Episode 32: If a Funder Asks You This Question, They’re Trying to Find Out This . . .
If a Funder asks you these questions, learn what they are “really” trying to find out about your organization. Funders don’t know you or your organization. They use context clues to determine viability. Don’t get caught off guard, learn how to decode the most standard questions so that you answer them correctly.
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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 Philanthrepreneur Amber Wynn.
Speaker 2 (00:29):
Hey fam, it's Amber Wynn. You are on air with your girl and resident philanthrepreneur. Hey, listen, the purpose of these episodes is to support the most amazing people in the world. That would be you, my nonprofit leaders. And today's episode is piggybacking off of the last episode where we talked about questions, the questions that nonprofit leaders ask, and what that means. This week's episode is about questions, and it's the questions that a funder asks and what that means. I have a lot of times people just coming into the nonprofit sector and said, “Oh, they asked me for this, that I don't. Why would they ask me for that?” So on this episode, we're gonna dive in deeper to let you know exactly what it is a funder is looking for when they ask for specific things. But before we do that, we're gonna start with a short commercial from a sponsor. We'll be back in a minute.
Speaker 3 (01:34):
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 (02:05):
Hey, so we're back for the last episode. In this episode, we've been covering questions, the type of questions last week you ask that gives indications about your knowledge about the nonprofit sector. And then this week, the questions that a funder may ask you in what that actually means. And why that's important is because there's more applicants than there is funding. And so funders are looking to weed out those individuals who may be a high risk, who they deem not knowledgeable enough. Listen, if I'm giving you $250,000 or a million dollars, I wanna feel confident that you understand what the expectation is for that money. People mistakenly believe that funders just write check because you checks, because you have 501(c)(3). That's not the case. They're expecting a return on their investment. And so some of these questions are asked to probe and see your knowledge.
Speaker 2 (03:06):
And if you participate in any of my workshops, I break that down. I look at everything that a funder is asking you for, and I explain to you what it is they are actually seeing. When you give your answers, for example, when a funder asks you, “What's your annual budget?” If your response is, “Oh, well last year it was about 24,000,” or “Well, we think it's gonna be…” Before you even give me the number, I know that you are high risk. I know that I won't be funding you because when you say things like, I think or last year, if you can't give me a definitive answer, then I know that you are not running a tight ship. When a funder asks you, What's your annual budget, it should be a straight number. No hesitation, no, think no last time it was. Because the purpose of a budget is to let a funder know how much it costs to run your organization.
Speaker 2 (04:07):
It's not how much you fundraised. It's not how much is in the bank. It's not how much you think you can fundraise this year. The annual budget is how much it costs to run your organization. So if I say to you, “Amber what's your annual budget?” My answer should be $450,000 because it's not how much I have in the bank, which is not 450,000. It's not how much I raised last year, which is also not 450,000, but it is how much it costs to run my organization at an optimal level. Why are they asking that? Because if they have a grant and it's not the government and your budget is 450,000 and you're asking them for 450,000, that's also telling, right? You're expecting a funder to fully fund your business and you never wanna do that. You want to ask them to fund a program, a portion of your budget that lets them know that you understand what that relationship is.
Speaker 2 (05:08):
It's not them taking care of you. It's them partnering with you. So if they're funding a program, that's partnership. If you're asking them for your full budget, then that's dependency. And so that leads us to the second question. When a funder asks you, “What's your sustainability plan?” They wanna know how are you going to continue to fund this program when they no longer fund you? Cause they have no intention of continuously funding you. Most times you'll see a funder will allow you to reapply twice, maybe three times, but generally it's twice. And so why they're asking you about your sustainability plan is because why would they invest money in a program that's only gonna stop after they stop funding it? And a lot of times I'll have nonprofits say, “Well, I'll just ask them to fund it again. Why won't they continue to fund it?”
Speaker 2 (06:02):
A funder's job is not to take care of you. A funder's job is to get their funding goals funded, I mean to reach their funding goals. And so they wanna reach as many people as possible. And if they continue to fund you, number one, it's a violation of IRS rules, right? They've gotta be able to fund different organizations as well as you are mandated by IRS to get your funds from different sources, multiple sources. So no, the goal is not for them to continue to fund you, but it's like, why am I gonna put my money into this sinking ship? So when they ask you for a sustainability plan, you need to be able to tell them, “Yes, we have other feelers out for grants. We are doing this gala that's bringing in money. We also have our board that's contributing.” You need to be able to tell them, even if the money that you're trying to raise doesn't fully cover the program, there's effort being made in doing that.
Speaker 2 (06:57):
And so it's important that you understand when they ask you for that, that's what they're asking for. When a funder asks you for a board roster, they're asking to find out who is on your board of directors, but more importantly, what type of leaders are they, right? If it's Pookie, Mookie, and Shika, one of them is a barista from Starbucks, another one works at Footlocker and the other one is in school, then is that true leadership? And is there knowledge enough to guide the organization? So the one who's working at Starbucks, she may bring some value if your program is about on the job training, she can talk about what type of skills youth may need in order to be successful at a job. That could very well be. But if your organization is talking about STEM programs or if your organization is working on college access, that person is not gonna really reflect true guidance, true leadership.
Speaker 2 (08:07):
So when a funder's asking you for your board roster, we're looking to see who is actually guiding this organization because the IRS has set that up, whether you're doing all of the work or not, it doesn't matter. Do you look the part, a very, very important aspect of looking the part is your board. So if your governance is weak, that gives a funder a reasonable reason for not funding. So that's one of the things that they're looking for. Another question, “What impact has your organization made?” This one's extremely important, especially for those nonprofits who just started their organization. And it's just a concept. If you've been doing the work for years, you just never incorporated, you get to count that those years that you've been doing the work. But if this is something that's just been burning in your heart and you're like, Okay, I see the problem, I'm gonna start a nonprofit.
Speaker 2 (09:02):
It's highly unlikely that you're gonna get a large sum unless you have a fabulous grant writer who knows that if you have a strong board and if you have some history, you can make it work. I'm not gonna ever say that you won't get it. I'm saying you're not in a silo. You're not the only individual organization submitting for grants. And a lot of times people come in and they're just like clueless. It's like, “Hey, I need a grant” Well you and 2.5 other million nonprofits, right? And so it's important to understand that if you can't demonstrate that you made an impact, that you're not a contender, you're not at the top of that shortlist. Because funders wanna feel secure that you're gonna deliver on your promises. So when you get your 501(c)(3), the first thing you wanna do is to work and create a track record.
Speaker 2 (09:53):
Whether that means partnering with another organization, whether that means doing a couple of free programs so that you can have some proof that what you're saying you're gonna do works. It’s one thing to have it in your head. It's another thing to prove that it works, cuz that's what the funders investing in. They're investing in the fact that you've created this program that you can demonstrate actually works. So that's what they're looking for when they're like, “Well, what's your impact?” And you say, “Well, we're going to and we're to...” What I hear as a funder is, so that means you haven't, right? So come back to me after you have, and you've proven it. So just be very careful in understanding that question. The next question, well, we already talked about that. One, is about your sustainability plan. So if a funder asks you, “What's your five year strategic plan?”, they're asking you, do you have a vision or are you just doing this day to day, right?
Speaker 2 (10:53):
You just winging it off the seat of your pants. People are like, Do they even use strategic plans? If you have a strong board, then yes, you are. But if you have a weak board, your strategic plan is gonna sit up on a shelf and collect dust. But from a funder's perspective, if I'm asking you, do you have a five-year strategic plan? I'm asking to see if you are a visionary. I'm asking to see if your leadership is strong enough to put in a structure that's going to guide your organization for five years. And if that answer is no, then that may be the reason why I decide not to fund you. So in this episode, we're talking about questions and what they mean, particularly from the funder's perspective.
Speaker 2 (11:41):
And so a lot of these things you wouldn't know. I only know because I served as a funder for an organization, but I want you to go into these conversations powerfully, and I want you to know that they mean something. They're not just randomly asking you questions. I have people say, “Well, I've applied and applied and I just haven't gotten funded.” Sometimes it's the way you answer the questions. So if you answered that question, “No, I don't have a strategic plan,” as I said to you, they may be like, “Okay, well then you don't have a vision, not funding.” If you say my budget, my annual budget is about 24,000, then you're not gonna get funded, right? Because as we know, the purpose of a budget is to demonstrate how much it costs to run your organization. So all of these answers have meaning. All of these answers lets a funder know whether or not you have a solid nonprofit.
Speaker 2 (12:34):
You understand the rules and regulations of the IRS and whether or not you'd be in good investment. So I'm here to set you up powerfully. So go back through some of the previous episodes when I spend a lot of time explaining this. And also I have a membership site where you can go and the first level is free, and it covers most of the things that I've been talking about in these episodes. But in particular for the funder questions. The second level will help you. It will help you to bring out to build out your annual budget. It will help you to look at what type of strategic planning you need to do so that when these funders ask these questions, you will be prepared and you'll understand. It's one thing to say, “Hey, you need this” and hand you the piece of paper. It's another thing for someone to say, “Hey, you need this and this is why, and this is how you build it.”
Speaker 2 (13:28):
And that's what I do on my membership site. I provide you with courses that explains the why behind everything. Because if I have you build out a budget, but you don't understand that the purpose of the budget is to demonstrate how much it costs to run your organization for a year, then it's useless. It's useless information. Because when a funder asks you the question, you don't know what you should say. And I always want you to be prepared, right? All right, so we're gonna pause right now for a minute, for a break. But when we come back, you get to ask Amber your questions. See you in a minute.
Speaker 4 (14:04):
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Speaker 2 (15:24):
Hey, hey, we're back. You're on air with Amber, and today we're talking about questions, questions from the nonprofit founder funder and how those questions really provides them with insight to the strength of your nonprofit. And now we're at the point where you get to ask me your questions, ask Amber. And so like I said, you can reach out to me at any of my social medias. This question comes from a DM, Jared and Chino, and Chino Hills said, “Why you so pretty <laugh>?” And I just have to share that on air because Jared, “Okay I'm gonna say it's because my mama was fine.” <affirmative> let's take some nonprofit related questions. And we have one again from Instagram, Alicia in Pasadena. Her question is “What is a form 990 and where do I get it from?” Okay, so the form 990 is one of the most important financial statements in the nonprofit.
Speaker 2 (16:40):
You know how for personal and individual and even businesses, you have to submit your taxes. Well, that's what a nonprofit submits to the IRS, to the state, so that they know that you are still in business. They know that you are following the rules that were prescribed by the IRS. For example, if your organization makes over $50,000, then you have to file a Form 990. If you make under $50,000, then you file what's called a 990-N, and it's a postcard. Now, if you don't file this 990 consecutively for three years, the IRS will revoke your nonprofit status. And the reason why is because they need to know what you're doing. When you submit your finances, they get to read them and say, “Oh, this is not related to your mission. We're gonna tax you on that. Or, Oh, are you even in existence?”
Speaker 2 (17:35):
If you're not in existence, they're gonna remove that benefit. The tax write-off happens as a result of you being tax-exempt. So if you no longer functioning as that, they're gonna remove you from their database. And it's important for you to understand that this form has to be filed every year. And where do you get it from? It's something that your accountant will prepare for you if you google 990 form, they have the blank ones. But let me tell you, sometimes it can get complicated. And what you don't wanna do is get your organization in trouble because you didn't know what you're doing. And so typically, nine 990s are completed by certified public accountants because their license is online saying that we've audited these organizations and we are saying that based off of our expertise, they have done X, Y, and Z.
Speaker 2 (18:35):
So 990 is how funders and anybody in the public can look at your organization's finances to determine who the highest-paid staff are, where you get your donations from. It's allowing people who are interested to have full transparency of your organization. And I think that's really important for people to understand. A public charity's information is made public to everybody to see, because your purpose is to serve the public. And so you're supposed to be transparent. Now, you don't have to do those same things when you're a for-profit because it's your business and there's different rules. But because you've said to the IRS, Yeah, I'm gonna be a 501(c)(3), you agreed to making all of your well a majority of your documents public so that funders and stakeholders in the community can see what you're doing and you're demonstrating transparency. So Alicia, thank you for your question about nonprofits. Jared, thank you for your compliment. I appreciate that <laugh>. And now we're gonna move into the next section, my favorite section of the episode where I get to put the spotlight on you. The most hardworking individuals in the world, nonprofit leaders. And today we are spotlighting an organization. It's very unique. It's called Casting for Recovery. And Casting for Recovery's mission is to enhance the lives of women with breast cancer by connecting to each other and nature through therapeutic sport of fly fishing. Isn't that interesting? Let's take a look at what they do.
Speaker 5 (20:34):
For a quarter of a century, Casting for Recovery has been providing fly fishing retreats to empower women with breast cancer. CFR started with a small group of diverse, talented volunteers and one retreat. The idea was simple, provide women with the opportunity to escape all that a breast cancer diagnosis brings by giving them a safe space to connect with each other and nature. Last year, due to the impact of Covid 19, we had to cancel our retreat season. Thankfully, we are back on the water. The magic of Casting for Recovery is alive and well. Even behind the masks and in between the social distancing.
Speaker 6 (21:20):
It was beyond what I expected, far more than what I expected. It has just been a joy. And the bonding with the other ladies has been amazing. This has formed somewhat of a sisterhood where you can go to and that they will understand and listen as opposed to all of the negativity that we often experience during this journey. If I had to describe the whole weekend, the retreat, the fly fishing, the peace, gratitude, I had a break from thinking about cancer, from thinking about bills, from thinking about problems, from thinking about anything other than having a good time for Regina <laugh>. And that's amazing.
Speaker 7 (22:02):
When I applied, I did feel like it was gonna be more about fishing, but that soon changed when we got here because I've taken away so much more from this weekend. Okay, I'm just honored to have been chosen.
Speaker 8 (22:19):
I found a lot of healing in the weekend. I would recommend it to anybody that could come and just get away and commune with nature. Well, I think it was perfect that they had support people here, the nutritionist, the mental health professional, and the oncologist gave very good information. Everybody was just so nice and so supportive.
Speaker 9 (22:43):
I would describe the weekend as awesome. Oh, I loved meeting all these other women. It was, they're really, really fun.
Speaker 7 (22:52):
I had a lot of gratitude for how hard everybody has worked to put this together and the sponsors that have helped. I feel very humble that everybody cares enough about us to do that.
Speaker 5 (23:05):
With every cast. CFR is providing women with breast cancer the opportunity to connect with each other and nature giving her something that she didn't even know she needed.
Speaker 2 (24:02):
So touching. It's extremely challenging when you're facing something as serious as cancer. Both my mom and my sister passed from breast cancer, and so a lot of these organizations have personal meaning to me. So I would like to just thank Casting for Recovery for all their work that they're doing with women survivors with breast cancer. If you'd like to donate to support this amazing organization, visit them at www.castforrecovery.org. Or you can call them at (888) 553-3500. Again, thank you, Casting for Recovery for all of the amazing work you're doing to impact lives, <affirmative>, <affirmative>. And now, ladies and gentlemen, it is time for my Mindset Minute, and it's the time of the episode where I just share some of my thoughts, some of my insights, and some of my musings. And today I'm gonna categorize it as a musing with all that's been going on in the world.
Speaker 2 (25:12):
I don't know about you, but I just wanna break, right? It's just heavy. I don't watch the news anymore because it just gets me down. But what it helped me to realize is that the world needs nonprofits. Like the world needs us. The world needs you. I'm a for-profit, but my role is to strengthen your organization so that you can get out there and do the work that needs to be done in this world. Because as we've learned, the purpose of the for-profit is to make money, to generate revenues for their investors, to improve technology. The purpose of government is to enact laws and to protect the citizens. And so you fill in the gap, you step in the gap, and you do the things that these other industries don't do. A lot of it is being a watchdog. You're holding these two sectors accountable, but you're also doing the work like Casting for Recovery.
Speaker 2 (26:16):
You are doing the work to help people heal and to strengthen communities. There's so much that's going on, and we have a nonprofit to address all of it, whether it's abuse, whether it's lack of education whether it's homelessness, food insecurity. The gamut runs rampant, and you are doing the work and the world needs this work. And so why I do what I do is because my goal is to help you get from here to here faster. And here, let's be clear, is funding. That's my goal. My goal is to get you from here to here faster. Because when you have money, you have access to resources. And when you have resources, then you can operate at an optimal level. If you are self-funding your organization, your organization can't grow, cuz then it's based off of how much money you can slice off from your salary to go towards the nonprofit.
Speaker 2 (27:12):
You're not gonna be effective. More than that, it also impacts your livelihood. If you are already not making enough to make ends meet, which is generally where most of us are, and you're giving some of that to your nonprofit, then you're impacting your quality of life. So when I tell you that the world needs nonprofits, I'm telling you that you need to get your infrastructure tight quickly because the longer you spin your wheels trying to do things cheap, or I have a lot of nonprofits, try and get everything donated. You're not gonna make an impact trying to get everything donated because when people donate, when organizations donate, it's not a perfect fit. And so then what ends up happening is you shift to make that work and you shift to make that work. And then next thing you know, you're outside of your mission. And so I'm here to tell you the work is hard, but if you set your infrastructure up properly, the money will come easy because funders are looking for a certain formula, and it's the formula that IRS has put out there.
Speaker 2 (28:21):
And once you look the part and you have that exciting mission and you can demonstrate that you're making an impact, you're gonna make money. And here's another thing you should know, Funders fund programs that get funded. So if Amber Wynn, Philanthrepreneur was a foundation and Amazon was funding me, the nonprofit sector's a small community..So if Amazon’s funding me, then why can't I think of a funder? Then Wineguard is gonna see, Oh Amber's being funded by Amazon, they must be a reputable organization. So then they're gonna fund me. And that's how it goes. That's why we have so much disparity in nonprofit because those organizations which are typically affluent and they can pay to get their infrastructure established, they are getting the funding and they're being funded by other funders because they're being funded. So the purpose of me helping you to get your infrastructure tight and have you to look like a bonafide business is so that you can get from here to here faster.
Speaker 2 (29:23):
I want you to get from struggling to thriving and thriving, not just for your community, but thriving for you. Because when you're bringing in money, then you can pay yourself a salary and you can pay your staff salaries and not this struggling salaries, but like market industry. And so I'm here because I want you to get from here to here quicker because the world needs nonprofits. So let's just be clear. You know what I mean? That's the whole purpose of me being here. Yes, it's to support you. But as I shared with you earlier, my purpose, my why is to strengthen communities. The only way that I can do that is by helping you to get to that point where you can do that. So when I'm driving you, when I'm being really honest, when I'm just calling you to the carpet, it's because I have a mission to accomplish and it's to make this world a better place.
Speaker 2 (30:19):
I can't do it without you. So in partnership, that's what we're gonna do. The world needs you and in partnership, you and Amber Wynn, we are gonna make it happen. So if you're not sure about your why, get sure you're not sure about how to get there, get with your girl because we have work to do. All right. So with that, I'm gonna wrap it up. I'm talking to you from a space of love and commitment because this world is jacked up and we got work to do. So let's get it in. I will see you on the next episode. Until then, take care of yourself, like you take care of your community.
Speaker 1 (31:00):
Thanks for listening. If you enjoy 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.
