Successful Nonprofits: The For-Profit + Nonprofit Hybrid

It’s About the Work, Not Your Tax Filing Status

For-Profit? Nonprofit? Why Not Both? (with Angela Hughey)

It’s About the Work, Not Your Tax Filing Status

For-Profit? Nonprofit? Why Not Both? (with Angela Hughey)

by goldenburggroup

Who would think that for-profits and nonprofits could go together like peanut butter and jelly? Today’s guest, Angela Hughey, did! Join us as we explore the hybrid organizational model through the case study of ONE Community and see if the hybrid model might work for you!

Listen to the Episode Here!

Links

ONE Community’s Website

Web Page: Spotlight on Success Local Hero Awards

ONE Community Foundation’s Website

Sign the UNITY Pledge here!

UNITY Summit Event Page

Timestamps

 (2:47) ONE Community’s origin story

(5:36) Starting with a for-profit

(11:03) Adding on a nonprofit

(13:27) The MAB and the Board

(16:55) Hybrid model challenges

(18:17) Hybrid model benefits

(19:30) What Angela would have done differently

(21:27) Interacting with businesses as a hybrid

Transcript

Dolph Goldenburg (00:00):

Welcome to the Successful Nonprofits® Podcast. I’m your host, Dolph Goldenburg. For most people, nonprofits exist in two very separate universes from for-profits. But, according to the Stanford Social Innovation Review, there has been a growing trend of combining nonprofits and for-profits. This trend was triggered in 2008 by the recession. And it was triggered as a way to reduce reliance on donations and grants and help organizations that are working for the greater good to become more financially sustainable. You may have heard of a few of these hybrid organizations. They are frequently job training or microloan programs that combine a nonprofit and a for-profit. Let me share with you, Listeners, today’s guest, Angela Hughey, knows all about these hybrid organizations firsthand. She is the co-founder and president of ONE Community Foundation in Arizona, and that is a coalition of socially responsible businesses and organizations moving diversity, inclusion and equity forward for all Arizonans.

Dolph Goldenburg (01:17):

A few years after founding the for-profit ONE Community, she also went on to found the nonprofit ONE Community Foundation, which provides educational opportunities to ensure better understanding of non-discrimination and the importance of being LGBTQ+ inclusive. Angela joins us today to discuss how to create business plans that utilize both the nonprofit model and the for-profit model. I need to share with you that I had the pleasure of getting to know Angela while serving as the interim executive director of the Southwest Center, which is about a $4.5 million dollar nonprofit serving communities affected by HIV/AIDS in Phoenix. I was always impressed at Angela’s boundless energy and ability to bring business, nonprofit, government and community leaders together to solve seemingly intractable problems. There were many times that Angela and I would be sitting around a table and it became very clear to everyone around that table that there isn’t the word “no” for Angela. She is going to make it happen because she is committed to seeing inclusion and diversity and making it a success in Arizona. So, please join me in welcoming Angela to the podcast. Hey, Angela, welcome. I’m so thrilled to get you on the podcast.

Angela Hughey (02:43):

Oh, Dolph, I cannot thank you enough for the opportunity.

Dolph Goldenburg (02:47):

I feel pretty confident there’s a good origin story around your business, ONE Community, and the nonprofit.

Angela Hughey (02:57):

There really is and I never tire from telling this story. I think that so much of what we do comes from really good listening. And so we were just listening about 13 years ago. I was working for a media company in the Hispanic community. And I had a lot of Hispanic community relations peers and they all went through title changes. They all became multicultural. And I was out at work. And this is over a decade ago, so that was not as normal as it is in these parts. Not everyone was out and felt comfortable enough just being their authentic selves. But I was fortunate. I was out. My peers and these community relations folks that I worked with knew that I happened to be a member of the LGBTQ community. And so when I saw them go through these title changes and become multicultural community relations managers, I asked them if they had money for the LGBTQ community. Overwhelmingly the answer was yes.

Angela Hughey (03:51):

And then the next question was, What are you doing with it? Where’s your investment? And overwhelmingly that answer was, “We don’t understand the diversity and the complexity and just really the community. And so we don’t understand how to advertise to or engage the LGBTQ community.” My partner at the time and now wife, Sherry, and I had a long talk. We just felt we didn’t fit neatly into all these boxes that the LGBTQ community had. We felt that there was a void. And so we just sat at our dining room table over several months and did as much research as we could find and created what was, really, the first evolution of ONE Community.

Angela Hughey (04:40):

And what we saw in the little bit of research that was available in 2006, 2007, and 2008, was that when people knew us, their propensity to vote against us plummeted. So it didn’t matter what your religious beliefs were or what your political beliefs were. When you knew someone that was LGBTQ, where you stood on issues, such as fairness and equity, was pretty simpatico. Because as I like to say, we’re just as boring as everyone else. So that was the precipice for starting ONE Community. We wanted to create an opportunity where people that weren’t LGBTQ community members could get to know us as consumers and as professionals in your ranks, because as we like to say, we’re all Arizonans. And so we wanted to make sure that the business community really understood that we were a positive community and that we brought great value to the overall Arizona conversation. And so that’s how we started when community.

Dolph Goldenburg (05:36):

The vast majority of people who would have started ONE Community would have started as a nonprofit. What made you decide to start it as a for-profit?

Angela Hughey (05:46):

Well, two reasons. My wife and I put our life savings into it. Like literally emptied out our 401k. So that’s how much we believed in it. But also my background was media, including storytelling, videography and filmmaking. And I just think that we’re all selling something. So from a ONE Community standpoint, we’re selling diversity inclusion and equality for all Arizona. And we’re selling a connectivity to LGBTQ and allied consumers and professionals. Our original tag line was “You vote with your wallet every day. So support businesses that are LGBTQ inclusive.” So our backgrounds led us to starting a for-profit ONE Community. Its actual name is ONE Community Media, because we wanted to have events and promotional opportunities and now there’s a radio show. We just thought that we were selling the value of the LGBTQ community. So we didn’t understand nonprofits and how they really worked. And it just seemed like this was a for-profit entity,

Dolph Goldenburg (06:48):

As you said, you were literally putting your entire life savings into it. And that’s not something that you can do into a nonprofit, because you’re never going to get that money back. Did you get any pushback after starting ONE Community as a for-profit?

Angela Hughey (07:10):

You know, that’s a great question, Dolph. So the business community overwhelmingly gave us no pushback. The LGBTQ community gave us a great deal of pushback because they thought that we should be a nonprofit. When we first came to market you could give 10% of your membership to LGBTQ inclusive nonprofits. So from the moment that we came to market, we weren’t just doing well, we were doing good, too. And I did not believe that doing good work was dependent on our tax filing status. We believed it was basically on how actionable we were in our follow through and really moving important conversations forward, which is what we’re known for.

Dolph Goldenburg (08:06):

Was there a moment or a point where LGBTQ nonprofits said, “Okay, we get it.”? You aren’t just trying to exploit your membership in the community.”

Angela Hughey (08:19):

So interestingly enough, when we started ONE Community, we figured it would take a couple of years to take hold because we thought that it was really a disruptive idea. We were a disruptive organization. We knew that we had to build trust. And so the plan was that I would consult for LGBTQ inclusive nonprofits during that time because what I knew the client is would prefer to just have one point of contact. So if we could represent some of these LGBTQ inclusive nonprofits as well, and go to, for example, Healthcare Company X and say, “You shouldn’t just be making a buying decision from a community relations or marketing standpoint on what programs or opportunities make sense at ONE Community. But also look at Southwest HIV, one-n-ten, Phoenix Pride, Aunt Rita’s, etc.”

Angela Hughey (09:19):

So that I think, number one, was a better service to the client because they were creating a more consistent pattern within the LGBTQ community, which helped them build trust. But also it helped the whole community. We believed the LGBTQ community was just starving. So it didn’t matter if we were for-profit or not-for-profit, we needed more financial resources coming into the community. There’s a number of companies that we brought into the market who literally didn’t actually place marketing dollars or community relations dollars with ONE Community their first year. But instead placed them with Phoenix Pride who I consulted for or placed with Aunt Rita’s who I consulted for. So we all do better when there’s more financial resources to go around. And I just think, overwhelmingly, LGBTQ organizations over a decade ago were hungry. Really, really hungry.

Dolph Goldenburg (10:18):

What I hear you saying is that you proved to the potential nonprofit partners that you were not there to take away their piece of the pie, but that you could actually bring a few extra pies to the table.

Angela Hughey (10:28):

We’re pie makers! We literally are in so many ways. We might be the entry point for organizations of all shapes and sizes through our UNITY Pledge or through another program or event. What matters is you’re getting to know the LGBTQ community. And when you know us, you’re going to love us. We are a very diverse community and all of these diverse nonprofits have so many really unique offerings. The answer shouldn’t be “either, or” the answer should be “and.”

Dolph Goldenburg (11:03):

Absolutely. Let’s fast forward a little bit. So how many years were you a for-profit before you started the nonprofit foundation?

Angela Hughey (11:15):

So we launched ONE Community in December of 2008 and we went to file the paperwork for ONE Community Foundation in August of 2011. But we didn’t get the paperwork back stating that we were officially a 501(c)3 for 22 months. We fast tracked it; we paid extra! But there was a clog up at the IRS. So in the interim, we actually started our ONE Community Foundation educational fund over at the Arizona Community Foundation. So we have three arms.

Dolph Goldenburg (11:44):

So it took about three years before you really decided to apply and applied to also have a nonprofit side. What was the impetus for that?

Angela Hughey (11:57):

So we created a multicultural advisory board. We had business members that were allies who came to us and said, “ONE Community’s value proposition is unique. We’ve just never seen an organization like this. Would you consider creating a foundation? We think that with your business connectivity, there could be some sort of a mentorship program for LGBTQ businesses and young leaders. Would you consider this?” And my point was, regardless of tax filing status, you’re asking us to have another business. And so the question is: does it make sense to have two sides of the house, both ONE Community and ONE Community Foundation? Is there an opportunity for both of them to thrive? We went out and asked our business members if they would be supportive of us having a foundation side. Overwhelmingly the answer was yes. And that, again, it wasn’t an either/or, but that the opportunity to invest more in both sides of the house could be there. So we didn’t take the investment from ONE Community and move it to the Foundation. We see that there is the opportunity to have great return on investment on both sides of the house. So that could give us the opportunity to invest more in the overall umbrella that is ONE Community.

Dolph Goldenburg (13:27):

And so just to be clear, this means you fill out two sets of tax forms. You have two sets of books. Your nonprofit has a board. Your for-profit probably does not have a board.

Angela Hughey (13:38):

It has an advisory board.

Dolph Goldenburg (13:40):

Oh, your for-profit also has an advisory board. Okay, now you got to tell us about that.

Angela Hughey (13:44):

Yeah. We have a multicultural advisory board (MAB). We started it in 2011 because we wanted to answer the question: does it make sense for us to have a foundation? We also have a millennial advisory council on the ONE Community side, as well, because we want to be good mentors to our up and coming leaders.

Dolph Goldenburg (14:25):

I absolutely love this, but you’ve only created more questions for me. Your MAB is on the for-profit side of your house. Are those volunteer members, are they paid members?

Angela Hughey (14:39):

They’re volunteers.

Dolph Goldenburg (14:41):

And was it difficult to get them to volunteer for a for-profit?

Angela Hughey (14:45):

No, not at all. I think what matters really is that people care about the organization and the work that the organization is doing. And it’s an advisory board, so it’s not an overly heavy lift. They meet six times a year. We always look for opportunities for our MAB to get involved. ONE Community handles the advocacy work we do, so we give our MAB the opportunity to add their names to that. For example, putting their names on a letter writing campaign against a horrible bill like HB2706. Or we invite them to speaking engagements. But I think, overwhelmingly, folks care about the organization. It’s not about, again, your tax filing status.

Dolph Goldenburg (15:33):

I love this. So got more questions though. Help me understand. So you are the CEO of ONE Community the for-profit corporation. Are you also the CEO of ONE Community Foundation?

Angela Hughey (15:43):

I’m the president of both.

Dolph Goldenburg (15:45):

Talk to me now about your nonprofit board. Is there much overlap between your your nonprofit board and your MAB? What does that look like?

Angela Hughey (15:56):

The foundation board members also sit on the MAB.

Dolph Goldenburg (15:59):

And is it identical? Is so, what does that look like?

Angela Hughey (16:04):

No, the MAB is much larger because I think it’s a joyful and not overly cumbersome lift. It’s just a year to sign up for the MAB and then you just stay on it if you want. It has grown to 30 diverse LGBTQ and allied leaders with just a variety of wonderful professional experiences and backgrounds to really lend their wisdom to the conversations that we have. Then the Foundation board is much smaller because we’re hyper-targeted on the work that we’re doing.

Dolph Goldenburg (16:39):

Are you on the Foundation board as well? And how does that work in terms of conflicts of interest?

Angela Hughey (16:49):

Yes, I am. We have an odd number of board members. And we make sure that if there’s things that I shouldn’t vote on, that I don’t vote on them.

Dolph Goldenburg (16:55):

Totally fair. I love that. So it sounds like your Foundation board, the nonprofit board, has a conflict of interest policy and you figured out how to be involved in the decisions you can be involved in and how you stay out of the ones that you shouldn’t be involved in. That’s awesome. Now, what have been some of the surprising difficulties that you have experienced as a result of having a for-profit side of your house and a nonprofit side of your house?

Angela Hughey (17:19):

People are usually surprised at ONE Community’s for-profit. So we are constantly telling our origin story and how we separate the two sides of the house. And I think that really finding a thoughtful and cohesive way to talk about those things is important. And then remember that we have the UNITY Pledge as well. We thought it was so important when we created it that it has all its own branding and is in its own lane. So for us, from a branding standpoint, how do you talk about the umbrella that is ONE Community? And how do you talk about the three pillars under that umbrella: ONE Community. ONE Community Foundation, and the UNITY Pledge. And so we have a rather large overview document that talks about the programs and events on each side of the house. I think it’s a pretty clear map.

Dolph Goldenburg (18:17):

That’s really awesome. And what have you seen as some of the biggest benefits of having a for-profit and a nonprofit that go together?

Angela Hughey (18:24):

Well, we might be working with a partner that has different kitties. So depending on the year or circumstances, like a pandemic, we might have a partner that has more money in one kitty than they have in another kitty. And so I think it allows our partner organizations the opportunity to invest in a way that is less stressful internally. What we really try and pride ourselves on is an answer for everyone. Everything we do at ONE Community starts with a handshake and a cup of coffee and not making any assumptions. So our belief is that no matter who you are, if you want to be a participant in this conversation, there’s a pathway forward for you. We don’t care what side of the house it’s on. We care about whether or not you want to be a part of the solution.

Dolph Goldenburg (19:30):

As you look back, is there anything you would have done differently around structuring your for-profit and your nonprofit?

Angela Hughey (19:44):

Well, I think there’s just a lot that we didn’t know that we didn’t know. We’re really thankful for our relationship with the Arizona Community Foundation because they have been really great partners. In particular, because there are different rules and challenges on foundation sides than there are with for-profits. We’re also really thankful we have a very good compliance attorney. I think that one of the most important things you can do is ask questions, and I am not afraid to ask a lot of questions. Our attorney says that we’re really great clients because we ask questions before we make the mistakes. I always want to make sure that we’ve got very clear lines on both sides of the house, and we do. And as long as we’re open and transparent and we’re not afraid to ask questions, we’re going to get really good guidance.

Dolph Goldenburg (20:35):

That’s awesome. I love that. So it sounds like the big things that you would do over is get a better sense of the things that you might not have known going into it so you would be better prepared for it.

Angela Hughey (20:48):

Yes. The interesting thing about us, Dolph, is we’ve evolved into all of these things. So ONE Community advocates, but we didn’t start as an advocacy organization. We have evolved into the opportunities that have been presented to us. And so we’re in a constant state of evolution. And I think that really creates an unlimited landscape for us. But again, we are a hybrid organization because we didn’t come out of the box as an advocacy organization. We came out of the box as a media company who believed in treating all people fairly.

Dolph Goldenburg (21:27):

It does seem to me that businesses might interact with ONE Community, your for-profit arm, differently than they do with nonprofits.

Angela Hughey (21:41):

They certainly may. When we started ONE Community over a decade ago, we knew that there just were not a lot of dollars available for minority based organizations, regardless of if they were for-profit or nonprofit. So my whole things was that we had to be really creative in putting together sponsorship opportunities that allowed a business to pull from multiple departments. For example, a business that has X amount available from marketing and Y amount available from community relations can then pool those dollars to purchase our program sponsorship. From our inception, we’ve found a way to work with marketing and community relations departments. Because again, regardless of what side of your tax filing status, you can be doing good in the community. So overwhelmingly, the work that One Community has done has always fostered growth and inclusion in our LGBTQ and allied community. It was about how creative we can be, because there’s not a lot of dollars to work with

Dolph Goldenburg (23:09):

I think you’ve got a big summit this October.

Angela Hughey (23:12):

Yeah. We’re very excited. It’s our UNITY Summit. ONE Community is really good at bringing diverse voices to the stage and setting the tone for really thoughtful, important dialogue. We’re in the midst of a global pandemic that harms minority communities’ health more so than the majority’s. And we’re also living in an unfortunate time where LGBTQ Americans are having their healthcare benefits stripped away under this administration. So there is more fear in being out and authentically who you are when you’re visiting a doctor, not to mention in an emergency care situation. There is also a really robust conversation happening because of the murder of George Floyd and Brianna Taylor and the hundreds of thousands of other people who have lost their lives at the hands of brutality. And the amazing thing about the LGBTQ community is that we are a part of every community. We are every socioeconomic background. We are every culture. We are every religious belief or non-belief. So we have an opportunity to create connectivity and bring people together to have a dialogue about how to move forward. We have done a good job of identifying vulnerabilities that are in front of us as Arizonans and as Americans; we haven’t achieved the perfect union but we can get there when we’re willing to have the difficult dialogue. So ONE Community has a responsibility to bring people together and build this stage where these things can be addressed. That is the UNITY Summit.

Dolph Goldenburg (25:24):

That’s really awesome. Again, I’ve been around tables with you when I was working in Phoenix. And it’s not just the UNITY Summit. I really see you always looking to create opportunities for partners to move policy forward. Because, as you said, we’ve not reached the perfect union, yet. And it’s really clear that neither your for-profit nor your nonprofit is going to rest until we do

Angela Hughey (25:48):

No way! I think that the kids are all right, Dolph. I really think we just have to keep being good mentors to the generations that are coming up behind us. I think we’ve created a pathway for them to help make this state, this country and this world better, but we have to not blow things up before they get here.

Dolph Goldenburg (26:09):

Absolutely. Angela, I could talk with you for another hour about this really unique hybrid that I actually think a lot of organizations, both for-profits and nonprofits, should be thinking about. But I want to make sure that I ask you the off-the-map question. Obviously, Listeners have gotten to know you. They’ve gotten to know your passion already. But I want to ask you about your upbringing. I understand you grew up in Ohio. This is actually not something I knew about you until I was prepping for the interview. And I was not aware that when you were a child, Arabian horses figured pretty prominently in your life.

Angela Hughey (26:46):

They did. I was very fortunate. We grew up in a small one stoplight town in Ohio. It was a beautiful farming community and my parents’ hobby was Arabian horses. So we had a 23 acre ranch. It was just a fantastic way to grow up- on a farm and spending so much time outdoors with these really remarkable animals. That was a really unique and awesome way to grow up.

Dolph Goldenburg (27:26):

And do you still have horses? Do you do anything with horses?

Angela Hughey (27:30):

So I would say horses brought us to the state of Arizona. When I was younger, we would come to Scottsdale for the big Arabian horse shows. My parents thought that Arizona was the land of opportunity. So they packed us up from that 23 acre ranch and we moved to an Arizona subdivision when I was 14 or 15 years old. That was vastly different for me. So I think Arabians brought us to this great state. And it’s a state that I just love and I’m so proud to call my home. We have such joy and are working to make it the best state she can be every day.

Dolph Goldenburg (28:07):

I adore the way you approach the work. I really do like that you are positive, but you’re also really positive about the fact that we’re going to move forward, we’re not going to go backward. Angela, I want to make sure that our Listeners know all of the ways that they can reach out to you. So the first thing I want Listeners to know is that they should absolutely visit onecommunity.co (NOT .com!). There you can learn more about the for-profit side of the house of ONE Community. And if you’re located in Arizona, you can also join ONE Community’s member-based coalition that works to promote diversity, inclusion and equality for all Arizona. You can also learn about their upcoming award ceremony to recognize business and community heroes.

Dolph Goldenburg (29:04):

Visit one communityfoundation.org to learn more about the nonprofit side of the house. You can also visit openaz.co (NOT .com!) to sign that UNITY Pledge if you live in Arizona. Now, even though it’s just for the state of Arizona, it is the largest equality pledge in the country. Businesses and organizations who sign the pledge are offered a complimentary listing on ONE Community’s website. Last of all, Angela mentioned the UNITY Summit. It is coming up from October 12th to October 23rd. I believe there’s going to be about eight sessions that deal with corporate responsibility and create opportunities for partners to move policy forward. Hey, Angela, I am so thrilled to get you on the podcast. Thank you so much.

Angela Hughey (30:13):

Well, Dolph, I can’t thank you enough.

Dolph Goldenburg (30:26):

Thank you. If you were just dreaming about how to expand your nonprofit by creating a for-profit or if you’re a small business owner and dreaming about how to really achieve your vision by adding a nonprofit onto it and you missed those URLs, don’t worry about it. Just go to successfulnonprofits.com and we have all of those URLs in the Show Notes. While you are there, please make sure that you sign up for our weekly email newsletter. We only send it out once a week. We never spam. We never sell your list. It is a great way to make sure that you are staying in touch. And also as long as you are on our website, we are still running the Listener Survey. Obviously, you’re a podcast listener. So please take a few minutes to fill out our Listener Survey. We really work hard to make sure that our guests and our topics meet your needs. You can help us know if we’re doing that and you can also help us know some ways that we can be doing it better, because we can all do our work just a little bit better. That, Dear Listeners, is our show for this week. I hope you have gained some insight to help your nonprofit thrive in a competitive environment.

Dolph Goldenburg (31:44):

I am not an accountant or attorney and neither I nor the Goldenburg Group provide tax legal or accounting advice. This material has been provided for informational purposes only and is not intended to provide and should not be relied on for tax, legal or accounting advice. Always consult a qualified, licensed professional about such matters.

 

**  We have edited this transcript because how you listen is not how you read. If you have a problem with this, remember you got this for free! **

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