Earned income is growing in popularity amongst nonprofits. Why? It allows organizations to expand their funding sources while meeting their growing needs and creating more sustainable programs. If you're interested in learning how to generate an earned income that aligns with your mission, Bill is here to help.
Bill Woolsey is the President and Founder of FiveTwo, a network that equips faith-based entrepreneurs to launch a variety of sustainable nonprofits and startups. Over the past decade, Bill and his team have been able to help produce new and renewed homeless shelters, mobile medical clinics, and recovery ministries that are bettering communities across the country.
He joins the podcast to share how to successfully approach an earned income venture within your nonprofit.
Bill’s Top Tips For Generating an Earned Income
- Your income stream has to align with your cause. Pay attention to your messaging around your programs, because how you define them will make a difference with your donors. It has to make sense with your mission, whether it means offering discounted services to a low-income community or selling a product made within your organization, donors want to see that connection and how their gifts work alongside it.
- Thinking like a business can be positive as long as you don’t lose sight of your core values. When your nonprofit begins growing and building assets you have to pay attention to those assets and how they fit into your values. The best way to approach this is by learning how to adapt business principles within reason and connecting them to your core values.
- Before you start, you need to know what you need. Connect with your board and think about the resources you already have or can easily get access to. Before you can start generating an income, you have to know what resources are necessary before you can even start your program.
Our Favourite Quotes
(13:23) There's a good chance that your initial idea of how you're going to create earned income isn't going to work. But it's the exercise, and it's having this flexible mindset and persevering. One of the biggest reasons startups fail is the founder just gives up, right. It's too hard. Well, this flexible mindset and iterating and saying, okay, here's what we're trying to get. Now let's come together and talk about what are some good ideas that would get us there in align with who we are. It's a wonderful exercise.
(19:32) Our first recommendation would be how to leverage existing resources. Okay. So maybe you're sitting on dollars that you typically are going to use some other way. And you could say, you know what? This year we're going to redirect them and we're going to redirect them into establishing an income stream. So it's not really going to hurt our bottom line in year one because we were going to do something else with those dollars.
(24:20) I think as the leader, whether you're CEO or executive director or whatever your title is, at the end of the day, you've got to be convinced this is the direction you need to go. There are no such things as these overnight successes. Every overnight success, when you really dig in, it was five or ten years in the making, and then all of a sudden they came on the horizon. You're not going to have that. So let's talk instead about what time frame you and your board are comfortable with and what dollars you have to get there.
Transcript
Sabrina
Let's talk about generating and earn income with Bill Woosley.
Hi, and welcome to Driven's Fundraising Superheroes Podcast. I'm your host, Sabrina Sciscente. And as an innovator in nonprofit technology, our team at Driven is determined to help you unlock your true fundraising potential. We want to help you with your donor volunteer and member management so you can give us a visit at trustdriven.com to learn more.
Fundraising is a big part of your nonprofit's day to day. I mean, it's what makes you a not for profit. But have you ever considered possibly offering a product or service, a generated income to help find your mission? That's what we're here to talk about. Today. We're going to discuss how you can explore and earn income to help fund your organization. Bill Woolsey is the President and founder of Five Two, a network that equips faith based entrepreneurs to launch a variety of sustainable nonprofits and startups. Over the past decade, Bill and his team have been able to help produce new and renewed homeless shelters, mobile medical care clinics, and recovery ministries that are veteran communities across the country. Bill joins us today to discuss how your nonprofit can approach and earn income in line with your mission and how to do it sustainably.
So thank you so much, Bill, for joining the show.
Bill
Hey, you're very welcome. Thank you for having me, Sabrina.
Sabrina
So can you just explain to our listeners, maybe those who aren't familiar, what exactly it means to have an earned income and why is it important to organizations?
Bill
Earned income is critical, especially. We work a lot in Five to the Network. We work a lot with nonprofits. Most nonprofits typically think of income only from a donative side, donative or grants. So, individuals, organizations type things earn income when it's done well, it marries up to your cause with products or services that actually reinforce your cause. For instance, if you're good, will is a great example. Goodwill, they have thrift stores that employ the people they're trying to help get out of poverty, recidivism out of prison, out of going back into prison. So they're employing these people in those stores. They're actually making money in those stores because then the items in the stores are donated by wealthier people and often bought by wealthier people. And so it's this wonderful reusing of commodity, but it feeds into their end game. So therefore, you've got two income streams, a donut and an earned that are both contributing to the outcome you're trying to produce as a nonprofit. Or it does take another skill set, obviously, to do that. So you're going to have a development skill set. You're going to have a business minded skill set that they're going to have to come together.
Bill
But when you have that, then it also mitigates up downturns in economy and things like that. So it's really a cool way to think of how you're trying to bring about the change you're trying to bring about in a way that is a hand up to that individual who is your core client, rather than a hand out to that individual. So it works on a whole number of levels.
Sabrina
Yeah. And I'm curious, in your experience, how has it impacted the sustainability of a nonprofit? Do you find that it has some benefit, especially when paired with the traditional donation models?
Bill
It's very impactful, especially if your listeners are in a US base or in a Western base where it's a consumer driven society. In a consumer driven society, the individual is making the decision they're looking for product. It's able to buy or fee for service, whatever your particular earned income stream is based on. And therefore their sustainability is not just dependent on the donation, but it's also supplemented either one or the other. Your earned income could become very strong. And so then your donor base is a different caliber. In our network, in five, two, we've always been historically and in the ministries that I've led have always been roughly 60 40, maybe 70 30 donative to earned. Sometimes it flips and it could be 50 50. So it just helps you show impact and extend your reach into a whole different group of people.
Sabrina
Yeah. It really allows you to get, I guess, a little bit creative almost because you're able to control exactly how you're making that money. But it could also be really nerve wracking, especially for nonprofits who are new to the business phase.
Bill
It definitely can be very nerve wracking. I wouldn't suggest you just change your whole business model overnight. Right. And I think the goal there is to make sure that whatever your earned income stream is, it needs to align with your cause. It needs to align with what life change, what community change, society change you're trying to bring about. And so the individual and especially the donor, because the donor may initially push back on it, they're like, well, now you're earning money. Why should I still give to you? Okay, so you need to just pay attention to your messaging to that donor base. But the closer it's aligned, then the better. So, for instance, in our network, we provide training, we provide soup to nuts, build fund and launch training to go from idea to launch into a venture that helps people. All right. That's what our training does. It's all online, it's all there, and it's priced very inexpensively because we're trying to get, as many Christians in the game in starting new nonprofits around the world. Well, the reason we can make it so cheap and still be financially sustainable as an.org is because our donors are supplementing that.
So our donors love to hear when people are using the training and the things that they're doing because they know that their donation is directly allowing that person to get it, because in most nonprofit situations or in many, they're not going to be able to afford a typical for profit fee.
Sabrina
And I'm really curious to get your thoughts as this is a subject that has been brought up on the podcast really organically a couple of times. Do you think that nonprofit should begin approaching their organizations like a business, like almost adopting a business mindset? Do you feel like there's any benefit to that?
Bill
Well, there's huge benefit. Again, you're not jettisoning your cause, your values. It's very important. One of the reasons we work so much with individuals and what their values are, because their values are going to allow them to have joy, feel good about what they're doing. And if all of a sudden in this nonprofit that you've started, which is going to look like you by nature because you're the one who built the thing, if all of a sudden it starts crossing value boundaries, then it's going to cause you internal conflict. It's potentially will cause conflict externally with other employees or things because you haven't been clear on what those values are, et cetera. So I do think that at the same time, though, whether you're a nonprofit or Church, I've led churches in the past. The larger they become or as soon as they start having assets, you have to pay attention to those assets. And it's a wise steward who will adopt business principles within reason, again, to your values. Okay. So as soon as you have employees, you're going to have to do HR by legal stuff. There's all sorts of business things you need to be paying attention to.
And from a financial standpoint, there's a lot of wisdom. God's put a lot of wisdom in the business world. It's all his anyway. So how can we take those Nuggets at those principles and apply them to our organizations? And not just how, but how should we? We should. Okay. And now what does that look like? So by all means, and I know people of faith, and I'm one of those at times. It's this whole thing of your praying, you're asking God to provide. God does provide. It all comes from him. At the same time, he's not asking you to just sit in a closed room and sit there all day. He's asking you to do and to work, and he's giving you gifts to work with, how you manage and use those. That's as important as your prayer life and your devotional life and your depending on God.
Sabrina
What are those things that organizations should be considering before they even think about approaching an earned income model? You really talked about using those resources. Is there anything that nonprofit should discuss think about? Are there things that they need to check before they even approach this kind of work?
Bill
Oh, by all means, that's a great question, because sometimes we work with a lot of entrepreneurs and they're like, oh, good idea. Let's go do that. Well, hold on a second. By all means, what? I would suggest we have a free little mini course and you can go to startnewtraining.com/minicourse, and that begins you to kind of jump start this process. Now when you get there, you're going to see it's, how to create movement on your calling. But that calling is what you as the leader and you as the.ORG need to discuss. Okay. So it's why are we doing the things we're doing? And maybe you've never really had that clarification of that because what we're trying to do, we're trying to clarify your calling to equip your calling and then ultimately to activate it. And when I'm talking about an earned income is an activate phase issue. Okay. So before you ever get to the activate side of things, let's talk about this calling. So again, as an organization, why are we existing? What are we trying to accomplish? In our training we use a business model canvas approach, and a business model canvas is nine quadrants.
It asks some very critical questions. That's a wonderful exercise for you to go through with maybe your executive team or whoever, maybe your board or whomever, and just say, okay, let's go through these questions and let's see if we're clear there. If we're not clear there before we just say, let's go sell something. Let's make sure we do that. One of those questions is what are the resources needed to accomplish or trying to accomplish? And when we work with existing works, that question is also what resources do we already have? Sometimes we'll work with groups that will come to us and they're resource rich. They've got an empty building, they've got a gym, or they've got staff. And now their business changed and they're trying to figure out how to employ, how to leverage what they have. Maybe they have connections or they have good will in the community, whatever may be. That's a very critical question because often times your earned income is going to have a pretty strong connection to that resource area of what you have already.
Sabrina
Yeah. You have to kind of do a resource check before you jump in. Like, even in just day to day, like any sort of startup business, there's always that potential to fail. There's always that struggle beginning to really get your income back. So, yeah, that's really important. You have to put your Ducks in a row and then also consider, like, does this even make sense with our mission and values?
Bill
That's exactly right. So I would just say before you jump in, we know it works. We've seen it work. We've seen multiple examples. But before you go there as the leader in the organization because you don't want to fail at this in a big way. Now you want to fail fast, you want to learn. There's a good chance that your initial idea of how you're going to create earned income isn't going to work. But it's the exercise, and it's having this flexible mindset and persevering. One of the biggest reasons startups fail is the founder just gives up, right. It's too hard. Well, this flexible mindset and iterating and saying, okay, here's what we're trying to get. Now let's come together and talk about what are some good ideas that would get us there in align with who we are. It's a wonderful exercise.
Sabrina
And do you think that any nonprofit has the potential to generate an earned income, or do you feel like they could take this model and kind of adapt it to their mission and their organization, or do you feel like there is some cases where, no, this might not work for you?
Bill
Well, there might be some cases, but even in the urban core and impoverished settings, I would suggest to you your tendency probably when I'm talking to the audience, your tendency is a nonprofit person who's never done this, especially if you're working with an impoverished community base. Your tendency is probably say, that's not going to work for me. I can't charge money. There's no money here. Well, I know that's not even accurate. Okay. Again, in the Western society, people pay for things they value. Okay. They're always going to pay for something they value. The question is, do they value it or not? Is it worth to them what you're charging them? I would suggest that you may not have a 60 40 or 70 30. It may be a 90 ten where only 10% of your earned income is going to be coming out of an earned stream or of your total income is going to be coming out of Earnest Street. But the point being is that I would explore there. Maybe it's fee for service, maybe it's some kind of childcare. I don't know what it might be. Okay. I'd have to know your situation.
The goal would be to really not say they won't do it, not say they can't do it, but rather let's look at some things thinking about that end user in mind that we believe and we could test to see that they would pay. So I would strongly encourage your listeners to not assume prematurely that there's no money there, that your clients aren't going to pay at all. Can't pay. And usually what I hear is they can't pay well unless they're just totally being cared for by somebody else. They're paying for things. Okay. The question becomes and also just understanding that that's almost a denigrating mindset because it's almost treating them that they're another class of people and they're not able to like others. So I would be cautious with that kind of a mindset. But I also would understand one of the groups we were working with was working on a Ministry to help unemployed men find employment in a projects setting in New York City, and understanding they're living on almost nothing. I got it. So maybe you're going to have them pay with their time. You're going to, for instance, decrease some of your expenses as organization, because now you have individuals who are providing the services almost on a barter basis.
So there's some different ways you can look at it interesting.
Sabrina
Yeah. So it doesn't just have to be like money in exchange for good in service. It could be like time in exchange for good and service.
Bill
It could be time again, it'll take you some management. You're going to have to manage those. You're going to have issues, but you're always going to have issues. So you're kind of picking your battle of which ones that you feel are, again, most closely aligned with your calling.
Sabrina
And going back to that whole idea of risk and potential anxiety when it comes to nonprofits exploring this for the first time, how much should organizations be investing into an earned income venture in terms of time, in terms of resources? Like we said, it can be nerve wracking. So how can they help minimize those risks when they're getting started out?
Bill
Well, I would say, first of all, if this is the direction you're going to go, make sure your board is on board with it. Okay? Explain to them this is why it might actually be very healthy for your board to go through this process just so they understand what's happening. Usually when we see there's two reasons that an org would do this. Either they're failing or they're struggling financially and they're trying to find new avenues or they like on the idea and it still resonates with them and they understand it's like a whole nother level. Okay. But regardless, I would get your board involved with it and in using your board as a decider of your risk level. Okay. So maybe you can look out, because technically, when we work with orgs and individuals in these situations, we don't want you to spend money prematurely because you only spend one dollars once. So before you spend a dollar, we want to make sure you spend it well. So there are testing ways you can do. Okay, so this is why, again, we have a whole process, but you don't just go out and we're going to sell that building and start doing it.
You've done some studying on it. You've looked at your client base, you looked at your donor base. And then I would just say based upon that, your resources, our first recommendation would be how to leverage existing resources. Okay. So maybe you're sitting on dollars that you typically are going to use some other way. And you could say, you know what? This year we're going to redirect them and we're going to redirect them into establishing an income stream. So it's not really going to hurt our bottom line in year one because we were going to do something else with those dollars. So unless you're just getting out of the gate, it's probably a little bit of a longer look, unless again, you're just sitting in a situation. We worked with a covocational couple that are launching a Spanish speaking Church outside of Austin. This couple owns a bath and kitchen remodeling company. They're from Columbia. Lovely couple. They want to keep the business, but by nature of who they are, they've attracted a lot of entrepreneurs. So all of a sudden they kind of realize, you know, what we could do, like training of entrepreneurs and as an income stream for the Church.
Okay. But at the same time, so they're not really risking much there. They actually have a resource that they just haven't leveraged their knowledge and their abilities and their wisdom.
Sabrina
Yeah. That's a really interesting way to look at it. That's really cool. Going back into, okay, so they took the risk. They're really excited. They found something that works with their mission. They're confident they go into it, and then a couple of weeks go by and they're like, oh, this isn't delivering what I thought it would. We're in the negative, and then there starts to be some panic. So what should organizations do when this happens and they find themselves at a loss? What steps should they be taking?
Bill
Well, first of all, you said there are a few weeks in, and I would just say if that's your mindset don't do this. Okay. Yes, I would give yourself at least six months to a year. All right. What you're going to want to be looking for is engagement. And obviously you're going to have to have some kind of operations knowledge in whatever it is you're setting up. Okay. But this is again, if you're truly going to do this, it's not going to happen overnight. And I would really be looking to what kind of engagement we're having. So let's say, for instance, you're going to be doing something online that's going to be some kind of a service capacity unless you're a well known entity already and you can just roll this baby out, boom, you got instant following. You're going to have to build a following before you build a consumer base. So start looking at some of those metrics to say, okay, are we having engagement? Are we talking what content are we creating to show that is going to work for people, whatever it may be, if some of your more traditional models that we see are like partnering with coffee growers in a sustainable way.
Right. So when I buy this coffee, I'm actually contributing to the well being of some individual way down the pipe. We also see products that are made by impoverished people, people that are in poverty situations, and therefore, you've got to find those people. Right. So there are different things you'll have to do to build that out. Well, again, if you risk a lot of money in this, I would want to know what's your return you're looking at and how quickly if you're saying, well, we're putting up 100,000, we got to have it back in six months. I'm like, I don't know about that. Okay. But if you're saying, hey, we're going to put up 25,000 this year and we're going to see how it goes in 2022, and here are some things we want to see to see if we can get traction with it or maybe 100,000 in 2022 if you have it. Okay. Now you've taken a longer view, and now let's really dig in and see what you're looking at, because what you don't want to have to happen is that alarm bells start going off prematurely because you didn't really think through what it is, the time frame of what's going to happen.
Sabrina
I feel like taking a pause is really important in those situations, too, and trying to figure out where you can learn. Yeah. Because it is really nerve-wracking. It can be hard, especially.
Bill
It is. And I think as the leader, whether you're CEO or executive director or whatever your title is, at the end of the day, you've got to be convinced this is the direction you need to go. There are no such things as these overnight successes. Every overnight success, when you really dig in, it was five or ten years in the making, and then all of a sudden they came on the horizon. You're not going to have that. So let's talk instead about what time frame you and your board are comfortable with and what dollars you have to get there. Now, you may be in a situation that you're like, I've got to push this thing, and I need to have some return. And I'm going to be putting money that technically I could put elsewhere. Then I think it's a discussion of. So if you put it elsewhere, how's that going to contribute to your cause? How's that going to generate? So I would just say it is a longer play, slightly longer play, but it's also broadening your base, which is very healthy. So it's a strategic move, more than a tactical move. That's probably a good way of putting it.
Sabrina
Exactly. Well, thank you, Bill. Before we go today, can you let our audience know how they can get in touch with you, where they can learn more about your work?
Bill
Sure. First of all, you can go to our main site, which is fivetwo.com There you'll find where if you've got questions like this, you can click on the strategy session and somebody will get in touch with you. And we'll give you 15-20 minutes and just kind of talk through what you're thinking about. And we can help you think through what level of coaching or resources you might need. But you can also, as I mentioned earlier, you can go to our training site, which is Startnewtraining.com. And that's where our training platform sets. You can go to startingettrain.com/mini-course, and you can get a free three video course to kind of help you start seeing some of this stuff. And start thinking it through. End of the day. You can also grab me on Facebook Bill Woolsey you can get me on Twitter, grab me on LinkedIn send me an email and would love to dialogue with you.
Sabrina
Well, thank you again Bill, for your time and for joining us on the show. For those listening I have provided those links that Bill mentioned in the description box in case you'd like to get in contact with them. You can find everything he mentioned there and if you'd like to stay up to date with all the content we have going on Driven, you can give us a visit us at trustdriven.com there. You can also join our newsletter so you never miss a blog post or a podcast. We love to have you be a part of the Driven family. Thank you so much for listening and we'll see you next time on the Fundraising Superheroes podcast.
