Nowadays, getting your idea to IRS-approved 501(c)(3) is a pain in the a**. The unyielding bureaucratic obstacles can test the limits of those looking to process their IRS compliant non-profit. In the midst of red tape, we’re lucky to have companies like Yippiekiyay, whose mission is to ease the inconvenience as much as possible. Christian Lefer, CEO of Yippiekiyay, describes it as an attitude of empowering non-profits by fighting the bad guys. The way that translates is whether you’re starting a nonprofit or getting fundraising compliant, which is a difficult process as well, Yippikiyay will get you from idea to IRS-approved 501(c)(3) in less than an hour for under a thousand dollars – and you’ll never talk to a government agent or lawyer!
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Start Your IRS Compliant Non-Profit With Christian Lefer, CEO Yippiekiyay
Yippiekiyay is an attitude of empowering people and shedding light in the darkness, fighting the bad guys, making the world a better place by helping people get past all of the bureaucratic obstacles to changing their community through a non-profit. The way that translates is whether you’re starting a nonprofit or getting fundraising compliant, which is a difficult process as well, we’ll get you from idea to IRS-approved 501(c)(3) in less than an hour for under $1,000 and you’ll never talk to a government agent or lawyer.
I think about the folks that are out there that have intent that want to go and help the planet, and a great deal of those ideas, like many others, die on the kitchen table. They die because they can’t figure out how to get from A to B. You basically take out that barrier to entry for a budding 501(c)(3).
If you look at all the great movements in history, there’s been a little bit of moral outrage to power them. With this one back in 2009 or 2010, I volunteered to help start a 501(c)(3), and you know how difficult can that be, give me that paperwork. I welcomed the challenge. When I got a letter from the IRS and called in, they said, “Don’t worry, it’ll take about a year for 501(c)(3) to get approved. I questioned, “What in the world? If I wanted to start a used car lot, it would be twenty minutes at the Secretary of State’s website, $50 or $100.” I couldn’t imagine why even attorneys were looking at an eight, ten, or twelve-month cycle to get approved. I took that letter and I called about ten or fifteen extensions north and south of that phone number and I begged, cajoled, bribed. I promised to send chocolates, whatever I could get out of that person on the other end of the line who is processing the files because it was reaching somewhere into that exempt organizations department. At the end of the day, I put together all my research and tried it out and we started getting approvals in 30 days for people long before there was even a company or a process or software conceived, and I thought this is something people could use.
In the midst of Hurricane Harvey and the effects down in South Texas, I think about all the outreach. You’ve got athletes and luminaries raising funds and all I can think of is the bureaucratic nightmare. Somebody raised $4 million or $5 million on donations and gone. How’s that working in the 501(c)(3) space?
What many nonprofits aren’t even unaware of, let alone people who want to start them, is that say you have a little local neighborhood nonprofit and you’re providing some school lunches and maybe some support to people in the neighborhood. You’re in Beaumont or you’re in Port Arthur, Texas. Right now you’ve got the opportunity to reach the entire world and help in the way that you know best on the ground, but you are prohibited from raising money in 41 states if you’re not fundraising-compliant, which is our other main product. We can do that as well with a turbo tax-like process and get you fundraising-compliant quickly and easily at about a third of the cost of an attorney because these should not be barriers to helping our neighbor in my opinion.
We were chatting a little bit before and we were talking about Simon Sinek. We talked about the tilting at windmills. This is a bureaucratic tilting at a windmill for the nonprofit world. In your background, talk a little bit about why it’s important to you to take and help these nonprofits take and grease the skids, for lack of a better term, to get compliant and be able to do their mission.
We hired a visionary friend of a friend who’s become a close friend of mine and advisor, Eliott Frick, out in St Louis. He runs a marketing agency called Big Wide Sky. I said, “I need a name for this company, like InstantNonprofit.com. It needs to become something that’s more expansive and can provide these multiple services.” He said, “Forget the company and forget the products and all that stuff that you’re all caught up. We want to find out where this idea came from because these businesses are very near and dear to the heart of somebody when they’re born.” They asked me about some of the battles I had been involved in and inflection points in my life. I don’t even remember having the exact conversation.
There are people in the world that need somebody to fight for them.
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I was telling them the story when I was eight years old, my mom came home with my little sister from the doctor and my mom was visibly shaken, pretty upset, and she sat me down and she said, your sister Monique isn’t speaking at nearly four and we found out why. It’s because she never will. She’s mentally retarded, we called it back then, or developmentally disabled. I said, “She seems fine to me,” and I ran out to play with my friends and didn’t think twice about it. A few weeks later my single mom who was waitressing that day had to come home from work and pick me up from school. I was in trouble for fighting and punching out a couple of kids in the third grade New Jersey Elementary School. Everybody including the janitors and the principal’s office want to know why and they demand that I say sorry. I had my arms folded and I said, “I’m not sorry,” and I had a little twinkle in my eye and I said, “Those boys will never make fun of the special kids again.”
I realized that day that there are people in the world that need somebody to fight for them because my sister was unable to fend for herself. I didn’t realize it then but I embarked on a whole series of battles in my life, whether it was for free market principles or for my sister or whatever other jobs I’ve taken, things I’ve done. There’s always been a cause associated with them, a holy cause that was greater than me. I figured out backwards. I backed into this, and only after I talked to this marketing agency that I realized I had another holy cause with this company and that was to enable every person out there who runs into the bureaucratic brick walls to make the biggest difference. They can see themselves as great as they possibly can so that they can help their neighbor and help make this world a better place. If we’ve ever seen a time where that’s needed for us to pull together and help each other, it’s today.
If you’re a typical wannabe nonprofit and you and I have an idea, there’s a cause, I want to put this together, historically, how long does it take to go from conception to be an approved 501(c)(3)?
Historically, it probably reached the high end around 2014 where there was talk among law firms. I have an article saved. These big law firms in DC were talking about suing the government for violating their own guidelines that this is only supposed to take 250 or something days. I forget what the statute is or the guideline and we were up to eighteen months on average to approve a 501(c)(3). I don’t want to create any false hopes out there, but our record is nine days from somebody calling us to them getting an IRS approval for their 501(c)(3). We generally like to say that we reduced the time taken by about 75% and the fastest approval times in the industry. That’s from the date of the call to us to IRS approval because it’s not just about the IRS. There are a number of steps in this process, and if you break any link in that chain, it causes you more delays and more challenges and sometimes more money. Our job is to eliminate any red flags and any broken links in that process from day one.
For the audience, 501(c)(3) is just a nonprofit organization. I’m a budding wannabe nonprofit and I’m faced with figuring this out on my own and then I retained counsel or whatever it is somebody directs me to do. What would I be looking at in general for an expense to do this?
Typically, you’d see $3,000 to $5,000 for starting a 501(c)(3) with an attorney. We still get phone calls where people have either given an attorney money, and since I don’t know of any attorneys that say, “Result guaranteed,” you may or may not get out of the traffic ticket. You may or may not get your 501(c)(3) by the time they run out of that $2,500 retainer. We get calls with people that didn’t get across the finish line two years ago. They’re still taking money out of their pockets and their community, donors’ pockets to put lunches in kids’ mouths or books in their hands. We have to clean up some messes sometimes even from other online services that purport to do what we do. We have got this system greased and it’s our job to predict where the problems could lie and smooth all those things out. That’s why to date we’ve only gotten top ratings with the Better Business Bureau and Facebook five star reviews; we don’t get fours.
We’ve talked about many different things that I had the privilege of talking to the ladies that make this happen.
Our staff is incredible.
They were a killer, the three ninjas, the heroes squad. One, you’re faster. As I understand it, you’re less expensive. What is the typical range for somebody that would utilize you to form a 501(c)(3)? What range of pricing could they look at?
The fees for us to do this right now is $677 for our part of those services or $967, and that falls along a natural break where the IRS created a more streamlined solution for smaller nonprofits that predict or project that there’ll be under $50,000 per year in any of their first three years. What’s interesting is the IRS are collectors. They know how to get money out of people and they’re not usually very ambiguous about it, “This is a dollar total.” With this process, they are asking for a boy scout’s honor, best guess. If you believe that you’ll be below $50,000 and you apply on that basis and you exceed your expectations, they don’t even have a mechanism to come back for that additional fee because their fees below $50,000 are $275 to submit that file, so you have our $677 plus $275.
If you’re above the $50,000 per year projected, our fees are $967, moderately more for quite a bit more work, but $850 for the IRS filing fee. It brings a sub $1,000 proposition to almost $2,000 proposition. They want your best honest guess. If you’re going around buying houses for veterans and converting them for ADA use, etc., it’s not going to fly that you’re $50,000 or below, but many organizations do take longer to get up to those larger numbers. We don’t advise or influence people unduly. It’s like anything. If you’re going to launch a small business, don’t buy 1,000 hammers for your new hardware store; buy twenty and see how they go.
One of the questions that comes to mind is obviously there’s a lot of folks that have good intent in mind. Why doesn’t everybody know about you or use you?
Soon everyone will, I hope. I’m the CEO and I have to have some irrational beliefs, but we’re an early stage growth company. I wouldn’t quite characterize this as a startup anymore. We’re racking up thousands of customers at this point. We are emerging growth and eventually you have to use all these different channels and different media to get to people. If you talk to a high schooler today, Facebook, they’re like, “Dad, you’re old.” My kids go, “Dad, I’m not going to answer you on Facebook. That’s so old school.” My mom thinks she’s cool because grammy finally got on Facebook. It’s Snapchat, it’s Instagram, who knows what’s next. You now have to diversify your ability to reach people and go where they are.
People are abandoning TV and picking up Netflix. I don’t know that we’ll ever run a traditional TV ad by the time we get big enough to do traditional TV ads. Our job is to get it in front of as many people as we can. When we do, we do well on Google paid ads, for example, because when we do get in front of people, the value proposition is clear. We talk to where people are at, not like a bunch of accountants and lawyers using stock photography and clean language. We don’t use dirty language, but we don’t use those stilted terms. We talk in real language to real people and help solve real problems.
We were chatting a little bit about this notion of a barrier reduction in what you’re doing. You took a similar approach with the structure of your company. Talk to me about that evolution of that thought process on how you wanted to take and structure your company to follow your belief system?
It was Oliver Wendell Holmes who said, “I can’t define pornography but I know it when I see it.” I hate to use that example in a way but I don’t necessarily know what’s best for this company at any given moment when asked on the spot and facing a new situation. We’re facing new situations every single day in the moment. What I’ve learned is that I know the right one when I see it. I’ve also learned because of my amazing Chief Operating Officer, John West, who started out as a Google ad vendor and maybe a marketing vendor and has come to wrap his arms around a majority of operational, staff, advertise, all that systemic stuff in the company.
John and I read Simon Sinek. We have similar beliefs that people are greater than some institutions might want to give them credit for and they can make decisions that suit them and also suit everyone else. Adam Smith believed this as well. We’ve ended up deferring by necessity often to the staff, “We have this problem. A customer complained there is a glitch in the software,” and most management want to go run and fix the problem themselves and then go tell the staff how it’s going to be fixed. We have flipped that on its head and our first instinct, because we have learned how capable these young women are that you interviewed, our young staff, to take a look at a problem and be the best ones to fix it because they are the ones that are dealing with the customers, using the tools, operating the company on a day to day, and the brain trust that we’ve built.
It’s like a computer before the internet. You might’ve been able to crunch some spreadsheets and things, but once these computers are all connected and people are connected, these solutions that come out of that are absolutely mind blowing. I don’t care how smart you are. I’m not smarter than three people in my staff or five people collectively coming up with a solution for something. It’s been amazing to find some raw talented people. We did pick some good people and help them grow by empowering them. Sometimes it’s like parenting. You got to let them make a mistake and encourage them to continue.
You also took the approach of sharing the financials of the company and how that had a bearing on their behavior and activity. What’s your observations or impression of that initiative on your part?
What we encountered was, because of age, Millennials have grown up in a world where everything has been sold to everyone and a lot of things have come out not like they were sold, whether it’s government or Wells Fargo creating fake accounts. You name the examples of the betrayal of corporate, government, etc., and maybe in our own lives. Nobody’s unscathed by this, even our own families. They have BS detectors, so they don’t want to be considered salespeople and they weren’t hired as salespeople either, but they’re wanting a level of honesty and authenticity and integrity that’s lacking in the world in many ways.
Everybody’s on Facebook putting on their best face and it’s like dating. It’s maybe why divorce is so high. People go out in their best shiniest outfit to the best shiniest restaurant and when the diaper is flying across the living room ten years later, things are not so rosy.
We have a motto in the company called make things suck less. That means for you as a staff and for us as a company and for our customers, how can we organically continue to make things better for people? Part of that was sharing the financials. They have certain goals in their lives and we sat down and thought of how do we connect what we want, which is company growth. We want sales, we want to close, we know we have the best solution. We’re doing a favor by closing a customer to work with us instead of the online solution or a lawyer down the street. How do we get them to do that if they don’t want to sell and push things on people and rope them in and all those old tactics that don’t work anymore? The way to do that was to share with them. They’re believers, as you can tell. They believe that what we’re doing is a good thing.
We had our finance guy come in and teach them how to read a financial, which I didn’t know how to do until a few years ago by necessity with this company, but also how to tie their life goals, the raise they want. They want to make a certain amount of money, they want to get married, buy a house, do all those things. Those come out of financial results from this company, so how can they choose their own adventure? If they want more vacation time, how can they take care of their fellow employees? How does that impact the company? How do refunds impact the company? What’s come out of that is a set of policies that is inherently humane and loving. Our job as a company is to love people by giving them a great service, backing it up with honesty and integrity and being the absolute best. We want to, and not for any other reason, to serve people and the money will come. We’ve seen a lot of growth because of this philosophy.
Whatever you were doing before here, before this company, there’s this thought process after you went through the journey of dancing with the IRS to try to solve the 501(c)(3) problem and you said there’s a company in here. Take us into that thought process and when you went home and talked to your spouse and said, “I think I’m going to do the following.” What were you thinking and what was that like?
When you discover this need, the first thing you do is you serve the need. Anyone who’s ever solved a problem and has any entrepreneurial bone in their body goes, “Maybe I could make a living or make a little side hustle, make a little extra money doing this thing,” that’s exactly what I did. I started helping some folks get 501(c)(3) to start a little private school, help start another research organization and fast approvals, that goes without saying. I thought maybe I could do a little consulting around this. Then this information product guru thing started happening on the internet where people were like, “I teach people. I do videos and sell these expensive DDDs,” some of which I was buying for $1,000 or $2,000, these programs about how to create a website, how to reach people online, how to write better, copywriting, all that stuff. I said, “This is what I’m going to do. I’m not going to do one to one and be a consultant doing 501(c)(3)s. I’ll teach people how to do it themselves through a video series.”
I’ll never forget I was on a plane to see a guy named Mike Koenigs out in San Diego. He’s one of these internet guys who saw a need, taught a bunch of people things, did the thing, and then created a product. I’ll never forget, he came out on stage and I’m at this seminar about how to market things on the internet called Make Market Launch. He said, “You too can be in the software business even if you have absolutely no business doing so.” I do not remember hardly anything that happened after that weekend but when I got on the plane to come home, I knew that this was about creating a turbo tax like solution that would make it easy and maybe even enjoyable. There are a lot of things out there that will make something suck less but if you can bring a little delight and that mischievous, fun attitude that people are looking for in life, you could make this thing big.
Our job as a company is to love people by giving them a great service, backing it up with honesty and integrity and being the absolute best.
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I’ll never forget just someone telling me that this software thing could maybe be outsourced. I had a couple of bad starts on that and there’s a whole story there, but I realized that we could leverage technology and then carrying expert customer service together to make a difference in people’s lives. We literally have thousands of nonprofits operating all over the world making difference in many more thousands of other people’s lives. If there is one thing that I could say I feel like I was put on this earth to do, it’s totally that.
Some folks do say, “I want to take and have an impact on the world. I want to change the world.” and you think, “That’s a pretty tall order.”
You remember that hippie song, “I’d love to change the world, but I don’t know what to do, so I leave it up to you.” I think Leslie West did that song. It talked about all the problems of the world but the punch line was, “I don’t know what to do, so I leave it up to you.”
I think about the people I’ve run across on the entrepreneurial journey and the idea dies on the table. Your idea could have died on the table easily. It could have died when you failed with the first software programmer or two, but you’re looking forward. What has you fired up for the next year or so? What do you see coming?
We’ve grown. We’ve gotten our systems down and again credit to John West, our COO. If he could be here, I’d be thrilled because it’s one thing to come up with the idea. You’ve met the Tasmanian Devil, you’ve been around long enough to have seen the original cartoons on TV as I was. There’s like a lot of spinning, but probably not a lot of stuff getting done. Having John create systems for all these things, we’re seeing real progress because if you systematize things, people can count on the level of quality that they’re going to get. They can count on the experience. In the the’60s when McDonalds was growing, why did people go there on road trips? They knew they could count on a clean bathroom and a consistent experience.
Instead of having great results except one or two of apples fall off the cart, everyone gets the same high quality experience. Just from a systemic standpoint, we are now able to go scale up on fundraising compliance, which is becoming a huge problem for nonprofits. Then by customer demand, we are bringing online training for things like high-dollar fundraising, and other customer needs like how to run board meetings quickly and efficiently. Those things are going to start coming about more and more because no longer do boards want to pay $5,000 for a consultant to train them for two days when there’s the board turnover and the nonprofit space is incredible. Would they buy a product that teaches them how to run a board meeting efficiently, effectively, stay compliant, minute keeping and all that stuff, in a video product that they can use as an on-boarding process for every new board member? Absolutely.
Training isn’t our big thing, but it’s a supportive thing because we want people to have a better experience once they get up and running. The other big thing that is happening is we’re watching it with fundraising compliance. The 41 states that regulate any type literally having a donate button on your page even if you’re not hitting anyone up or contacting people, the local Denver Animal Shelter right up the street from us who has a donate button that is connected to a shopping cart looking thing that has New York in the dropdown along with all the other states, that comes standard, they are in violation of New York State law right now and they don’t even know it. New York State regulates that if you even have a path for a resident of New York to give to you, need to get fundraising compliant. What happens when that little nonprofit goes to an attorney and sees that this costs $12,000, they’re going to go right back and go, “I hope that doesn’t happen to us,” but they know darn well they’re not compliant.
This has been a perfect storm. You’ve got increased enforcement, you’ve got these onerous laws getting more and more serious all the time, and the third factor that makes this a perfect storm is everybody’s been thrust online. These regulations were created in an era with only big outbound phone and direct mail organizations. Jerry Lewis telethon, the ones you’ve heard of, you get the Red Cross mailing in your mailbox. They’ve got a room full of attorneys and can afford that even though they should be our customer. They can afford to have attorneys do this. These little nonprofits that have been all thrust online into the public arena with great opportunity attached to it by being online are also liable for some of these laws that didn’t consider the internet coming along and changing everything.
What are we doing? We’re using that same internet and that same technology to lower the bar so that all of these little and medium-size organizations can get over that bar and be fully compliant, be a best practices organization that’s transparent as their donors want them to be and not pay an exorbitant amount of money to do so. Our goal is for us to be the standard and for us to be the natural go-to for all of these types of services. The number one mission that we have as a company is to help people stay focused on their mission of literacy, environmental, helping children read, etc.
For the folks that are out there and they go, “I’ve had this idea forever to start a nonprofit for cause that I want to support,” how would they reach out to you or find you? Where are you at in social media?
We have a corporate website at www.Heroes.do. It’s a little unusual but the easiest way. Then these resolve all back to our appropriate place on our website, people can go to InstantNonprofit.com. It says what it is. They can go to FundraisingCompliance.com and get fundraising compliant. Those are the two main avenues that are quick and easy to get to the right people and the right program for their organization.
We’re in Denver and for the audience in the area and they go, “We are wanting to do a fundraiser for our nonprofit,” what are the chief misconceptions that they might have where they’re running afoul and they didn’t even know it?
A big question is what is fundraising compliance? What is charitable solicitation as it’s called by bureaucrats, rule makers, attorneys, and the government? It literally encompasses every type of fundraising that you could do. An invitation to an event is a solicitation. Anything that could potentially get the money in your bank account is a nonprofit. It’s the act of even creating the path between the constituents or the resident of a state and your organization. You mentioned earlier the raffle laws. If you’re going to have a raffle, you do have to register for running a raffle. It’s essentially considered a form of gambling by the state and they regulate it. These agencies, they are driving revenue by increased enforcement and regulating these things.
There are two sides to it. There’s fraud prevention. They want to have you in the database so that when Mrs. McGillicuddy calls from the neighborhood to see if you’re a real 501(c)(3) and if you’re helping the kids, they can at least verify that you’ve registered with the state by checking you out for fundraising or checking out whether you have a raffle license. The longer we have this technology around, the more that government is going to figure out how to use it. These state agencies are starting to use these tools to find organizations that are noncompliant. They used to wait around for complaints. They’re able to bump to databases against each other and go out and issue cease and desist letters and all types of things. That’s also herding folks right into our arms where we have the cheapest, the best, and the easiest solution out there.
Through your career before this, there were probably moments of advice that stick with you. Is there one single piece of advice that you received somewhere in your career that you brought forward into this company that you thought was remarkable or highly influential when you did this business?
Being a copywriter, I did this advocacy proudly for the free market for years and the internet is a product of that. All this innovation is a product of free market and our freedoms. If I were to boil something down but in not in so many words, it’s that people overestimate the capacity of other people and underestimate their understanding. There are so many other principles that I’ve been taught by great people that I was blessed to be trained by or instructed over the years, especially in copywriting. You learn a lot about human nature when you have to take something and dumb it down.
It’s not dumbing down as an insult, but people are busy and they don’t have time to process high-minded 50-cent fancy vocabulary words. They need you to break it down for them real assembly. I look at it that I overestimate their capacity to change the world, but I underestimate their level of understanding. What that does is it keeps me focused on spoon feeding the fact that they can do something in such simple terms that when they’re in between the PTA meeting and the sick kid and the job or the business and the car repair and I’ve got them for a few seconds, I get through to them, “You can change the world and it is simple. It’s these three bullets.”
Another great quote that I run my life by in communication at least and even in this understanding people thing is Mark Twain’s famous quote. He says, “I sat down to write a short letter but I didn’t have time, so I wrote a long one instead.” What that means is that if you have the heart and the love and you want to take care of people, you have to think about how you approach and communicate to them. The shorter that you want it to be and the more crystal clear that you want to express an idea or a product or a solution or anything or even how much you care is, it takes extra time to boil that down into the most meaningful little package that you can. It’s a way of supremely honoring that person as far as their time and their attention and all the other things. There’s only one thing in this world that we cannot replace and it’s not money. It’s that time.
I got to talk to a lot of folks have associated with your company and back to the underdog, to conquering the world stuff, clearly smoothing the path for 501(c)(3) formation and compliance. For the audience that have 501(c)(3) and maybe they’re uncertain whether they’re compliant or not, what should they do? Should they reach out to your company, to a website? How do they reach out to you to figure out what they’re doing if they need your help?
They can go to FreeComplianceCheck.com and that’ll bring them again to a page on our website. It’s easy and catchy to remember. We will ask them a few questions on a form, have a quick conversation with them whether that’s online or somebody jumping on the phone, and assess whether what they’re doing is completely compliant or not. There’s a book out there, Seven Felonies a Day, and it explains how every single American cannot walk out their front door without being in variance with something, their mailbox is too many inches away from the sidewalk. There is something going on. I say that in jest.
Our job is to help people reach a level of compliance and reach a level of professionalism that is appropriate and commensurate with the level of their organization. If everyone tried to get insured to 100% where they’d never have any liability of anything, no one would ever start a business or leave the house. If there’s a battle, which there often is, between what we would like and the budget that we have available, we have a plan to navigate that Strait of Gibraltar for people so they can get compliant, commensurate and appropriate for the stage of their organization without breaking their bank. Our goal is to not have any of these obstacles prevent them from getting help to the people that need it.
We’ve talked about compliance. We’ve talked about filing. We’ve talked about that perhaps one of the things many nonprofits have challenges with his board issues and board formation and board training. Do you see your company helping the nonprofits figure out how to do fundraisers because many of them have challenges in fundraising?
I’ve raised millions of dollars for nonprofits over the years. We teach that in a course and that’s how to take a small list of people right inside your Rolodex and bringing them from raising their hand with a little bit of interest in your organization to writing a $5, $50 or $100,000 check, maybe putting you in their will or all these things that philanthropists do. There are philanthropists created every single day by people who invested wisely. I know people who saved paychecks their whole life and put it into a mutual fund and are now leaving that legacy to a series of nonprofits because their kids have plenty of cars and their college is paid for and are in their starter home.
Our job is to continually uncover the next biggest roadblock, the next biggest speed bump in life for nonprofits and flatten that out for them. We will never run out of products and services to introduce. We are constantly in touch with our customers. Even being the CEO and with all the growth, some of my favorite time that I spend every week is when I get to hop on the phone with a customer or a prospect who’s thinking about working with us and I say, “Thank you.” They thank me for being on the phone with them and I say, “No, I didn’t get into this so that I could sit up in some corner office. You are doing the work on the ground helping the flood victims of Harvey or whatever the problem of the day is and it’s a great honor for me to learn from you how people are doing that most effectively today.”
We will always have problems to solve in the nonprofit sector. Something I want to add too is you look at trends and you look at books written by people like Malcolm Gladwell who examined these bigger macro trends in the world. One of the ones I see is that the whole idea of nonprofit and for-profit are converging because if you think about things being commoditized in the world, anything. and in the future even more, can be reverse engineered or people can deconstruct and figure out how to build a laptop, how to build this product, how to have a robot make a table nicer than that in Ikea. People are going to be knocking things off more than ever nowadays. The value isn’t there. The value is in a company relating closely with human values.
For-profits are being forced because of commoditization to go, “We help Harvey victims. We do this.” They’re having to associate themselves with a cause to show that they’re a responsible corporate citizen and they’re not throwing off a bunch of cash to investors. Investors are very involved in causes and impact, so that’s where the for-profit world is being driven whether kicking and screaming, dragged, or being driven by genuine want to have a bigger meaning in life than money. They’re going in the direction of a symbiosis between the two. Meanwhile, if you look at nonprofits, you can’t as a nonprofit go around with your hand out and hit up a mailing list. I put the picture of the doggie and kitty on there and expect people to write checks. People are online looking to see the pictures of the children that you’re helping, looking at the metrics.
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There are all kinds of studies. Philanthropists, even small investors, Bill and Melinda Gates Foundation has been helping them learn how to measure the ROI of the nonprofit gift they’re giving. Everything is becoming more sophisticated and that means nonprofits are being driven whether kicking and screaming or by a genuine want for more ROI into the same space as the for-profits where they’re having to use more business practices and adding that to the cause, whereas for- profits are adding cause to the business practices. I believe this is Reese’s peanut butter cups, two great tastes that taste great together go a lot farther. You’re going to see companies associate with cause more and more all the time to where it’s almost imperceptible which is which. You can see nonprofits running like a business and using lean startup methodologies and other things to show that they have as much impact as the nonprofit down the street that’s trying to solve the same problem or the market will decide.
The donor’s going to go that way? If you take 10% goes to the cause and 90% goes to overhead and whatever, versus the other way around, I didn’t plan my money to help them have a bigger car. For your and looking at the regulatory realm of nonprofits, how do you see the regulatory burden over the next three to five years in the nonprofit space?
There is a genuine desire on the part of many individuals in the regulatory world, whether it’s not killing the golden goose or not hurting people who want to do a good thing. I’ve talked with many Secretaries of State. They want to reform some of these onerous laws where a nonprofit has to go out and do the same thing in 50 states on paper. You’re still downloading Word docs and PDFs from these agencies. There’s a genuine individual response that they want to make that better, but when they go to the National Association of Secretaries of State and ancillary agencies, when they go to these big confabs, there is a lack of ability to work together and we see it in Washington where some very good ideas don’t make it even among parties that want something to happen because everyone has a different idea about how it should be instituted.
Our empowerment mentality is, “Let’s do this work for the bureaucrats by helping our customers do an end run around these processes so that the regulations don’t stop people in their tracks, and they can go off and do what they do. Then whatever happens in the regulatory world, it’s okay and we’re still making a difference to the people we care about in our communities.” I don’t see regulations decelerating. We’ve only seen an increase in regulations regardless of any lip service that we’re getting from agencies and the folks that are making up these rules. On one hand, you have to get tough on crime and fraud prevention. We’re going to have these folks, these nonprofits registered out the wazoo and that is competing with. Let’s make things easier for them. At the end of the day, there are probably some criminals in boiler rooms who ten years from now we’ll be doing exactly what they’re doing now.
There’ll be one or two poster children that will go out there and muddy the water for the folks trying to do that.
That is what happens. It’s a few bad eggs. We have done a lot of 501(c)(3)s and if we see something that’s not an exempt activity, it doesn’t fit a nonprofit, then we let them know, “You’re better off being an LLC or you’re better off being a trade group 501(c)(6), which by the way we can help you with.” I don’t know of a single case where somebody called and all they were trying to do is be greedy and hide some money from the government through their nonprofit. Y People watch the news and are influenced unfortunately by the media who sensationalizes those cases. You do have a few bad eggs causing a lot of regulations and a lot of coming down and heavy enforcement on not only the nonprofit sector but virtually everywhere else you look in life. My kids do lemonade stands and they’re going to keep doing it until they pry their cold dead hands off their lemonade glass whether or not you’re allowed to because some bureaucrat in the city doesn’t want them to.
What’s your parting piece of advice to somebody that’s considering a SaaS type startup company and perhaps a parting piece of advice to either a current nonprofit or someone who has an idea that wants to form a nonprofit?
Being in the nonprofit sector, part of the problem and one of the major differences between for-profit and nonprofit person, a person that associates with one or the other, is a nonprofit person generally doesn’t like to ask for money and is not sure how to translate the value of what they’re doing into the ask of the donor. That’s a big problem in the nonprofit world. One of the things that people that are starting a SaaS company, starting a for-profit to solve a problem, the guy that invented the washing machine probably didn’t want to see his family, time, and resources, his poor spouse down at the river with the washboard. These things do make people’s lives better. Don’t underestimate the value of what you do and the way to gauge it is to ask for it.
I started doing this for a couple of hundred dollars and then I raised my prices so that I could give better service. One of the best piece of advice I ever heard was charge enough to serve outrageously. You’ll find a medium where people are more happy to give us less than $1,000 for what they would pay a lawyer $3,000 to $5,000 to $10,000 for and be confident and deliver. You’re going to deliver five times or ten times value for that customer, and by doing that interaction, you’ll create a company. Many people are afraid to expose their idea to the weather and people’s opinions and everything that they hide them away. They probably die a life of regret that they didn’t invent that thing or didn’t roll out that idea. Even if it’s a side hustle or it’s part time, my advice is to go find someone who needs that service, and as quickly as possible, stop volunteering for it and start charging for it. You will very quickly find whether or not you have a business.
Step two, do not do what I did and take too long to find someone who is your personality opposite to go systematize that thing. If you’re the engineer, go find the social butterfly and get a co-founder. I ignored that advice and David Cohen, who I had known from Techstars. Techstars has a very successful incubator and they always require you to have a co-founder. I used to think that was stupid until I got a co-founder and 10x my revenue, so it’s very important to find people who are complementary and not like you along the lines of Michael Gerber’s book, The E Myth. We tend to hang around with and hire people that are like us and it destroys people’s companies and ideas. We have to get people who are complementary to us in different from us and that’s what makes the world a beautiful place, isn’t it?
This has been fun. I think about making a difference and the company that makes the difference, so I appreciate you taking the time and allowing your ninja crowd take the time and visit, so thanks very much, Christian.
Thank you so much, Bob. I appreciate having us on.
About Christian Lefer
Since I was a cartoon-watching kid, I’ve been fighting Simon-Bar Sinister, the arch-nemesis who robs peoples’ potential away, takes over their minds, steals their hope, crushes their dreams. It’s what I was put on this earth to do.
Now I create solutions to benefit the nonprofit sector. My passion has always been to empower others to impact their world: “Unleash your inner hero!”
My family’s involvement in the community and as advocates for foster and adoptive parenting, along with my successful consultancy in founding and fundraising for nonprofits, make my foray into software and solutions for charities a natural.
From 2004 to 2011, I performed high-dollar fundraising and ran special projects across the U.S. for a national grassroots issue advocacy organization, while serving as Executive Director for two state-level groups. During this time I served as a senior adviser or chief evangelist for numerous marketing, issue advocacy, public policy and public officeholder campaigns.
Having organized successful 1st Amendment litigation in state and federal courts, I am proud to have also become a sought-after adviser on free speech and civil liberties issues.
My key strengths include vision, copywriting, marketing (direct and online), and sales. I earned a B.A. from Rutgers University in History/Political Science, cum laude.
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