Episode 21: A Sustainability Mindset - The Founder’s Syndrome
You could be the reason why your organization isn’t thriving. Move from fear to fearless when you understand how to leverage the rules of engagement in your favor to powerfully serve your community.
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NONPROFIT SPOTLIGHT: Black Women’s Health Imperative
Podcast Transcript
Speaker 1 (00:04):
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 Philanthrepreneuer, Amber Wynn.
Speaker 2 (00:25):
Hey, it's your girl. I'm back once again. Here to share with you some of my knowledge, my wisdom, my experience, and I've been covering a lot about just resources. And I've been on some of these social media platforms listening to nonprofit leaders cuz I wanna keep my finger on the pulse about what's going on, what my nonprofit leaders need, what they want, how I can support.
Speaker 2 (00:54):
And just listening to some of the posts, I wanna share something. In every episode I do a mindset minute, but in this episode I wanna talk about a Sustainability Mindset and what does that mean and how does it impact you and your organization and how do funders respond to that. So in this episode I'm going to talk to you about something that really strangles a nonprofit and that's called the Founder's Syndrome. But before we jump into all of that we're gonna hear from one of our sponsors. So when we come back, I'm gonna talk to you a little bit about Founder's Syndrome.
Speaker 3 (01:43):
Starting a new career, in a new sector, with unfamiliar job titles and new jargon can lead to frustration and burnout.
Speaker 3 (01:53):
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Speaker 2 (03:05):
We're back. You are here On Air with Amber, your resident Philanthrepreneur, and today we're talking about the Sustainability Mindset and specifically we're talking about the Founder Syndrome. What is the Founder Syndrome? It's when a Founder starts a nonprofit or a business for that matter, but in this case a nonprofit and the organization really doesn't grow. And it doesn't grow because the Founder doesn't allow it to. Why? Because it's their organization cuz they started it. Why? Because it's their vision. They're not allowing other individuals to contribute, to expand, or grow. The Founder has to touch everything before any decisions can be made. It has to be their approval and it has to go their way. They have the final say. And what's wrong with that? If it's your business? Well, first of all, a nonprofit cannot be owned. I've said that a hundred times and I'm gonna say it a million times more until those of you who've started these nonprofits understand that it's not your organization.
Speaker 2 (04:11):
A nonprofit is a public charity and that's how the IRS recognizes it. And listen, I've started a nonprofit as well. I know the amount of time, the amount of financial investment, all of that that you put into this nonprofit organization. But the fact that you didn't understand that you invest in your time, your money or whatever did not mean that it would at the end be yours is irrelevant. It's still a public charity. And so with the Founder Syndrome, what happens is, you know, have a visionary who's got this great heart who really is committed to their community and before you know it, they're completely invested. That’s you, that's the Founder and that's what you're supposed to do. But you need to recognize that at some point there needs to be other opinions, other people's perspectives, the perspective of the community. Otherwise your organization is going to be strangled.
Speaker 2 (05:12):
There are some organizations where the Founder has been there the entire length of the organization's existence. So like 20 years and the Founder's still running the nonprofit and the Founder's like, Well, what's wrong with it? I started it. I've invested my money. Sometimes you need new blood, you need new energy. And what happens when you drop dead? Does the organization just die with you? And if that's what you want, then I'm gonna say your focus is not on the right thing, it's on the wrong thing. The right thing is wanting your nonprofit organization to be around decades after you've gone, right?. And so a Founder Syndrome is dangerous to a nonprofit. I've had individuals come to me and say, Hey Amber, I heard that there's this thing called the Founder's Clause where I can put in the bylaws where I can never be fired or I get the final say so.
Speaker 2 (06:11):
And I'm gonna tell you unequivocally that that is a lie. And I rarely use that word, but that is a lie because if you have final say, so if you are unable to be fired, then that means you can benefit from this organization. And it states specifically in your bylaws that no one person or group of people can personally benefit. Then it no longer is a public charity. It's a company you can benefit all day long from if you start your own for-profit. So I just really wanted to touch on the founder syndrome because it seems to be a major source of strangling out nonprofits.
Speaker 2 (06:56):
Yes, you may have some Visionaries who are open, which is great. You may have some Founders who will allow some people to participate in the growth and development of the organization, which is great, but that's not enough, right? Founder Syndrome is detrimental to a nonprofit because new ideas can't come in and it's typically because the Founder is threatened, right? They are afraid that somebody's gonna come in and take over their organization, either a board member or a staff member. And what I've seen is they run them away, they say, Oh yeah, I need you to come on board to help me grow. And I'm even thinking about who I'm gonna turn this organization over to because they want the growth, but they still want the control. And here's the thing, if you are a Founder that is an Executive Director, then you're not in control.
Speaker 2 (07:54):
The Board is in control. But what happens is the Founder will stack that Board with people who will never fire them. And when you stack the Board, then typically you're not allowing the organization to have powerful board members who can then come in and fundraise. So it all gets all mushed up and smashed up into this thing. And that thing isn't typically powerful. So I want you as a Founder to just sit back and think and say to yourself, Am I preventing this organization from growing? Before you even ask that question, ask yourself this. Do I believe that this nonprofit is my nonprofit? If the answer is yes, even if it's because you've invested all of this time, money, and effort. If you answer yes, I believe this is my nonprofit, then that's the first mine shift you need to make, because it's not yours.
Speaker 2 (08:52):
You will always forever, as long as the organization is in existence, be its Founder. Cuz you started it. That's history. That's historical fact. You started the nonprofit, but the organization is a public charity and it's supposed to belong to the people that you serve. So when we talk about a Sustainability Mindset - Founders Syndrome is very detrimental to the organization. When we come back, we're getting ready to take another break. When we come back we've got Ask Amber and we've got questions about what is unrelated business income. But right now, let's pause for another commercial break.
Speaker 4 (09:36):
This is you and this is your business. From invoicing your first client to your 10th client to your hundredth client, you'll need to get paid quickly. Pretty soon you'll be ready to hire some help and you'll need to pay them. As your business grows, Wave is there to grow with you.
Speaker 2 (10:07):
We're back. This episode we're talking about a sustainability mindset and in particular Founder's Syndrome. But at this time of the episode, I give you an opportunity to ask me your questions. As I said at the beginning of the episode, I want to keep my pulse on what's going on in the community. So you have an opportunity to ask me a question. You can visit me on my social media platforms or email me at amber@amberwynn.net and ask me your questions. This week's question is, what is U B I T? That's how it's usually referred to U B I T is Unrelated Business Income Tax. So unrelated business income tax, the IRS. When you are a tax exempt organization, that means that you don't have to pay taxes on your revenue. That's the benefit of being a public charity. And the IRS doesn't make you pay taxes on it because you're doing a public service. That's why you can't own the org organization. You get taxed on revenue when it's a for-profit, but not when it's a nonprofit because it's benefiting the greater good. Anyways,so you don't get taxed on revenue.
Speaker 2 (11:22):
So when you are generating revenue, because you have to, because the nonprofit is a business, it's just a nonprofit, they say, the IRS that you can generate money that is in support of your purpose. So if you're getting money, it can't be money that you generate that has nothing to do with your purpose. For example, you are a youth serving organization, right?. If one of your programs is healthy foods and you have a garden and then at the end of the month you have a garden sale, well that is in alignment with your organization and what you're doing. However, if you are a youth serving organization and you're selling t-shirts, um that's not your purpose. Your purpose is not to produce T-shirts, right? You're just selling swag. So if you generate too much money with that specific activity, it can be taxable. And here's the thing that nonprofits need to understand.
Speaker 2 (12:30):
It doesn't matter that you're selling the t-shirts to support your mission. That's not what the IRS looks at. As a matter of fact the IRS cares about how the income is earned, not how it's used. Income from unrelated business income may be taxable, even if it's derived from activities used to further the nonprofit organization’s mission. So in some organizations they just say, Oh well we can exceed 35% of unrelated business revenue. In reality, there's no specific percentage that's set. So you wanna make sure that you have an accountant who can advise you on these types of things or some type of a tax attorney who can advise you on it. Because if the IRS says, Oh, you're making too much income from this non related revenue stream, then you'll have to pay taxes on it. And here's my thing, and I really want you to just consider this.
Speaker 2 (13:36):
If you are generating revenue, that's not a bad thing. If you need to pay taxes on that revenue, is that really a bad thing? You have the revenue, pay the taxes on it. I'm just saying, I find that a lot of nonprofits go out of their way to try and not do things when something is working and it's moving them forward. So let's just say you make $200,000 off of selling t-shirts. Well, the IRS may think that's excessive. So you need to pay 25% tax on that, pay the 25% tax because you still have the rest of this money that you can use to support your organization. So don't go small, go big, but put systems in place that will allow you to go big and still stay in compliance. That's my position, but that's me. I'm different. You definitely don't want to get your tax exempt status revoked because if you start to make more money and it's about this money making as opposed to serving your community, then the IRS will say, you're just using this as a ploy so that you can make this money.
Speaker 2 (14:41):
So you definitely wanna be in compliance and that's why you definitely wanna get an accountant or an attorney who can advise you. Great question though. Now it's the time that I enjoy the most where we get to highlight and spotlight nonprofits in the community doing the work. If you're interested in having your nonprofit, spotlighted here on the show, then reach out to me via email and let me know. And what I'm gonna ask you to do is to send me a video, two minutes or less, with your contact information on the last slide so that people know how to get in contact with you. But this week's episode we're covering Black Women's Health Imperative. The Black Women's Health Imperative targets the most pressing health issues that affect black women and girls in the United States through investments in evidence-based strategies, bold programs and advocacy, outreach on health policies. The Black Women's Health Imperative delivers national programs and health policy, education, research, knowledge and leadership development and communications to save and extend the lives of black women. That's what I'm talking about. Take a look at the Black Women's Health Imperative.
Speaker 5 (15:56):
Why the Black Women's Health Imperative is so important is the legacy that we know is real. Much of who we are whether it's an aunt, your mom, a teacher, there's been some woman, and if you're a black woman, it is usually another black woman who's come to you and said, Sit at my table, let me teach you something. Let me show you something. Let me guide you. And so I was lucky that my mother and my aunt, I mean my aunt's sister taught me, everyone says, Oh, you have great fashion. I learned my fashion from the Dollar Store called Pete's in Fort Worth, Texas from my aunt's sister, cuz she could not afford the designer or whatever. She couldn't afford ### reward. So we would go in The Dollar Store and she'd pick out stuff and I'd pick out stuff for her kids and for myself.
Speaker 5 (16:45):
And that's how I learned my style. Cuz style doesn't have a dollar, it's just style. Either you have or you don't. So I think organizations like this are so critical because we need that communal energy. We need to be able to talk about our health issues and not feel persecuted if we've done something wrong. We need to be able to talk about mental health. We need to be able to talk about partners, intimate partner violence, so that we can find a better way for the next generation. And I don't say that as some, ah moment, but listen, this is our team. This is the team you're born in. Doesn't mean you don't appreciate other teams. This is the shirt you wear, so why not wear it with pride and support each other?
Speaker 2 (17:32):
That is the Black Women's Health Imperative. That was Tamron Hall. And this is a national organization. They provide physical, mental, and spiritual health and wellbeing for the nation's 19.5 million African American women and girls. So to learn more about and donate to the organization, visit them at www.bwhi.org. Go Black Women's Health Imperative. All right, so today if you're just now joining us, you're On Air with Amber and we're talking about a Sustainability Mindset. A lot of times my nonprofit organization had this dooming gloom, Our doors are gonna close if you don't help us. We need your support. We can't do this without you. And I've said it before and I'll continue to say it. Nobody wants to hitch their wagon to a thinking ship. So now we're going to go to the part of this, of the episode where I talk about the mindset. Just for a minute, I'm gonna talk about your mindset. And today we're gonna talk about Your Why. What’s your why?
Speaker 2 (18:51):
I mentioned it a little bit earlier in the episode. Why are you still the leader of your nonprofit organization? Is it because you haven't gotten it to a place where you can hand it off? Is it because you never thought about handing it off? You never thought about a succession plan? Is it because you believe that this nonprofit is your business? What is your why? If it's your community, then you should be thinking about what are the things that you can do to improve your nonprofit organization? And sometimes it may not be you, sometimes it may be someone with more skills, someone with more connections. That doesn't mean that you don't have value. But if your why is to improve your community and you know that you're not a good fundraiser, then you need to bring a fundraiser into your organization. And when you bring that fundraiser into your organization, you're not dismissing all of the new ideas because you're afraid that they'll have too much power.
Speaker 2 (19:55):
If your why is your community, then you need to look at how you can expand programs. But if you don't have a Board who can help you bring in resources, then you're gonna be stuck small because you can only have these small events that bring in small amounts of money. So if it is truly your community, then I am going to challenge you to look at what you may be doing that keeps your nonprofit small. Are you not doing your research? Are you not looking at what's going on in the world around you in the nonprofit sector? Are you not bringing in tools? Are you not bringing in support so that you can grow your organization? So that you can really provide your community with the services that it needs? So in this Mindset Minute, I really want you just to pause and think about your why.
Speaker 2 (20:44):
And guess what? If your why is I've put in all of my money and my time and this is my nonprofit, then that's fine because that's your truth and that's your reality. But when it comes time to securing funding and you don't have a stellar board and you don't have the systems in place to create the financial statements that you need. If you don't have what you need to get money in from the outside, then as you're being honest with yourself that you believe that this is your nonprofit and you're not giving it up, then you need to be honest with yourself to say that you are the reason why you can't get the money. And it's just that simple. I get to that place with people, Well, I can't get this and I can't get that. Well, it's because you need to do this and you need to, Well, I'm not gonna do that.
Speaker 2 (21:31):
Somebody's just gonna come in and take my nonprofit. You can't have it both ways. And so at the end of the day, when you’re just sitting quietly with yourself. Cuz I'm just Amber, we'll never talk, I'll never know, it doesn't impact me, but it does impact your community. So just pause and think about what is your why. My why is all of you, all of my amazing nonprofit founders, my executive directors out there doing the damn thing, doing the work. I'm here to support you. I'm your biggest cheerleader, your biggest fan, and I'm here to provide you with the roadmap to long-term sustainability and financial success. So meet me here next week when we continue the conversation about a Sustainability Mindset. And until then, I want you to take care of yourself, like you take care of your community. See you next time.
Speaker 1 (22:26):
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.
