Episode 139: Should You Invest in a Building? The Strategy for Housing Your Programs
Delivering quality programs are the key to a nonprofit's success. Securing a physical building is a financial commitment that could send a nonprofit into fiancial debt before they get their legging. Learn how to navigate the process of delivering programs and securing a physical space without sending your nonprofit into financial debt.
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🔦 NONPROFIT SPOTLIGHT 🙌🏿
TaVia Wooley-iles Pt. 3
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https://fusion.amberwynn.net/product/questions-to-ask-a-grant-writer-before-you-hire-them/
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Podcast Transcript
(0:00)
So you got your 501(c)(3), and the first thing you're looking to do is to get a building. You're wondering, Hey, how do I get a building? I just started my nonprofit. If you are in this place, this episode is for you. Should you invest in a building when we come back?
(0:19)
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,
(0:41)
Hey, fam, it's your girl. And on this episode, we are going to talk about, should you invest in a building in the strategy for housing your programs? I get this all the time, hey, Amber, I just got my 501(c)(3) and I need to get a building. And I'm like, No. And it's a conundrum, right? Because you think, well, in order for me to get a grant, I need to be able to deliver my programs, right? But here's the thing, getting a building is a long term commitment, and it ain't cheap, right? Not only are you investing in a location, but you have to sign a lease. You know, most people who own buildings, they're not going to just let you go, you know, month to month. So here you are fresh, new concept. Most of the times when people start a nonprofit, they haven't done it before, right? So you commit to this six, one year lease, and you've got to pay that every month, but you don't even have grants. You don't even know if the programs are going to work. In your mind, they may, or even if you've delivered them before, and you're like, I want to expand. I need a building to do it. I'm going to ask you to pump the brakes. I'm going to ask you to look at a different type of strategy whereby, when you get your building, you know you can pay that monthly rent, right? So what does that look like? Well, first of all, you want to look at a strategy that's going to allow you not to get yourself in debt. There's this thing that's called the nonprofit poverty cycle, and it happens because nonprofit leaders jump into an idea, a concept, without really thinking it through. Why? Because you don't know what you don't know. A lot of times you start your nonprofit and you think, if I build it, it will come meaning it as the grants. And it doesn't work like that. In order for you to qualify for a grant, you have to create what's called a track record. Funders aren't just handing out money to people who have 501(c)(3)s. No, no. They're handing out money to organizations who can prove that they have a successful track record. So the first thing you want to do before you invest in a building is to create a track record of success, right? You don't want to jump into getting a building and being committed to a year or six months without even knowing that your organization will be successful. In your mind, or you know because you did a workshop or two, you think it's going to be successful. You want to know for sure. So what that looks like is committing to another structure for six months, getting your track record right, then securing some grants right, and then thinking about when you should get a building. When we come back, I'm going to actually give you the strategy for how to house your programs when we come back.
(03:45)
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. 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.
(04:26)
You're on air with Amber Wynn, and today we're talking about, should you invest in the building in order to deliver your programs? Logically, you would think that the answer is yes. Hey, I got my 501, c3, and now I need a building so that I can deliver my programs. What you don't want to do is saddle your organization with all that debt, right, especially if you don't have a board that's fundraising, especially if you don't have consistent revenue coming in. All getting a building is going to do is sink you deeper and deeper into debt. So two things I want to point out. I. If you have a 501, c3, then you are a public charity. And as a public charity, the public should be able to access your programs. So people are like, Well, I'm just going to, you know, run it out of my home until I can afford a building. Unless you are operating a group home or a transition home or a daycare. I'm going to advise you not to run your nonprofit from your home. If you have a home in the front and maybe, like a little casita in the back, or, you know, something like that, that might be it. That might be acceptable. But if a funder comes by and they and they do a site visit, and again, you're not a group home or a transition home or daycare. They may frown upon that. So what should I do? Amber, you're telling me not to invest in this building. You're telling me not to work from my home. What you want to do is to go where your clients are, right? So if you want to do a coding program, then you want to go partner at a school so a school district or a community based organization that's already doing some type of STEM program, so you would go to the nonprofit and say, hey, we'd like to partner with you for six months or a year. You get to test your program without committing to a six month lease, right? So the other beautiful thing of going to where the people already are is that it's going to be easier to do the recruitment if you're trying to do an after school program, then wouldn't it be great to be at the school so they leave the school and just go into a room, right? Or they go into the auditorium. It's going to help you understand the mindset of your clients. Will they, you know, leave that school and come to the building that's two miles away? Will it help you to build a relationship so they like the program, they love the program. So that when you start to advertise, to say, hey, we've got a building that's two miles away, then they will come right, because they know you, you've established the relationship. So the first thing you want to do is to try and deliver your programs at the place where your clients already are going to be. Maybe that's after school. Maybe it's another community based organization, for example, maybe you want to partner with the Boys and Girls Club. Maybe you want to partner with YMCA. Maybe it's an established organization that already has the building. So you don't have to incur any costs when you have a building. You have to have things, especially when you're working with youth, but any other population, you have to have insurance, right? So these are expenses that you won't have to occur immediately partner with another organization. If that's something that you've already done now you have a track record. Don't go run into a building right away. Maybe you have another nonprofit organization who has a room that you can sublease right so, or maybe it's a church, and they're like, Yeah, you can use our multi purpose center sublease from them, get like, one or two years up under your belt before you commit to a building, because a building is a commitment, right? So if you can sublease from another community based organization, maybe they only deliver their programs Mondays, Wednesdays and Fridays. You can just slide in and say, Okay, so for Tuesdays, Thursdays and Sundays, I'll sublease it, and it's a perfect match, because now they get to get full use of their facility. They get some revenue in. You're not committed to a whole building, right? Because you only deliver your programs on Tuesdays, Thursdays and Sundays, right? So it ends up being a win, win. First thing, go to where your clients are. Second thing, consider subleasing.
(8:57)
Renting is going to be your last option, but when you get to the point where you can rent, it's because you've got consistent revenue coming in. You know for a fact, that you've got grants, or you've got individual donors, or you have something in place that's going to cover the cost of that rent for six months to a year. Otherwise, you're going to be pulling out of your personal assets to pay for that, and that's not what we want. When you start paying for rent out of your personal assets, meaning you work your nine to five and you take in some of that money to cover the expenses of your nonprofit, that's going to create what we call the nonprofit poverty cycle. And we don't want that to happen, so the strategy is to go to where your clients are, to partner with other community based organizations, to sublease from a church or, you know, a YMCA or someone who has a room that you can rent out so that you can keep your expenses low when you start to get consistent revenue and jump in. To it, and then you can think about investing in the building. That's my personal professional recommendation, because we want to make sure that your organization is thriving and so that's sustainable. It's very lofty and ideal to think about getting a building, but until you have consistent revenue, keep those expenses low. All right, when we come back, we have Ask Amber, and you get to ask your question, and I'll answer it on air when we come back.
(10:30)
Have you been duped by a grant writer promising you the moon and the stars? But after collecting your $2,000 you never win a grant? No, a grant writer can't guarantee you'll get funded, but if you don't know how to vet them, you can walk right into a scam. Check out my guide with questions to ask a grant writer before you hire them, to help you determine if a grant writer is a bona fide professional or out to steal your hard earned money with no intentions of yielding results. This guide explains what to look for in a grant writer if they're novice or seasoned if they're a fit for the type of proposal you need written, what questions they should ask you leverage my 25 years of grant writing experience securing over ten million in grants for clients to help you find a qualified grant writer and reduce your chances of getting scammed. Order your copy today.
(11:19)
Welcome back. You're on air with Amber, and we're talking about, should you invest in the building? The answer is not right now. Now is the time of the episode where you get to ask me your pressing questions. This question is from Ralph. Ralph is from Arizona, and Ralph says, Hey, Amber, my part time staff is asking for more hours. They want to become part time. I mean, they want to become full time employees. I can't afford it. Full time employees come with benefits and payroll taxes, and I can't cover those. How do I explain that to them without sounding cheap? I want to move them over, I just can't afford it. Well, Ralph, you need to create a plan, and you need to, you need to share that plan with your staff, so that they see that you're not cheap, right, so that they see that there's a plan in place to get them from part time to full time. Because here's the thing, people want to live a quality of life, and if you're stringing them along with, you know, minimum wage part time, they can't, they can't live life like that. That perpetuates what we call the nonprofit poverty cycle, and we need to move away from that. The people who work in nonprofit organizations deserve to live a quality life just like everybody else. As a matter of fact, I will go so far as to say people who work for nonprofits need to make more than just the regular for profits. Why? Because they're dealing with people who are affected by trauma. They're dealing with people who have all of these challenges and barriers in their lives, and they are giving their blood, sweat and tears, to help our society become a better place for other people to live. So in my opinion, they should be making more and not less. And so Ralph, I'm going to say to you, if you haven't gotten to the place where you can move them to full time, then show them how you're going to honor their commitment to you. If it's, I can't move you to full time for at least a year, but in the meantime, I'm going to give you a $1 raise every year. Then that's showing to them, at least you're honoring their commitment. But here's the real deal. A lot of the time, people can't afford to move their staff from part time to full time because of what he says, it comes with payroll taxes, right? It comes with benefits. When you move from part time to full time, by law, you have to give people benefits, so you need to plan for that. Your board needs to be the type of board that understands it's their responsibility to fundraise for that. So we've started off with two part time staff, but within two years, we want to move them to full time. So that means we can no longer fundraise for $150,000 we now need to fundraise for 350. There is a plan for it, right? So that's what I'm going to advise you to do. Ralph, say to them, I can't afford to make the transit transition right now, but I have a plan. The board understands that their fundraising goal is to be able to bring on full time staff in the next three years, but in the meantime, they're going to fundraise to give you regular raises right to demonstrate your loyalty, and don't just say it Ralph like put it in place if you don't have board members right now who are fundraising, thank them. Lovingly rotate them on. Off recruit people who understand that the work that you're doing in your community means a lot, and so they're going to fundraise to help move these people who are committed to you into a full time position. Great question. Thank you, Ralph. And if you have a question for Amber Wynn, then hit me up on any of my socials. Ask your question, and I'll be sure to read it on air. Now we're going to transition to my favorite part of the episode, when I get to shine a light on the most amazing people in the country that's doing the work that needs to be done. We're on part three of our conversation with Tavia Wooley of EmpowerTHEM. Let's hear about some of the challenges that she's been experiencing and how she's overcome them. Part three with Tavia Wooley.
(15:53)
So our challenge is really educating community stakeholders, funders and everybody they got ears the importance of systems change work because it's much more trending or much more visible to be like, we gave away 500 backpacks. We've fed this many people, and those are all amazing things, but every year, we're going to have to give out more backpacks, and every month, every day, we're going to have to feed more people, if we don't address the root cause. So our challenge has been educating people on the value and importance of system change that really says, See long term impact in the community.
(16:46)
And we're back. That was our conversation part three, with Tavia, talking about, you know, how she's built out EmpowerTHEM. If you want to hear the full episode, you can go check it out on my YouTube channel. If not, we're going to hear the last part in our next episode. Part four today, we've been talking about, should you invest in a building? It's natural for you when you start your nonprofit to want this, have this beautiful place where you can deliver your programs, but don't jump too quickly, right? Create a strategy whereby you can, you know, meet your clients where they are, and then evolve until you can generate consistent outside revenue and then maybe secure yourself a building. If you found this information helpful, be sure to subscribe, like and share the content with someone in our community who could use it. I'm here to support the most amazing people on the planet. So it's important that we get this information out to our community. I hope to see you again next week, but until then, take care of yourself like you take care of your community.
(17:52)
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 you next time!
