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Invoice model for NPOs

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 [Music] 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