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The Truth About Nonprofits



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chelsea's with us in fayetteville

arkansas hi chelsea how are you

great how are you doing better than i

deserve what's up

well i am thinking about starting a

non-profit and i'm wondering

at what point if any is it okay to

budget a salary

for myself in the time that i would sit

and doing it

well of course i mean at some point if

you're going to run that full time you

would have to figure that out but let's

back up a step so

so at what stage are you in in in

thinking about starting this you've

already got a business plan an idea

specific audience you're trying to serve

where are you in this process

um mostly in the brainstorming i'm i'm

looking at a

subscription box for parents

to disciple their children like a family

ministry why does it have to be

non-profit

uh i don't know profit scares me

why does profit scare you because uh

because it's a ministry thing yeah but

you know ministries have to make

more money than they spend to stay open

so that nonprofit's a tax

distinction yeah nonprofits still take

in

more than they spend or they close

churches right any kind of ministry has

to bring in

more income than it has expenses or it

closes

so non-profit is not an actual

difference in the uh

in the income versus the expenses it's a

tax

issue it's just how you categorize the

profit is all

the profit is still there if the motive

is ministry

um i run a ministry

right which i'm very appreciative of i

appreciate that but i'm just saying

so the point is non-profit does not make

something holy

right or right or righteous or

better than the greedio capitalist or

something like that it doesn't

so that's all i'm challenging you on

because a non-profit honestly

we i have one i have a foundation and i

have another non-profit that i've

basically wanted to have wound down

because they're more trouble than

they're worth

unless it's the entire model of what

you're going to do because you've got a

board

you don't have control if you run it the

way the irs wants you to run it

um so i'm that's the only reason i'm

pushing back on it

there's nothing wrong with it so let's

say that we go back to your original

question when is it okay

for you to receive that when uh if you

just switch shoes with your donor where

are you going to raise money people

going to give you money for

to cause this to happen right yes

okay so switch shoes with your donor

stand over in the donor shoes look back

at your non-profit

and go okay they brought in a hundred

thousand dollars and she took a 95 000

salary that feels icky right

right yes okay they brought in a hundred

thousand dollars and she took thirty

thousand for her part-time work that

doesn't feel icky to me does it to you

no so that's how you judge it is just

switch moccasins for a minute

and walk a mile on the other guys

moccasins and then you can kind of see

what's going on

um because we you know the ramsey family

foundation we donate

uh lots of money to ministries that we

select each year in the budget

and one of the things we're looking for

is the icky factor

right right dave if i'm not mistaken

correct me if i'm wrong you know more

about this than i do i would

i would assume but isn't there a

suggested percentage

of what an executive director of a

non-profit should make in

in proportion to the amount of money

that the uh non-profit brings in

there probably is but it would probably

change by the size

yes so like if you had something huge

like the red cross

that would be a different person it'd be

much smaller it's proportion it

proportions if you had a small

non-profit it would usually be a larger

percentage would go to

staff yeah and so forth so so i

i would just say there's two things to

look at one is just don't

you know from a standpoint of donors

coming in

don't violate the icky factor and if

someone challenges you on that then

they're just not one of your donors

that's okay because you felt good about

the amount

that you had as a percentage of the

overall

uh for this coming budget year you know

whatever that is

then the second thing is is ken and i

are both telling you pan back a little

bit

and rethink why a non-profit

because if you're if you're doing this

ministry to kids

um and you know you had uh

a percentage of let's say you want to do

this for

kids that are underprivileged

financially and

kids that are privileged financially

then you might take

some percentage of the ones you sell

and use it to donate like like uh bomba

socks

every time you buy a pair of socks from

bombas they give a pair of socks to the

homeless

you see what i'm doing but they're but

they're for profit

they're for profit and they've given

away two million pairs of socks to

homeless

pretty strong ministry and i've got

bomba socks on at this moment they used

to be an advertiser for us here that's

how i got to meet the guys and for you

you met him in new york right yeah

absolutely and i have got a pair on as

well so that's uh

you know who who did that that's damon

johnson damon john invested in them from

the shark tank

speakers here's the thing uh chelsea

dave's exactly exactly right

it's about the mission for you it's not

about the classification

i would do a for-profit i'd keep it

clean and simple you just have less work

that you have to just to even launch a

non-profit dave as you know

before you've even really kind of proven

the model there's a lot of paperwork a

lot of work you got to do

i still think it's necessary in this

case yeah but do business for good

it's okay yeah it's okay to to do it

either way

sure nothing wrong with either way i

just i want our

um the people out there that are

thinking about things like this to to

do two things one is understand

non-profit

is not in the bible

it's not it's nowhere in the bible

it's a it's an irs tax code

so if the irs has to anoint you wholly

you're screwed

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so you you know you decide whether

you're going to be holy or not based on

the way you behave the way you serve

the weight whether you're greedy whether

you're generous

how you act and how you behave not

whether or not you make a profit

and so this thing from the communist and

socialist

college professors that have taught

everyone that capitalism is evil

has got to stop because it's accurate

it's inaccurate

biblically it's an accurate in truth

there are wonderful companies that are

for profit to do a great job again not

saying

that there's anything wrong with doing a

not for profit

i've got a good friend uh craig groschel

bobby grunwald over at life church

they obviously life church is a

non-profit and they have the

largest bible app one of the largest

apps of all of apple everyone's got it

on their phone

and it's a complete non-profit they give

it away for free

they put money into it it loses money

every year it's called you version by

boy app

they've got 500 million half a billion

people around the world using this bible

app

completely free and completely donated

that thing

where it to be commercial would be worth

billions and billions of dollars

as a company and that asset is owned by

that church

and it is an asset even though they give

it away for free and it doesn't make any

money

because 500 million people looking at

anything is an asset

in this world today so that's a

non-profit that's done extremely well

and run with excellence they're friends

of ours

we participate providing content ramsey

content to the

new version bible app they're wonderful

people they they're professional

in how they operate the thing it's not

half but run like some non-profits are

or some ministries are but um

so there's an example of when it's done

right chelsea like you want to do it

that's cool

but if you gonna do the kits to the kids

and it's gonna be for profit you're to

collect money from the

customer it does present you with

another challenge you have to provide

value

that's exactly and it gives you a

wake-up call on that

too so it's a great discussion i

discussed a long time

with ramsey when we were starting this

whether it was going to be

not-for-profit

and that's how i i kind of had to

germinate on all these philosophies and

really think through

is is it is it as a christian is it okay

to make a profit i had to go through

those things

and as my friend rabbi lapin says that

when you serve people well

they give you certificates of

appreciation with presidents faces on

them

they're green and the way that we say

thank you

is with a tip yeah thank you for serving

me

thank you and i don't think anything

about it i i'm

honored to give a great server a great

tip

i don't think they're a greedy

capitalist no

i'm glad they got it