For Profit vs Nonprofit Which Is Right for You?
Not every good idea needs to become a nonprofit. In this episode, I’ll help you weigh whether a nonprofit or for-profit structure makes the most sense for your goals. You’ll learn the legal, financial, and leadership implications of both—and how to make a choice that fuels your vision, not fights it.
Episode 160 | For Profit vs Nonprofit Which Is Right for You?
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🔦 NONPROFIT SPOTLIGHT 🙌🏿
In Due Time Coalition Pt 4
👉🏿 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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Learn more about my success with helping nonprofits
Visit My Website👇🏿👇🏿👇🏿
https://thenonprofitmasteryacademy.com
CONNECT WITH AMBER:
Follow me on Facebook 👇🏿👇🏿👇🏿
https://www.facebook.com/amberwynnphilanthrepreneur
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Listen to my Podcast! 👇🏿👇🏿👇🏿
Spotify: https://open.spotify.com/show/4G9QNaVAYz8eXTmz48gagl
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Speaker 1 (00:00):
Not every good idea needs to become a nonprofit. Despite popular belief, you can do good without starting an actual nonprofit organization. In this episode, I help you weigh out whether a nonprofit or a for-profit structure makes the most sense for your goals. In this episode,
Speaker 2 (00:20):
Welcome to OnAirwithAmber 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):
Hey fam, it's your girl, and today we're talking about the difference between starting a for-profit or a nonprofit and which one is right for you. Here's what typically happens. You see a need in your community, so you just do the work. Someone will say, Ooh, you know what? You need to start a nonprofit and get a grant for that. Not all the time. That's not always the solution. Listen to me. I have been in the nonprofit sector for over 30 years. I've done everything from program development to writing grants to being an executive director, to being a funder. I've sat on boards and in the 30 years that I've been in this sector, I will say that I have made a contribution to my community, but I believe in this space right now as a nonprofit consultant, I have made the most impact that I have ever made in my life, and I've served in some pretty amazing programs, but serving as a nonprofit, consulting, helping the most amazing people on the planet run more effective and efficient nonprofits is probably the most impactful work that I've done in the sector.
Speaker 1 (01:56):
When I strengthen my nonprofit leaders, they then strengthen their nonprofits, which then means they're making a bigger impact in the community. I can't think of anything more impactful than that. When I was an executive director, yes, I definitely changed communities one girl at a time, but in this role as a consultant, I am making probably the biggest impact that I can make because I'm shoring up nonprofits. I'm helping them to diversify funding streams. I'm helping them to keep and provide better pay to their staff there. There's nothing more impactful in my opinion than that, but some may have said, oh, Amber, why don't you start a nonprofit? And guess what I did in 2013? I tried to do what I'm doing right now as a consultant. There just wasn't an appetite for it. When I told funders, we need to train new founders and nonprofit leaders on how to run a viable nonprofit, how to run it like a business so that they can diversify their funding stream so that they understand what the IRS wants from them so that they understand what funders are asking for.
Speaker 1 (03:04):
And they were like, well, if they started a nonprofit, then they should know what they're doing. It's not the case because more times than not, people start nonprofits because they have a passion, because they've had a personal experience because there's a need that's not being met in their community. They're not thinking I'm starting a business. They're thinking about the programs. They're thinking about the community. They're not thinking, oh my goodness, I have to file reports. I have to do marketing. I have to create. They're not thinking that. They're thinking, how am I going to fill the need of the community? And so not knowing that there are other options out there, people start nonprofits and think, okay, well, there's a grant for that. When in reality you probably would make more of an impact staying as a for-profit if you have experience, let's just say if you're running a trucking company, I'm going to make it up and you say, you know what?
Speaker 1 (04:03):
I had an opportunity. I was incarcerated and someone gave me an opportunity, and so now I'm at a place where I have a trucking company. I want to do the same thing for other men coming out of prison and giving them opportunities because they don't have the same opportunities that people without a record would have. That's a great thing you can do. Doesn't necessarily mean that you need to start a nonprofit, but someone will tell you that, oh, you need to turn that into a nonprofit and get a grant. I'm going to say no. I'm going to say you probably would be more successful maintaining your for-profit status and creating opportunities.
Speaker 1 (04:46):
What would that look like? Well, if I were you, I would either go to your county and say, Hey, can I get a contract with you? Because the contract will hire you as a for-profit company. They will give you a contract and you can serve as one of their non-traditional careers, so you'll get a contract. They'll write you a check as a company that's providing training, so you don't have to be a 501(c)(3), right? They'll just give you the contract and you provide the training. You could work with a nonprofit who does workforce development. You would be their subcontractor, so they're the nonprofit. They get the contract and then they write you a subcontract. So they're doing the soft skills how to interview, and then they're giving them three, four opportunities. You're one of the opportunities, one of the trades that they can learn.
Speaker 1 (05:38):
So you didn't have to start a nonprofit. You just worked in partnership and collaboration with a nonprofit who's doing workforce development? Are you following me? You don't have to start a nonprofit in order to make a difference in your community. You just need to look at how you can powerfully position your for-profit so that you can do good. That's what I'm doing. I have a nonprofit consulting firm. It is a for-profit, and I secure contracts from funding agencies so that I can train nonprofit leaders. I work with nonprofit leaders. They bring me in to do board trainings. They bring me in to create systems and processes. They bring me in to train their staff. I'm not a nonprofit, but I make as much of an impact in the nonprofit sector as any nonprofit. And today, this is what I want to talk to you about.
Speaker 1 (06:34):
All right, so when we come back, I'm going to talk to you about what are the benefits and the drawbacks of each of being a for-profit and of being a nonprofit when we come back. If your grants aren't getting funded, it could be because the funder can't see how your programs are making an impact in your community. Get the How to Demonstrate Impact workbook to quantify the work you're doing in your community in a way that a funder can see a potential return on your investment. Funders need proof that your organization will use their grant dollars to improve your community. That proof is called impact, and impact is quantified through measurable outcomes. Leverage my 30 years of program development experience to help increase your chance of securing funding. Order your copy today. Welcome back. Today we're talking about for-profit versus nonprofit and which is right for you.
Speaker 1 (07:27):
The tendency of people who have giving hearts is to think that they have to start a nonprofit. As a matter of fact, I'll have people who are for-profits say, oh, we're going to start a nonprofit arm. You don't need to. When you start a nonprofit, you start a business. This is not something that you can do on the side, not if you wanted to be successful. For my for-profit companies, if you have this desire to give back, if it's not actually doing the service, I gave the example before the break about the truck driver. That would be direct services. You got to teach them how to drive the semi so you will actually be doing the service if you want to give back, but don't necessarily want to do the service, I'm going to encourage you to create a charitable trust. A charitable trust is like an online banking account where you get to leverage taxes like the ultra wealthy do, right?
Speaker 1 (08:29):
So they open up a charitable trust. They fund other 501(c)(3) s. Why am I going to encourage you to do that? We don't need another nonprofit. We have enough. The people who are doing the work just need more support. So as an entrepreneur, I have a charitable trust and I support nonprofit leaders. It's called funding rest because funders tend to only fund programs and not operationals, not operational expenses. So I fund rest. Nonprofits aren't able to give their people vacations. I will fund a week of vacation. $5,000 will fund a week of vacation for five individuals in a nonprofit. Everyone deserves to have a vacation, so you can make an impact as a for-profit company, I don't need to deliver the services. There are people who are doing the work out there. I'm just going to write the check, and when I write that check with a charitable trust, the charitable fund, I get to reduce my taxes up to 60% of my annual income.
Speaker 1 (09:35):
So it's a win-win for both of us. The ultra wealthy use this all the time, right? If you are a for-profit and you're thinking about starting a nonprofit before you make that plunge, holla at your girl, I can help you not only make that impact that you want to make in the community, but also save taxes. That's going to help strengthen your business. That being said, if you are not going to deliver the services, think about other ways that you can contribute to the community. That's going to be a win-win, and starting a charitable fund will allow you to do that, and I can show you how to do that. But if you are committed to delivering the services, I want you to understand that there are a difference. Number one, a public charity is a public charity, meaning it cannot be owned, meaning that the IRS has given this special exemption so that it benefits the public good.
Speaker 1 (10:30):
When people say, oh, I started my nonprofit. I'm going to pass it down to my kid. This is going to be the part of our generational wealth. That's not going to happen because the IRS did not set it up that way. If you want to pass down a company to your child, if you want to start generational wealth, then you need to start a for profit company and you can start a for-profit company and make an impact. You just got to do it a different way. If you are committed to service and you understand that this nonprofit does not belong to you, you don't own it, you can't pass it down, you understand that the IRS has created rules that you have to abide by, then by all means start a nonprofit. It's just important that you understand the difference. It's easier it air quotes to start a nonprofit, right?
Speaker 1 (11:23):
So people start it and they're like, oh, this is my business. Once you start that nonprofit and you understand all of the rules and all of the restrictions, it's a whole different ball game. So this episode is to talk to you before you start your nonprofit so that you have all the information you need to make an informed decision. Generational wealth. You want to own something, you want the money to come directly to you, start a for profit and you can start a for-profit and make an impact in your community. If you want to provide direct services, you know that the money that comes in has to go right back into your organization, not into your pocket. It can't benefit you even if you have a for profit and you think, oh, well, this for-profit can help my nope, nope. They've got to be separate. So for profit, nonprofit, I got you.
Speaker 1 (12:17):
As a matter of fact, if you go to my website, Nonprofit Mastery Academy, you can take a quiz and that quiz will kind of help you decide based off of what your goals are, which one you should do. But I hope just from having this conversation that you understand what a public charity is and what it's not and what you can do in order to facilitate your goals for-profit companies can make long lasting impact in the community. You just need a little assistance, and that's what your girl is here for. I can help you do it all 30 years. Listen, coming, going back and forth. Whatever you want to do in the community, I can help you. We don't need another nonprofit, but if you've started your nonprofit, you're not sure how to get it to a place of sustainability, I got you. Whatever stage you're in, I just don't want you to think that because you want to do well and do good and do more in your community, you have to start a nonprofit.
Speaker 1 (13:15):
You do not. You don't. Okay, so when we come back, I'm going to talk to you a little bit about ways that a for-profit actually serves your mission better than starting a public charity. When we come back, most founders don't realize that they're 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. 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. You're OnAirWithAmberWynn, and today we're talking about the difference between a for-profit and nonprofit and which one you should choose.
Speaker 1 (14:16):
I think as people historically, we see something wrong. We want to make a difference, and that's a good thing. Today's episode is to just let you know you can do that without starting a nonprofit because a nonprofit is a lot of work, and that's not to say that if you start a nonprofit, you won't feel financially secure. In my course, I make sure that all of my nonprofits are paid living wages. I actually encourage them to make the standard whatever's in the industry so that you are not taking from your family so that you're not dipping into your savings. But I say this with my chest, it's very rare that we have a nonprofit leader who's solely based off of the salaries that they're getting from their nonprofit is going to create generational wealth. It's just not set up that way. I'm going to say, if you follow my roadmap, you will not be hungry.
Speaker 1 (15:22):
You will be able to have some type of savings, but if you're thinking about generational wealth, if you're thinking about owning something that you can pass down to your child, it's not a nonprofit. It's a for-profit, and if you are a for-profit, you can make a difference in your community and you can get some tax savings. So it's just important that you understand that you can make a difference as a for-profit. You don't necessarily have to start a nonprofit. That's what today's conversations have been about, and I didn't have anyone to tell me that, and I am just going to scream it from the rooftops. You can make a difference without starting a nonprofit because starting a nonprofit is starting a whole business. I have for-profits. Tell me all this time, oh yeah, I'm going to start a nonprofit. I'm going to do it like another, no, don't do it.
Speaker 1 (16:11):
Don't do it. Take the money that you are going to invest into that nonprofit and support the nonprofits that are already doing the work. If you don't know who to support, if listen, I work with enough nonprofits, I can even guide you in that direction as well, right? We don't need another nonprofit. What we need is more support going into the nonprofits already doing the work. Alright, that's enough of me on my soapbox. We're going to move on to ask Amber where people in the community, my nonprofit leaders or whomever, reach out to me and ask me their pressing questions. This question is actually anonymous, and it's asking about how to serve the target audience in under-resourced communities. Let's hear what anonymous has to ask.
Speaker 3 (16:59):
Hi, Amber. I'm in a community with very limited resources, so my organization serves anyone in need. That's formula or car seats for infants to bus passes and access to computers, to our teens, to groceries for seniors. We literally help anyone in need. I keep hearing you say you have to choose if there is a need, why do I have to choose?
Speaker 1 (17:28):
All right, so the question is, my organization serves anyone in need. Why do I have to choose? The reason why you have to choose a target audience is because funders only fund specific target audiences. What do I mean by that? As a funder, I'm not funding organizations that serve everyone. I only want to fund organizations that serve African-American women ages 17 to 25. If you are serving everyone zero to 99, how do I know that my money is not going to the target population that you serve? That's zero to 15. That's not who I'm interested in serving. If you keep saying, we serve everyone because everyone's in need in my community, it's going to be more challenging for you to get funded. I've seen it time and time again when my nonprofit organizations narrow down their target audiences. Then the funder is more comfortable with funding you because you are funding their target audience.
Speaker 1 (18:33):
Mistakenly. Founders think, well, if it's a big old range, then that's going to increase my opportunity to get funded, and it's the opposite. The bigger your range, the less comfortable funders are with writing you the check, right? I specifically fund this age range. That's what I want to fund. And here's the other thing. There are nonprofits out there who specifically fund that age range, so I don't even have to choose. I don't have to worry about you, because there are other organizations who understand when they are specific about their target audience, their funders are more comfortable with that. The last thing I'll say about it is, yes, you have a lot of your community that's in need. Do not try to do all things when you're doing all things, then your impact is going to be watered down. If you specifically serve a target range, then you'll have better outcomes, and then that'll improve your opportunity to generate revenue. Right? Alright, so now we're going to move to my favorite part of the episode when I get to put the spotlight on the most amazing individuals on the planet, my nonprofit leaders, and we're wrapping up our conversation episode four with Mercedes and In Due Time Coalition who's talking about serving birthing moms in the Antelope Valley. So let's finish our conversation.
Speaker 4 (20:11):
I'm going to
Speaker 1 (20:11):
Look out. That's right, that's right. That's right. Well, I'm happy to hear that, and it's important, as I say all the time, not to just check off the box when you see that type of transformation and due time has been around, what? Nine years?
Speaker 4 (20:27):
Oh, no, not that long. Six years.
Speaker 1 (20:29):
Six years. Five, six years. Okay. Six years. And so she's been grinding y'all. She's been doing the work in the community. That's not the question. The question is, did your organization look the part, right? Yes. And so as founders and nonprofit leaders, sometimes you have to do that extra work. Yeah,
Speaker 4 (20:44):
And can I say one more thing? Say it. I would say too, even though you feel like you look the
Speaker 1 (20:51):
Park,
Speaker 4 (20:52):
Sometimes you have to take a step back and just readjust and get some things right to get the park and look the part.
Speaker 1 (20:59):
That's right. And it's no shade. It's just having been a funder. We don't know what we don't know, and I have the honor and the privilege of working with nonprofits to up their game, and that's just really refining those things that a funder will look at and say, okay, I get it now. Right. You're doing the work in the community. Look, you've trained all of these amazing individuals, right?
Speaker 4 (21:23):
Yes.
Speaker 1 (21:24):
So would you like to share with the audience anything that's coming up? As you mentioned, like new cohorts, events, you're trains for, the dads do
Speaker 4 (21:32):
Share. Okay. So our next informational will be July 25th at 4:00 PM So y'all look on, follow us on Instagram, first of all, in due time co. We will be having a doula informational in August. So the dates, the training dates are, forgive me each Sunday in August, so the third, 10th, 17th, and I want to say the 24th, 24th or 25th, we're going to have a new cohort and for our dads, just follow us on Instagram, so you can keep up with that. It's not just dads, but it's fathers. Anybody who is supporting black children. Partners. Partners. Yeah. All the things. So
Speaker 1 (22:15):
Is this training every month, every quarter, depending on funding,
Speaker 4 (22:21):
Depending on funding. Ms. Amber? Yes, depending on funding, but I will say we're going to run it back August and September, and then hopefully we can have a fall cohort. So if you follow us on Instagram in due time, co we're
Speaker 1 (22:36):
We're going
Speaker 4 (22:36):
To post it. We're going to post. We're going to post,
Speaker 1 (22:38):
Yes, yes, yes, yes. Okay, wonderful. Well, as I like to say to everyone who watches my nonprofit spotlight, you're doing the work, so thank you so much for all of the work you're putting into the community. Thank you for coming on the show. Of course, we are always welcome to come back, let us know when you have new programs, new offerings, new events, because we want everyone to know what's going out in the community.
Speaker 4 (23:09):
Yes.
Speaker 1 (23:10):
Okay. So thank you so much for joining us.
Speaker 4 (23:12):
Thank you for having me. All right, bye y'all.
Speaker 1 (23:14):
Bye. See y'all
Speaker 2 (23:14):
Soon.
Speaker 1 (23:28):
Welcome back. That was the last episode of our conversation with Mercedes. If you'd like for me to spotlight your nonprofit on my podcast, I would be honored. As I say, every episode, seeing nonprofits are funded nonprofits. We want the funders to see you. We want your potential clients to see you. So drop me a line on any of my socials. I'd be happy to bring you in the studio and let you talk about all of the amazing things that you're doing. Also, I just want you to know when we talk about the difference between a for-profit and nonprofit, which is our conversation today, if your heart is set on starting a nonprofit, do not let me discourage you. If your heart is set on starting a nonprofit, I want you to do it the right way and I have the resources for you. It's called the Nonprofit Mastery Academy, and I take you from concept to scaling your nonprofit, diversifying your funding strengths.
Speaker 1 (24:28):
I got you. But if you are a for-profit and you want to make a difference in your community, you do not have to start a nonprofit to do that. And I can help you, not only can I help you with making an impact, but I can also help you with getting some tax savings that then you can use to even make a bigger impact in your community by supporting the nonprofits who are already doing it. Yes. Alright, wonderful. If you found anything in this episode that you thought was beneficial, be sure to like, subscribe and share it with somebody in your network and then come back and see me again next week because I'm going to be here. I'm going to be here sharing with you all the information that I have that I think is going to support you because I am really grateful for the work that you're doing in the community. If no one has thanked you this week, thank you. And as always, take care of yourself, like you take care of your community. We'll see you next week.
Speaker 2 (25:21):
We're listening. If you enjoyed this episode, subscribe and leave a review on iTunes. Head over to https://thenonprofitmasteryacademy.com/podcast for the links and resources mentioned in today's podcast. See you next time.
