Speaker 1: What are the steps? Can you walk us through the
Speaker 1: steps of how to start a nonprofit? Five toho one
Speaker 1: ced three yep?
Speaker 2: Okay, So the first thing is you don't have to
Speaker 2: have a five on one C three.
Speaker 1: Can you just explain what a five oh one C
Speaker 1: three is?
Speaker 2: So a five on one C three allows you, according
Speaker 2: to the IRS, to be tax exempt, which then allows
Speaker 2: all donors to write off anything that they contribute to
Speaker 2: your organization. It's very important if you need large amounts
Speaker 2: of funding. If you don't and what you're trying to
Speaker 2: do can get by on like a fifteen hundred dollar
Speaker 2: budget or a two thousand dollars budget, you don't need
Speaker 2: the five oh one C three.
Speaker 1: That budget be monthly or annually annually.
Speaker 2: There's you know, it just depends on what you're budgeting for.
Speaker 2: You know, some people have a plant project and they
Speaker 2: just want to plant things a couple times a year.
Speaker 2: It just depends on what you're doing.
Speaker 3: Yeah, I was told something like that. The process is
Speaker 3: very long, like in dependent on how much you need.
Speaker 3: So like you can apply for the five O one
Speaker 3: C three if you're making if you're anticipating having ten
Speaker 3: thousand dollars or less, yeah, that's the initial one, but
Speaker 3: if you're planning more that that process takes a lot longer.
Speaker 2: It does, and I actually so we incorporated the organization
Speaker 2: and then we filed for the five on one C
Speaker 2: three at the same time, and it was about three
Speaker 2: or four months later I planned our first annual fundraiser
Speaker 2: because we needed the funding to really get started on
Speaker 2: what we were trying to accomplish. And in my mind,
Speaker 2: I'm thinking, if you look online, it tells you you
Speaker 2: can get approved for a five on one C three
Speaker 2: between two to twelve months. So of course I'm always thinking,
Speaker 2: I'm always being optimistic, and I'm like, well, three to
Speaker 2: four we might make it. We didn't, so we did
Speaker 2: the first fundraiser, and of course people are going to
Speaker 2: get very minimal amounts because they can't write it off,
Speaker 2: and it's a it's a huge incentive for any donor
Speaker 2: to know that not only am I helping this cause,
Speaker 2: but I can also it'll help me with my taxes.
Speaker 2: So we didn't get it approved in time, but we
Speaker 2: ended up getting it a year later.
Speaker 1: So, all right, what's the process to get a five
Speaker 1: on one C three, Like, what do you have to
Speaker 1: do together?
Speaker 2: There's a long application. There's a long application, and you
Speaker 2: have to be organized and have everything you have to
Speaker 2: answer with as many details as possible if you want
Speaker 2: to get approved without questions first from the IRS. So
Speaker 2: mission statement. You need a mission statement, You need the
Speaker 2: name everything that you would need to do to start
Speaker 2: a business. You have to be very clear about what
Speaker 2: you're doing. And when I say mission statement, it's funny,
Speaker 2: I'm remembering this now. We the IRS actually came back
Speaker 2: and said that our mission statement was too broad and
Speaker 2: that's why we didn't get approved the first time around.
Speaker 2: I think the initial mission statement was to help foster
Speaker 2: and homeless you self comfort, that could mean anything. So
Speaker 2: then we had to go in and revise the mission,
Speaker 2: apply with the state to change that and then resubmit
Speaker 2: the application for the five oh one C three.
Speaker 4: Is something that you did yourself or did you have
Speaker 4: lawyers involved?
Speaker 2: I hired help. Yeah, definitely hired help. And I would
Speaker 2: recommend if anybody doesn't already have that experience in the
Speaker 2: nonprofit sector, hire where you need, especially when it comes
Speaker 2: to accounting. Get the support so that the first time
Speaker 2: around you're not making those mistakes.
Speaker 1: So when you had the narrow value mission statement, like
Speaker 1: what was your revised mission statement?
Speaker 2: So now the mission statement is helping foster and homeless
Speaker 2: youth self comfort by providing comfort items for bedtime and
Speaker 2: programs that inspires them.
Speaker 1: To self soothe.
Speaker 2: And that was okay, all right, So you have that.
Speaker 1: You have to set it up as a business like
Speaker 1: you have like.
Speaker 2: An LLC setup, not an LLC. But it's the same
Speaker 2: steps of like having to you don't have to trademark,
Speaker 2: but I highly recommend it because the work of a
Speaker 2: nonprofit easily inspires someone else to want to do similar work,
Speaker 2: and they can They can take your name and do
Speaker 2: it in another state if they want to, so trademarking,
Speaker 2: I highly recommend filing for the setup for the nonprofit
Speaker 2: the same way you would with the LLC for your state,
Speaker 2: and then applying for that five on one C three
Speaker 2: early if you expect or if you want to receive.
Speaker 1: Large funds, and it's like a fee for that.
Speaker 2: Yes, there's a fee. There's a fee for every application,
Speaker 2: so you have to have some fund to get started.
Speaker 2: When I applied in twenty twelve, I think that the
Speaker 2: five on one SET three application was like eight hundred dollars.
Speaker 2: I'm not sure if it's increased since then, but yes,
Speaker 2: you definitely need something in order to get started.
Speaker 1: Okay, so you do the application, you get well as
Speaker 1: the five oh one C three is going through the
Speaker 1: process because they could take up to a year. What
Speaker 1: what else do you need to get off the ground
Speaker 1: to start the actual charity?
Speaker 2: Everything?
Speaker 1: Explain that.
Speaker 2: So you need a website, okay, you need a marketing plan.
Speaker 2: You need a business plan.
Speaker 1: Marketing plan? Can we can we talk about that? Yeah?
Speaker 3: Because all right, how do you before you even go
Speaker 3: into that, like this is you and someone up like
Speaker 3: the COVID, Like who.
Speaker 1: Else is doing this?
Speaker 2: So the co founder was my mother, but no she
Speaker 2: she was living her best life in Florida. So my
Speaker 2: mom was not involved in, you know, actually getting the
Speaker 2: organization started. I was doing this on my own with
Speaker 2: the help of friends who believed in me and the organization.
Speaker 2: So that's the next step in and I'll get back
Speaker 2: to marketing. But you need you need a marketing plan,
Speaker 2: you need a business plan, you need a board of directors,
Speaker 2: you need people that are going to hold you accountable,
Speaker 2: which most people don't know. So when you're applying for
Speaker 2: this paperwork. You can't just put your name on it.
Speaker 2: If people are giving donations, the IRS wants to know
Speaker 2: who else is tracking these dollars to make sure that
Speaker 2: you're not out here spending these these funds in the
Speaker 2: wrong way. So when I first started, and I think
Speaker 2: most people when they start nonprofits, it's usually people that
Speaker 2: are very connected to you as well as the mission,
Speaker 2: and so they'll sign on to support you. And that's
Speaker 2: usually how the board starts, and then eventually it grows.
Speaker 1: You have to have a board of director, yes, how
Speaker 1: many people?
Speaker 2: Three?
Speaker 1: Non Negultimately you have to you have to they have
Speaker 1: to have titles or just board a director.
Speaker 2: Yes, and they need titles. So you need a president,
Speaker 2: you need a treasurer, you need a secretary.
Speaker 4: And that's New York State's the end of a federal
Speaker 4: New York state.
Speaker 1: Okay, so all right, you have those three people. Those
Speaker 1: people have to actually be active.
Speaker 2: They should be active. So here's the thing. It's like
Speaker 2: it kindly recommended because they're putting themselves on the line
Speaker 2: by signing that paperwork. Right, So if you have someone
Speaker 2: signed as a secretary and it's your cousin, but they're
Speaker 2: not actually doing the work. If you get audited or
Speaker 2: there's an issue, they're going to come looking for you
Speaker 2: and your cousin. So everybody should understand how serious it
Speaker 2: is when they are signing that paperwork.
Speaker 1: Okay, can we talk about marketing?
Speaker 4: Yeah?
Speaker 1: So how do you put together marketing plan for a nonprofit?
Speaker 1: Or it's because it's different, right, Like we're marketing. Let's
Speaker 1: say we want to market our podcast, right, or you're
Speaker 1: marketing a product. Right, it's a little different than marketing
Speaker 1: for a nonprofit because it's charity. Yeah, so it's like,
Speaker 1: you got it. It's kind of in my opinion, it's
Speaker 1: it's a little delicate because you don't want to make
Speaker 1: it seem like you're selling something. But obviously you need funds.
Speaker 1: We don't talk about fundraising, but you need funds, So
Speaker 1: how do you how do you do that? Like how
Speaker 1: do you market for a charity?
Speaker 2: I think the two most important things to consider when
Speaker 2: marketing is who is your target audience? And then also
Speaker 2: what are your donors need to see and understand in
Speaker 2: order to give. So the more your donors know, the
Speaker 2: more they will give. Period making sure that in everything
Speaker 2: that you do, whether it's just utilizing social media, that
Speaker 2: every image, every caption, every meme, everything that you're sharing
Speaker 2: explains the mission clearly. Transparency is the number one thing,
Speaker 2: and trying to solicit donors. Marketing, so making sure that
Speaker 2: you are marketing towards the people that you need to
Speaker 2: do the service. Right. So when I started this organization,
Speaker 2: I wanted to market this towards people who run the
Speaker 2: foster care agencies in New York City as well as
Speaker 2: the homeless shelters, So figuring out what do they need
Speaker 2: to see in order to understand what our services are
Speaker 2: and that sometimes it's simply putting together a kit that
Speaker 2: explains and breaks everything down. Here's the mission, here's our values,
Speaker 2: here's our logo, here's our one year plan, here's the
Speaker 2: program that we can provide or the curriculum, just depending
Speaker 2: on what you want to do and ironing all of
Speaker 2: that out so that they can understand it and then
Speaker 2: they choose whether or not they want to work with you.
Speaker 3: So you're pretty much I mean, you're not selling in
Speaker 3: the sense of an item, but you're selling your vision
Speaker 3: and your passion.
Speaker 2: Yeah, in a sense, right, yeah, and making it clear.
Speaker 2: I mean, there's another nonprofit friend of mine runs an
Speaker 2: organization called Kicks for the City. It's a very simple mission.
Speaker 2: They give shoes to the homeless. So when all of
Speaker 2: their packaging, they're showing photos, images of sneakers, images of homeless.
Speaker 2: So people can just simply connect the dots. Here's the mission,
Speaker 2: there's a value, and here's what it looks like if
Speaker 2: you give.
Speaker 1: It's easy. So all right, So the biggest part of
Speaker 1: charity nonprofit organization is that you have to have money. Right.
Speaker 1: It's actually a business. Right. That's something that people need
Speaker 1: to understand too. If you think about running a nonprofit
Speaker 1: successful now, yeah, is that you have to run it
Speaker 1: like a business because it is a business. Right. So
Speaker 1: we're going to talk about funding. So nonprofits get majority
Speaker 1: of their funding from donors. Right, how do you really
Speaker 1: depend what's the other ways?
Speaker 2: Yeah, it depends. You can get a majority through individual donors,
Speaker 2: through state funding, through federal funding. Those are the three
Speaker 2: main ways.
Speaker 1: Yeah, let's let's let's talk about donors. Yeah, how does
Speaker 1: how is some what's the one on one blueprint to
Speaker 1: attract individual donors, real the men so.
Speaker 2: That they understand the cause and make sure that you
Speaker 2: are speaking to people who care about that mission, that
Speaker 2: specific mission. So with Precious Dreams, I had to find
Speaker 2: a way how do I connect the issue a fostered
Speaker 2: homeless youth and make it relatable to someone who's never
Speaker 2: been in those shoes. So the first thing that we
Speaker 2: did was target parents, because parents understand the importance of
Speaker 2: comfort items. So I remember my first year, I would
Speaker 2: have meetings and one of the first questions I asked was,
Speaker 2: do you have kids, what's their bedtime routine? Do you
Speaker 2: read to them? What do they do? They sleep in
Speaker 2: pajamas And it immediately brings them to this happy place
Speaker 2: of thinking of like what that looks like for their
Speaker 2: kids and how important it is to them. And then
Speaker 2: I would help them vision what a typical night looks
Speaker 2: like in a homeless shelter, or what a night looks like.
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Speaker 2: Poster kid who's sleeping in a room with five other
Speaker 2: families on a mattress that's on the floor, and immediately
Speaker 2: they feel connected, you know, and then they want to give,
Speaker 2: They want to save someone because they can't understand how
Speaker 2: someone else could be lacking what their child has or
Speaker 2: what they have that they were taking for granted because
Speaker 2: they just did never thought about the person who lacks.
Speaker 3: It's a commonality, like we were all children at some point. Yeah,
Speaker 3: and we probably all have gone through some experience as
Speaker 3: a child, whether it was like somebody putting you to
Speaker 3: bed or the bad time routine. I want to go
Speaker 3: to the fact of state funding and federal funding, so
Speaker 3: like how does that work and are there acts or
Speaker 3: initiatives that the state provides are just like you know,
Speaker 3: what I should target them or how do you go
Speaker 3: about it?
Speaker 2: It depends on what you're doing. Again with the nonprofit,
Speaker 2: So if you're providing a service for schools or for educators.
Speaker 2: It's very easy to go after state funding. If you
Speaker 2: are providing sneakers to the homeless, it's a little harder
Speaker 2: to get those grants approved because they might not see
Speaker 2: the importance in that work. So yeah, it just depends
Speaker 2: on what you're doing. But those applications are available online.
Speaker 2: There's a full list of the state money that's available,
Speaker 2: federal money that's available, and you just have to see
Speaker 2: whether or not you fall along.
Speaker 1: So okay, So how important is grant writers?
Speaker 2: Grant writers are very important. They're very very important, especially
Speaker 2: if you don't have relationships with a lot of individual donors,
Speaker 2: because you need one of the other grant writers. And
Speaker 2: also researchers are another a whole other animal because a
Speaker 2: lot of times, and we learned this the hard way,
Speaker 2: I thought, you know, let's let's find a grant writer.
Speaker 2: You find the grant writer and they're like, okay, so
Speaker 2: who's doing the grant research because that's a whole nother job.
Speaker 4: Yeah, I'm not even heard of that side. What's their
Speaker 4: job to do to research everything?
Speaker 2: Yes, and it takes hours because there are so many
Speaker 2: grants available, But there could be one small thing in
Speaker 2: that grant one requirement and your organization just doesn't fall
Speaker 2: under it. So making sure before you waste anybody's time
Speaker 2: and they're writing this full proposal that you fall in
Speaker 2: on all of the requirements that are listed for that
Speaker 2: one specific grant.
Speaker 1: And most of these grants government or private, or like
Speaker 1: a mixture.
Speaker 2: Of a mix. Yeah, private, public, state, federal.
Speaker 1: And you could just google and probably find a lot
Speaker 1: as far as different causes.
Speaker 2: Yeah, a lot of the are very public. Some are
Speaker 2: invite only, which are harder to apply for. But so
Speaker 2: there's a lot of private, especially like family foundations, where
Speaker 2: they've set up to give finances annually to different organizations,
Speaker 2: but they don't want to have thousands of applications coming in.
Speaker 2: There are over one point five million nonprofits in the
Speaker 2: United States. So if you are a very small, like
Speaker 2: three or four person run organization where you're trying to
Speaker 2: just simply give out twenty thousand dollars a year, you
Speaker 2: don't want one point five million people applying. And so
Speaker 2: what they'll do is they'll restrict it to a certain
Speaker 2: county or a certain state, and people will have to
Speaker 2: know someone in order to get in. It's kind of like, like,
Speaker 2: I don't want to say mafia, but like you have
Speaker 2: to know somebody in order to even figure out what
Speaker 2: their application process is to get in the door.
Speaker 1: So where does your funding come from?
Speaker 2: Most of a majority of our funding comes from individual donors,
Speaker 2: and that is a gift that I've been able to
Speaker 2: receive because of the work that I've done, so in
Speaker 2: having that that history, that job history at places like
Speaker 2: Madison Square Garden, where I've been able to develop relationships
Speaker 2: with the one percent in New York City, or you know,
Speaker 2: the athletes and artists that come through and they're invited
Speaker 2: to sit courtside at our games, the gary Ves of
Speaker 2: the Internet, like all of those people I developed great
Speaker 2: relationships with by them seeing my work ethic but then
Speaker 2: also my character, seeing that I am someone who is
Speaker 2: responsible but kind. And so when I approach those people
Speaker 2: about giving to my nonprofit, the answer is yes more
Speaker 2: than no.
Speaker 1: So do you have because like I think, Deary Ferguson
Speaker 1: Robin Hoood Dinner is like five thousand dollars minimum, It's
Speaker 1: like five thousand dollars per plate to end. Yeah, and
Speaker 1: it sold out. You can't get in and so that's crazy.
Speaker 1: But like how do you price? How do you ask
Speaker 1: for money? Like do you do it in galas? How
Speaker 1: do you know how much to ask for?
Speaker 2: There's so many ways to fundraise, so many ways. So
Speaker 2: one thing that's very important we talk We go back
Speaker 2: and talk about boards, right, your board of directors should
Speaker 2: be very diverse and they should have a network far
Speaker 2: beyond your reach so that they can go out as
Speaker 2: ambassadors and promote your organization to receive funding from anyone
Speaker 2: that they're connected to. Then you can utilize social media.
Speaker 2: There's a lot of ways that you can raise money
Speaker 2: on social media. There's a lot of platforms like get smart.
Speaker 2: Dot com is a platform that you can pay for
Speaker 2: where you can set up fundraising pages. But then it
Speaker 2: also gives you text numbers, so like the Text to
Speaker 2: Give where you can send out a number and say,
Speaker 2: if you text this number, you can donate twenty five
Speaker 2: dollars instantly. That's a platform that allows you to do it.
Speaker 2: Galas are very important. Selling a ticket to provide an
Speaker 2: experience for somebody is the easiest way to fundraise. Who
Speaker 2: doesn't want to come to an open bar experience or
Speaker 2: to see a performer to go out to have a
Speaker 2: good time. So galas are honestly probably one of the biggest,
Speaker 2: the biggest ways that nonprofits are able to generate funds,
Speaker 2: especially for precious streams. It's definitely our our go to
Speaker 2: every year. You have an annual gala, yes, every fall.
Speaker 1: So on the business side, how do you know? All right,
Speaker 1: you run an organization, not you, but just anybody, right,
Speaker 1: and that's your job. So you have to make a living.
Speaker 1: You have to you know, provide for yourself, right, So
Speaker 1: how do you know or what's the rule of thumb?
Speaker 1: Like how much money should you be taking for your
Speaker 1: own personal It never really seems like it's right because
Speaker 1: it's like a charity you don't want to take, but
Speaker 1: it's still a job. But you're doing something, you know,
Speaker 1: and you've got to get compensated for that obviously. So yeah,
Speaker 1: especially like when you're the owner of it, because it's
Speaker 1: up to you, Like how do you determine, like how
Speaker 1: much money you take from that as your personal salary?
Speaker 2: So I think the most important word when it comes
Speaker 2: to thriving in the nonprofit space is transparency, and annual
Speaker 2: reports are important. An annual report is more than just
Speaker 2: the nine to ninety which you need to fill out
Speaker 2: every year so that the government knows how you're spending
Speaker 2: your money. But an annual report will break down exactly
Speaker 2: how much money went to operational costs, to programming, to
Speaker 2: office supplies, to everything. And a lot of times big
Speaker 2: donors want to see where every dollar went last year,
Speaker 2: and if you can show that, then they will give more.
Speaker 2: Like I said earlier, the more the more that a
Speaker 2: donor knows, the more they will give. So we always
Speaker 2: make sure that we're very transparent about what we give,
Speaker 2: but then also making sure that they see the numbers
Speaker 2: that they that they that they'd want to see, right,
Speaker 2: So like, if I'm giving a dollar, I want to
Speaker 2: know that at least seventy five cents of my dollar
Speaker 2: is going to go to the wards the ch children
Speaker 2: and the images that you're showing me in this deck,
Speaker 2: to that program and so a precious dreams. It's interesting
Speaker 2: because I kind of mimicked an idea that I saw
Speaker 2: from Usher's Foundation. So Usher has the new Look Foundation,
Speaker 2: and I don't know if they still do this, but
Speaker 2: years ago their board was covering one hundred percent of
Speaker 2: the operational cost and so they marketed on the website
Speaker 2: that one hundred percent of your donation goes to the programming,
Speaker 2: and that will reel anybody in. So I went to
Speaker 2: my board. This is actually how I was able to
Speaker 2: get approved for a salary. I went to my board
Speaker 2: and said, this is what I saw, and I think
Speaker 2: that this is a great approach. And because we're only
Speaker 2: still at like the sixty thousand dollars annual level, would
Speaker 2: you guys be willing to put together a cost so
Speaker 2: that this is this is how much would go towards
Speaker 2: operational costs, and then this is how much that you
Speaker 2: give to the organization every year. And they voted, because
Speaker 2: voting is another thing that must happen on your board.
Speaker 2: They voted, it was approved, and they actually cover my salary.
Speaker 2: So when people donate to Precious Dreams, none of that
Speaker 2: money goes to operational costs. My board, my board of directors,
Speaker 2: they out of their pocket. Out of their pocket, Yeah,
Speaker 2: which says so much, right, So, like the highest level,
Speaker 2: the highest level of leadership at my organization believes in
Speaker 2: this mission so much that out of pocket they pay
Speaker 2: for my salary.
Speaker 3: So if rule it thumb, like, if we're starting a nonprofit,
Speaker 3: what would you say that percentage would be for a
Speaker 3: nonprofit to have an operational.
Speaker 2: Cost they're recommended accorded to according to like Charity Navigator,
Speaker 2: would be forty percent should go towards operational costs and
Speaker 2: anything outside of programming, everything else should go towards programming.
Speaker 2: And then if it doesn't, they would they judge you.
Speaker 2: There's a lot of like grading systems online for profits,
Speaker 2: so you you will get graded on a lower scale
Speaker 2: if you are taking that money and putting it.
Speaker 1: So we have if like a million dollars comes in,
Speaker 1: four hundred thousand should go to the operational cost, six
Speaker 1: hundred dollars should go through the product.
Speaker 3: And then the operational cost always if you have staff
Speaker 3: WI you obviously just Applaska fall in that list too. Yeah.
Speaker 2: And also it's like just accountability and being smart about
Speaker 2: how you spend that money because there's no rule that
Speaker 2: says that you have to. But if you get an
Speaker 2: audit from the I R S and they look at
Speaker 2: how you're spending, they can pull that five on one
Speaker 2: C three at any time.
Speaker 1: Okay, all right, that was good. That was a lot
Speaker 1: of good information.
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