Why Nonprofits Must Make Money
In this episode, I’m breaking down one of the biggest misconceptions in the nonprofit sector: the idea that because we’re “nonprofit,” we shouldn’t focus on making money. Spoiler alert—we absolutely must. I’ll explain why generating revenue isn’t just important, it’s a non-negotiable for your sustainability and success.
Episode 157 | Why Nonprofits Must Make Money
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🔦 NONPROFIT SPOTLIGHT 🙌🏿
In Due Time Coalition Pt 1
👉🏿 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
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Speaker 1 (00:00):
In this episode, I'm breaking down one of the biggest misconceptions in a nonprofit sector that nonprofit leaders should not focus on money. Spoiler alert, you must focus on generating consistent revenue in order to achieve long-term sustainability. When we come back, let's talk about why nonprofits must make money.
Speaker 2 (00:23):
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 (00:43):
Welcome to On Air with Amber Wynn. I'm your girl, and today we're talking about why nonprofits must make money. Listen, nonprofit is a tax exempt status. It is not a business model. Today we're talking about having the dangerous mindset of why nonprofit organizations stay in nonprofit poverty, and I say nonprofit poverty because it is a cycle where nonprofit leaders struggle and struggle to generate revenue. If you go into starting a nonprofit thinking, oh, I'm not supposed to make a profit, then guess what? Your nonprofit programs are going to struggle. You won't be able to pay your people prevailing wages, and if you can't pay your people prevailing wages, guess who's going to leave your organization? Your people? Yes. Guess what? When people come to work for you, they work for you because they support your mission, but they have families, they have bills, they have dreams and aspirations.
Speaker 1 (01:46):
They have sick kids, they have parents they have to support. So it is important that you are able to provide them with prevailing wages. So today I want to talk to you about why nonprofit status is a tax status. When the IRS allows you to be tax exempt, what they're saying to you is you have the right to give your donors the ability to write that off as a tax benefit. That's where all of this nonprofit stuff stops. After they write that off. You now have to support not only your operations, but the people that you employ. So it's important to understand that that is a tax status and not a business model. A business model was one whereby you can cover the cost of your materials, your supplies, your operations. You can keep the lights on, you can keep the water flowing. You're able to say to your program managers and staff, guess what? You're going to get a raise this year. If you come into this space thinking I'm not supposed to make a profit, then your organization is going to fail and you're not going to be able to successfully meet your mission. When we come back, I'm going to talk to you a little bit about how treating your nonprofit like a business actually unlocks growth and makes an impact when we return.
Speaker 1 (03:09):
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. You're On Air with Amber Wynn, your hostess with the mostest, and today we're talking about why nonprofits must make money, and I told you that when we returned, I would talk to you about how to treat your nonprofit like a business because it unlocks growth and impact.
Speaker 1 (04:02):
When you have money, you have power, the power to grow your business. Think about it this way, a lot of nonprofits function believing that they're supposed to get everything donated. If I said to you, okay, today I'm going to donate to you a box of red blouses, now you've got to figure out what to do with these red blouses. You're either going to create a program or you're going to do something, but my donation now drives your organization. Did you even have a desire to focus on red blouses? No. Guess what your mission was. Your mission was to teach youth how to swim. Now you got to figure out what to do with these red blouses. If you have money, then you can say, guess what we're going to do? We're going to buy purple bathing suits because purple is your organization's color. So if you run your organization based off of donations, you will never stay true to your mission.
Speaker 1 (05:00):
You're going to have to figure out what to do with all of these donations. Money is like having one of those Visa cards. You can go spend it on whatever you want versus if you get a Starbucks card or if you get a card to go to games station, you have to go to those places. You want the flexibility to do what you want to do, and so that happens to be money. So when we talk about growth and impact, it's important to understand that money gives you that freedom. I think it was Oprah Winfrey who said, no, I don't think that being wealthy solves all my problems, but it sure does make it easier and it makes it easier for our nonprofits. When you have money, you can make decisions, intentional decisions as opposed to waiting for someone to donate something to you. Now, if they donate money, then you get to use that money in the way that you want to do, but you have realize that a nonprofit can't function solely off of donations because people are going to give you what they have.
Speaker 1 (06:04):
Yes, you can make a list and say, we want purple swim outfits or whatever. Are you going to get the sizes that you want? If you have the money, you can say, we need six and small, we need 10 and medium, and we need five in large. Again, it's about having that power. It's about being intentional about what you do with the money, but most importantly, it's about having the money to be able to make the decision. If you can generate a hundred thousand dollars, you can say, and with this a hundred thousand dollars, we're going to give our staff an increase in pay. If you don't have that money, then you say to your staff, I don't have it. And then after a while, your staff is going to be like, you don't have it. You don't have me because I need an increase in pay in order to keep up with the inflation that's going on in this world.
Speaker 1 (06:50):
So when we talk about having an understanding of how money is going to benefit your organization, I have people say to me all the time, oh, I'm not in this because I believe in money. I don't care about money. You have to care about money. A nonprofit is a business. It's just a business with a philanthropic purpose. When you have money, when you leverage that money to support your business model, then now you are able to make intentional decisions that's going to number one, grow your organization and then allow you to make the impact that you want to make. If you are given all of these donations, then your mission is going to change, right? You've got these red blouses, what are you going to do with them? It's not going to help you put these youth into the pool prepared and ready to swim.
Speaker 1 (07:38):
So how is that going to impact your impact that you're making in the community? I say all of that to say nonprofit organizations have to make money. Now, I'm not saying that money should be the driver. I am a fund developer. If it don't make dollars, it don't make sense. You guys are doing the work already. If you're doing the work and not getting paid, then you're struggling. I believe that you should get the money that you deserve for doing the work in the community, and I believe that you should have a consistent flow of revenue so that you can make intentional decisions to grow your organization the way that you envisioned it. Yes. Alright. When we come back from this next commercial break, I'm going to talk to you about common revenue streams that nonprofits ignore and why they matter when we come back.
Speaker 1 (08:30):
Are you looking to leverage your 501(c)(3) tax exempt status to get products and services donated for an event silent option or to support your program but aren't quite sure what to say? Get the Donation Request Letters Toolkit. It provides you with the templates you can customize to fit any request, eliminate the guesswork of what to say, how to say it, and what to offer potential donors as benefits for their donation. You had no idea you should offer donors something in exchange for their donation. Did your offering benefits triple your response rate? Plus the toolkit comes with the Donor Acknowledgement Form template. It's the form you give them after they donate. This toolkit has everything you need for a successful donation request. Order your copy today.
Speaker 1 (09:13):
Welcome back. You're on air with Amber Wynn, Philanthrepreneur, and today we are talking about why nonprofits must make money. And right now I'm going to talk to you a little bit about revenue streams that nonprofits ignore. Listen, when people start nonprofits, it typically goes like this, “Hey girl, or Hey dude, you're doing all this work in the community. You should start a nonprofit and get a grant for that.” And so people do that. They start nonprofits thinking, oh, I'm going to get these grants. And the reality is, out of the top eight funding sources for a nonprofit, grants are - wait for it - number seven. You spend all this energy trying to get these grants. It is one of the smallest pools of money out there. Why? Because government agencies have a payout rate of about 20%. Foundations have a payout rate of about 15%. Corporate foundations have a payout rate of about 7%.
Speaker 1 (10:19):
And think about it, if there are 1.4 million nonprofits out there, and that's the payout rate, a lot of y'all ain't getting no money. What's the number one source of revenue out there for nonprofits? It's individual donors. Why is that? It's because people connect to your mission. People understand that what you do makes a difference. Corporations, foundations, they have a fiduciary responsibility to give out money. 5% of what it is that they bring in. It's not a lot of money, especially when you have more applicants than you do money. So what you want to do is look at ways to generate revenue and some of the common streams of revenue that nonprofits ignore is charging for their fees. I have people say to me all the time, I'm going to start this nonprofit and I want to give away my services for free. And that's admirable because a lot of my nonprofits are in communities where the finances in the local households are not high.
Speaker 1 (11:27):
But there's two reasons why you should charge. Number one is because when someone has a stake in the game, they're going to take what you do seriously, and I'm speaking from personal experience, having been an executive director. If you give away all of your services for free and people don't have the same value, when you pay for something, you're like, I got to get my money's worth when it's free. People have a tendency to be like, well, it's free. It's one of the reasons why I tell my nonprofits to never say your stuff is free. Say it is at no cost to you. There is a cost. Either we got a grant to subsidize it or we have a donor to subsidize it, but it's never free because free devalues what you're doing. So on your flyers, I want you to say the program is at no cost to the participants.
Speaker 1 (12:13):
It's been subsidized by a generous donor so people understand there's value. Secondly, you don't have to charge the actual amount of the program. If it costs $25 per person, charge them $5. If it costs $125 per person, charge them $25, but charge them something so that they have some type of stake in the game, right? So that's called a fee for service. It adds value to what it is that you're doing, but it also creates a consistent flow of revenue. The other thing I want you to look into is employee giving programs. A lot of the corporations out there, Microsoft, Nike, all of these corporations out there, they get their employees to be engaged in communities. What does that look like? They commit to $20 a month from their paycheck, and some of those companies even match it. If I give $20, they give $20, your organization gets $40.
Speaker 1 (13:15):
The beautiful thing about that one is all you have to do is enroll in the program online. So it's not this ongoing thing that you do. So you may not generate a whole lot of money. Maybe it's $5,000 a month, but that's $5,000 you didn't have to do. You fundraise for, and it comes in every month, and you can use it for food because a lot of government grants won't allow you to purchase food. You can use it to pay for your utilities, you can use it for stipends, like whatever, right? Employee giving give back programs are also another one. Another one I want you to think about in terms of generating consistent revenue is your board. A lot of people have board members and they don't contribute. It is their fiduciary responsibility to donate to your organization. What's also important about that is it’s unrestricted dollars.
Speaker 1 (14:06):
These other dollars are restricted, meaning there's a budget line item that they have to follow. And so you want to make sure that you have unrestricted dollars so when the plumbing goes out or if there's a client that you need to support unexpectedly, it's unrestricted and you can use it for that. So there are a ton of other funding streams that you can look at. I have a book on Amazon called Beyond the Grants Creative Fundraising Ideas. Get that book. It's got over 200 pages of fundraising ideas, but I want you to think about different ways to bring in revenue into your organization because nonprofit organizations must generate revenue and grants. If you are depending on grants, you are putting your organization in jeopardy, right? And we don't want that. All right? So we're talking today about why nonprofits must make money, and it's important for you to understand that it's not a bad thing to generate revenue. When you generate revenue, it allows you to make a bigger impact in your community. Alright, so now I want to talk to you, give you the opportunity to talk to me actually as we move into the segment called Ask Amber. This question is coming from Aria and Fresno, and Aria wants to know about increasing her visibility without a marketing budget. Aria, go ahead and ask your question.
Speaker 3 (15:37):
Hello, Amber, this is Aria calling from Fresno, California. My question for you is, how can I increase my visibility without a marketing budget?
Speaker 1 (15:47):
Okay, well, it's just that simple. So Aria, one of the ways that you can increase your visibility without a marketing budget is to go into a podcast. You are a subject matter expert in something and there are always podcasts out there who are looking for people to interview. So do a search on Google that covers your topic and reach out. They usually have on their website an opportunity. Would you like to be a guest or send them an email saying, Hey, I'd love to be a guest. Here's my bio. Would you consider it? Podcasts are really, really growing in the country. So that's one way. Another way is you can do lives on your social media. Go live on Facebook, go live on Instagram. What I will say to you is don't do none of that silly stuff. Don't get out there dancing and doing the challenges.
Speaker 1 (16:41):
Come up as a thought leader. Do two minutes on, did you know or here's a thought for the day, or do some statistics when you come out on your social media, doing lives, give valuable information. The other thing that you can do is create a newsletter and produce valuable content either monthly or quarterly. And then what you want to do is start forwarding that to your elected officials. When you get cards from program officers, add them to your emails. You want to get visibility by also reaching out to your elected officials and say, “Hey, I'd like to be a resource to your constituents.” Typically, an elected official is going to have their own newsletter. Ask them if you can put articles into the newsletter with valuable information. Basically what's happening when you get in your elected officials newsletter is they're kind of endorsing you. Would they put you out there if they didn't think you were credible?
Speaker 1 (17:44):
And also, when you're on an elected officials newsletter, you're getting in front of funders because an elected official has a very big database. So try some of those. They don't cost you anything except for time and consistency. Alright, now we're switching to my favorite part of the episode where I get to put the spotlight on the most amazing people in the community, my nonprofit leaders. It's called Shine on Nonprofits. And as I said, I get to highlight amazing individuals doing the work. I started this part of the episode because my nonprofit leaders are doing the work in the community, and I want them to be seen. I want them to be seen by potential clients, but most importantly, I want them to be seen by funders. So today we are starting off with Mercedes, who is the executive director of In Due Time Coalition, and she's in the community out in Palmdale and Lancaster, and she's providing moms with the care that they deserve, birthing moms, she trains doulas, all of the things. We're going to let Mercedes introduce herself today. Let's go for part one of Nonprofit Spotlight with In Due Time Coalition. Hey fam, it's your girl. And in studio today we have Mercedes who is the founder, executive director of In Due Time Coalition. Mercedes,
Speaker 4 (19:28):
Welcome. Hi. Thank you for having me.
Speaker 1 (19:30):
I'm so excited to have you here. A part of what I do is to make sure that people in the community know what services are out there, but also we want the funders to know, hello, the types of organizations in the community that's making a difference. Mercedes, why don't you start with telling us a little bit about how the organization got founded. You maybe want to start with the name In Due Time Coalition? Yes.
Speaker 4 (19:56):
In Due Time Coalition is a full spectrum perinatal care advocacy education organization. So originally, In Due Time Coalition was Youth Leadership Coalition.
Speaker 1 (20:11):
Okay, that's a whole lot different
Speaker 4 (20:12):
Youth Leadership Coalition. The goal was to support pregnant teens, but we couldn't find the mission. We couldn't find the mission for so long because of the name. I was going through an old journal where I had written down In Due Time and I had sketched a pregnant belly. And when I went through the journal, I'm like, this is the name. This was the name a long time ago. I think it was 2011 when I had drawn the picture and wrote In Due Time. So I just kept coalition because coalition is for me, it's community.
Speaker 1 (20:47):
Okay. So when was the organization founded? Yes. Yeah,
Speaker 4 (20:51):
2019. 2019. The organization was founded. We went through the name change, I want to say the end of 2020, beginning of 2021.
Speaker 1 (21:01):
And so is your focus still primarily on teens or talk about the target audience?
Speaker 4 (21:07):
Yes, yes. So yes, we support teens as well, but the full spectrum, meaning all pregnancy outcomes.
Speaker 1 (21:14):
Okay.
Speaker 4 (21:14):
So before conception, during conception, even postpartum. And if you choose not to have the child, we support with abortion as well.
Speaker 1 (21:25):
Okay, wonderful. So talk to us a little bit about your personal experience. I know it impacted a lot, the reason why you actually started the organization. Tell us a little bit about your story.
Speaker 4 (21:39):
Yes. So knowing what I know now, all of my birthing experiences were very traumatic. I start with my last birth, which was nine years ago now, after I had my son, I had him via C-section
Speaker 4 (21:55):
After I had him, I had experienced postpartum hemorrhage. There's 500 mls in the human body, and I lost that 500 mls where I felt I had a transitional experience with death. So I shared that with one of my post friends. I just got you. I'm sorry, but this is my truth. This is my truth. I had a near experience with death and after that experience, I went through a period of my own postpartum depression where I felt like I needed additional support. So my maternal mental health was at risk. I couldn't take care of my kids because I wasn't taking care of myself. I had questioned God a lot, why am I still here? Why am I still here? So I went through that period and I think that was my not, I think I know that was my driving force, and it still is my driving force just to educate the community, educate women, educate fathers, educate the full family, whatever the support system looked like, just to educate them on what are the things, maybe not all the things, but whatever I can educate them on, that's what I want to educate them on pertaining to labor delivery and postpartum.
Speaker 1 (23:26):
Welcome back. That was part one of our conversations with Mercedes. If you are a nonprofit who'd like to be spotlighted on my podcast so that you can get in front of your constituents, you can get in front of potential donors. Hit me up on any one of socials, email me at [email protected]. I'd be happy to put the spotlight on you because listen, seeing nonprofits are funded nonprofits, and if you'd like to see the entire interview with Mercedes, going over to my YouTube channel and you can see the whole thing. Otherwise, you'll see it in the upcoming next three weeks. We're going to break up the conversation for the next three weeks after this one. Alright, that is it for today's episode where we talked about why nonprofits must make money. I hope that you understand that making money is not something bad, but actually it's something that is a necessity.
Speaker 1 (24:28):
In order for you to run a viable nonprofit, I want you to pay yourself, I want you to pay your people, and I want you to make the impact in your community that you started your nonprofit to make. And the only way you can do that is if you have a constant stream of revenue. Okay? So go out there and make that money. Alright? And if you're not sure how to do that, if you are confused because you thought, oh, I thought a nonprofit couldn't make money, I got you and my Nonprofit Mastery Academy, I take you through everything. How to set up your nonprofit in a way that funders see you as a viable business in a way that your organization is sexy enough for someone to contribute to your organization. It's called the Nonprofit Mastery Academy. I'll drop the link in the bio, but I want you just to really fall deep into your mind and think my community needs the best services that I can possibly provide them, and that comes from being fully funded. Alright, so then we will see you next week, fam, if you enjoyed any part of this episode, be sure to subscribe and share this information with someone in your network. I will see you next week, but until then, I want you to take care of yourself, like you take care of your community. See you next week.
Speaker 2 (25:49):
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.
