. The other thing is, as a founder, you don't really realize that there are rules and regulations in place. You can't make things up as you go. For example, things like how to pay your staff. You have to report to the tax franchise board. You have to report to the Secretary of State. But if you don't know this, you may be paying your staff as 1099 individuals not paying the taxes that you want to. A nonprofit is a business. It's just a business with a philanthropic purpose. But there are rules and regulations, and a lot of my new founders, because they're so passionate and because they've listened to all of these people who really don't know what it takes to run a successful nonprofit, get caught up in going down the wrong path. Today, I'm encouraging my new founders to really take the time to research and understand what it takes to build out a successful nonprofit.
Speaker 1 (17:34):
When we come back, I'm going to talk to you about why it's important to launch your organization like a pro, even if you're brand new. When we come back, if you're thinking about hosting a golf tournament or any other kind of event, make sure at the end of the event you generate a profit and not come out with a loss, there's a formula for guaranteeing that your event will generate a profit. You'll find it in my Hotter Price event. Tickets for Profit Toolkit. Learn the insider secrets for how to ensure your event will always make a profit every time. Order your copy today. Hey, welcome back. Today we're talking about avoiding the new founder mistakes, and before we left for the break, I told you how to launch like a pro, even if you're brand new. Now, I'm just going to call a spade a spade.
Speaker 1 (18:26):
Launching like a pro is understanding what it means to be a nonprofit organization that is infrastructure, that is diversifying your funding streams, that is recruiting seasoned board members, that is having systems in place so that you can deliver things like financial statements. And guess what? I have it all for you. It's called the Nonprofit Mastery Academy, and it's where I walk my brand new founders. And heck, even if you're seasoned, I walk you through how to run a successful nonprofit business because a nonprofit is a business, and I want you to know it's not easy. It's not easy to run a business. But what the Nonprofit Mastery Academy does is it gives you all of the information you need to know from not only just the perspective of an executive director, but also the perspective of a funder. The perspective of the IRS and all of those things are important.
Speaker 1 (19:22):
It's not some things that are just made up. It's not theoretical. You understand the laws and why they're in place. You understand what your responsibilities are as an executive director, what your board's responsibilities are, all the things that are going to make you successful. Why is that important? As a founder, when you have this information, that means that you start to run your organization according to the way the IRS wants you to. And when it looks like the IRS wants you to, then it's easier for a funder to fund you. It's just that simple. If you're spinning your wheels and making things up when you submit your application, the funder's going to be like, what is this? When it looks like a viable application, when you have all the things in place, it makes it easier for a funder to fund you because they know that they're not going to get in trouble because they funded an organization that's not viable.
Speaker 1 (20:14):
Funders have to report to the IRS, and so they're only going to fund nonprofits that look like viable nonprofits. So that's why it's important for my new founders to understand that they are rules, regulations, policies in place that they need to adhere to, and that's going to get you closer to being funded. You can't make things up and then expect funders to give you money. It's going to put their organizations in jeopardy. All right, so if my founders, my brand new founders listening to me understand that there are rules and regulations that they need to follow and they follow them, I guarantee you, you're going to get your organization in a position where it can be funded and where you can get consistent funding. Next in the episode is Ask Amber, and we have a question from Eric in Illinois. Eric, what's your question?
Speaker 3 (21:13):
Hi, Amber. My name is Eric. I'm calling from Illinois. We're finally at the point where we're ready to recruit a board. You use the term powerhouse board. My question is, where do I find powerhouse board members?
Speaker 1 (21:26):
Okay, that's a really great question. Where do I find powerhouse board members? You find them in places like corporations. Corporations want to look good to the community to their consumers, so they'll have their mid-level directors, their VPs sit on boards so that they can then put in their annual reports. We're in the community. As a matter of fact, our board members, I mean our leadership team sits on this board and this board and this board in the community. The other place you can find them is when you go to hospitals and you see on the wall, they have all of those plaques. We'd like to thank our donors. Those are perfect people to have as board members. Number one, you know that they give, your board member should be paying board dues. If their name is on a wall, they've written a pretty big check, they probably are also very altruistic, which means they probably already serve on boards.
Speaker 1 (22:29):
Pull out your phone, take a picture, go look them up on LinkedIn and say, Hey, would you be interested in serving on my board? Likewise, associations. Let's just say if you are into robotics, stem, or if you are an attorney, there is an association out there for every position, every role. Do some research, reach out to the president of the association. Let them know that you're recruiting, and if you could send out a letter inviting different individuals from that association to join your board. When you are a part of the Nonprofit Mastery Academy, I have a whole module that speaks to board recruitment, and I also give you the board recruitment letters so you don't have to think about what to write. There's one for corporations, there's one for associations. There's one for any sector that you can think of, so I got you. But what you want to do is not recruit the people who are in the same place that you are in.
Speaker 1 (23:38):
You want to recruit the people who understand what it means to be a board member in a nonprofit. They don't get paid. Their responsibility is to bring in resources and bring in revenue. Okay, Eric, thank you so much for your question. If you have a question for me, hit me up on any of my socials, I'd be happy to play it on the podcast. Read it however you want to do it. You can email me, you can DM me. I don't care. Alright, now we're moving into the most exciting part of the episode when we get to put the spotlight on our nonprofit leaders. And in this week's episode, part two, we're talking to Mercedes, who's the executive director of In Due Time Coalition. She provides maternal health support doula training for birthing moms. So let's finish our conversation with Mercedes. Well, it's no mystery that historically the healthcare system has not viewed African-American women in the same light that they view our counterparts, meaning that they overlook our pain, they underestimate our pain. Apparently this was something that you experienced as well. Yes. Talk to us about what types of services you provide women in helping them to advocate for themselves. Are there 10 things you say to your doctor? What does that look like?
Speaker 4 (25:14):
So yes, I do have a bookmark where I give to the moms that I support questions to ask the provider. So what are my blood pressure
Speaker 1 (25:22):
Readings?
Speaker 4 (25:23):
And just informing them to how important those things are to document. So knowing the ranges of your blood pressure because there's a thing such as preeclampsia, watching for swelling in the hands, swelling in the face, shortness of breath. So things like that I support moms on. Also, just educating them on what's happening with the body and what to look for, signs to look for when labor is near, because some people they don't know. They don't know because it's your first time, you have no idea how long labor could last. That looked different for everybody. That looked different for everybody. But yeah, just educating the mom, the dad, on what's really going on.
Speaker 1 (26:11):
And I like that you include the dad as well,
Speaker 4 (26:14):
Right?
Speaker 1 (26:14):
Yes. Because this is not a singular experience. This is the whole family is involved and impacted. I mean, think about what your outcome would've been. 500 mls.
Speaker 4 (26:26):
Yes, 500 mls.
Speaker 1 (26:28):
And so I guess the question for me then is what were they doing? What
Speaker 4 (26:33):
Were they doing? I do not know. I don't know still to this day. I look at my medical records every so often, and I just realized this year when I took a look at them, one of the doctors that saved my life, she's within the network, the African-American Infant Maternal Mortality Network, Dr. Latonya Hines at Kaiser. Hey, Dr. Hines. Hey, Dr. Hines. And I saw her recently at an event, and I let her know when I looked at my records, you were the doctor who saved my life, so thank you, girl.
Speaker 1 (27:08):
Yes. Yes. And I think it's important also, we have other organizations out there who are really trying to increase the number of African-American physicians because we know when we have representation in healthcare, it's a different experience. We don't have to defend our lives. We don't have to say I'm in pain. And I mean, I've had physicians say to me that they've gone through labor and they've had to advocate for themselves. So it's really important to understand what it is you're supposed to be saying to your doctor, what questions you can ask. The thing, especially for our teen girls, but even just for adults, you trust your doctors. You're supposed to, right? You don't know if things are going wrong. You don't know if the headache that you're having, if it's because this watermelon is trying to come out of you, or if you're dehydrated. Exactly. Or if your blood pressure is high. But if you have someone that's saying to you, you shouldn't be having a headache, or if you're having a headache, ask this. What's my blood pressure? Just to make sure these things are in place. So I think I know the work that you're doing is instrumental. In terms of your geographical service area, where do you provide your services?
Speaker 4 (28:28):
Our services is based in Antelope Valley. So Antelope Valley, including Lancaster, Palmdale, and the surrounding cities, courts, Hills, lake la, but also we also provide doula training.
Speaker 1 (28:39):
Tell us about that.
Speaker 4 (28:40):
Okay, so the doula trainings that we've been providing are for community members, moms, anybody that want to be a part of the process of labor and birth, and just to educate yourself on what's going on so you can go back and educate. I like to say 10 people. So once you get educated by us, you can educate those 10, and then maybe they'll be interested in coming to take our training so they can educate the next 10 and so on and so forth. Sure.
Speaker 1 (29:18):
Welcome back. As always, I'm excited to hear the work that's going on in the community. If you'd like to be featured on my nonprofit spotlight, hit me up on my socials. I'd love to put the spotlight on you, what you're doing, your events, your programs, the impact that you're making in the community. As I always say, seeing nonprofits are funded nonprofits. If a funder can't see you, they don't know you exist. They don't know the work that you're doing in the community. So increase your visibility, and I'm here to help you do that. If you'd like to see the full interview with Mercedes, head on over to my YouTube channel and you can watch the full interview. Otherwise, we've got two more episodes where we're continuing to have a lively conversation with Mercedes and all of the work that she's doing in the Antelope Valley.
Speaker 1 (30:08):
That's all we have for today. Today we talked about how to avoid the mistakes that a new founder makes. What are the things that you should focus on? Infrastructure, always infrastructure. And if you are not sure how to do those things, I got you. It's called the Nonprofit Mastery Academy. I'm going to include the link below, sign up so that you can get the handholding that I give you. Listen, I've been in the nonprofit sector for over 30 years. I've done everything from emptying the trash to actually giving out 7 million annually. One of those roles was serving as an executive director, and I understand not only the pain, not only the struggle, but the reward that you get for serving your community. As a nonprofit consultant, my job is to support the most amazing people on the planet. That's you. But having been an executive director, I know that you can spend a lot of time, a lot of energy, and a lot of money on the wrong things. The Nonprofit Mastery Academy helps you to focus on those things that you need to do. All right. So check it out, check me out. And if you've enjoyed or gotten value from anything that I've said today, be sure to subscribe and share this episode with your community. And until I see you next week, take care of yourself, like you take care of your community. See you next time, fam.
Speaker 2 (31:31):
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.
