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Paid in full invoice template for non-profit organizations

can you take a salary as a non-profit founder i'm going to answer that question in this video let's get into it [Music] hey all this is tiffany with boston the budget i hope new and small nonprofits get up and running if you need help or know someone who needs help with their non-profit subscribe to this channel because i drop a video every week okay so i'm gonna answer this question pretty quickly but i want you to stay with me because there are a bunch of caveats and things you need to understand so can you take a salary as a non-profit founder yes you can but there are some things that you need to consider so let's talk about that so first of all you need to understand the difference between staff and board okay so ideally in a non-profit organization there's a fine line between the board directors and the staff so the board provides oversight over the organization as a whole and they are legally responsible for the organization and there are some things that they pay attention to they provide oversight over the executive director they manage the finances and make sure that the organization is basically following the rules staff deal with the day-to-day work they make sure that the organization and the work you do with clients or your participants is happening is functioning right those are two different roles ideally in a non-profit the board is separate from the staff they don't do the same thing so if that's the case then the board don't typically get paid for the work that they do because they're not necessarily considered staff but the staff do because they're performing a job and they're getting compensated for the job that they have so if you want a little bit more explanation of can board members be paid i have another video that i'll put in the description box below where i answer that question um the answer is yes but again more caveats so check out that video make sure you look at that video but i want to go a little bit deeper with that point so you can understand how nonprofits actually function and how it actually plays out so i talk a lot in my videos about different phases of nonprofits so nonprofits go through development they have the infancy stage and then the childhood and adolescence and so on and so on as a new nonprofit you're in your infancy stage so the reality is when you are very new the board and the staff are essentially doing the same thing simply because you probably don't have the money to pay staff and the board are the people who have to get the organization up and running you have to do work right you have to prove that what you're doing is making an impact so you have to start the work so a lot of times the board and the staff are the same thing the board is doing the actual work so that line is very very blurred between the board and staff eventually as you start to grow up in your organization there's a bigger distinction and that line gets a lot clearer but in the beginning it's completely reasonable that the board is doing some of the functions of staff perfect example is a lot of nonprofit founders start on the board but they know eventually they're going to phase into the executive director position but because they're on the board they're doing a lot of the work they're holding meetings or doing the support groups with the clients or they're delivering meals and all that kind of stuff so it's completely reasonable that non-profits do that in the beginning but ideally you want a separation from that once you grow up once you know you are up and rolling and you have a pretty substantial budget the board should stay out of the day-to-day work and do their oversight duties and make sure the budget is straight and the financing is good and the staff should be able to function to be able to serve the organization and serve your clients so i just wanted to get that distinction out of the way because as you are if you are a board member in the beginning and you want to get paid because you're also doing the work i don't recommend that you do that because board members typically don't get paid and you may be confused because you're like well i'm doing the work why would i get paid ideally you want to transition into a staff position and then once you transition into the staff position then you can be paid if you transition from the board to if you're the founder you want to transition from the board to staff the board have to vote on that they have to establish that you're going to be the executive director they need to document the process they chose to select you they need to document the process for identifying what your pay will be and they need to make sure it's reasonable compensation for the type of work you do so they're going to look at the industry that you're in to see what the comparable salaries are and also they should consider where you are in your development you're not going to go from zero to 70 000 a year unless you've prepared for that as an organization so they also need to be mindful of that and if you're on the board before you transition you're not a part of that vote you're not a part of that decision so that it can be completely independent independent and fair okay so say that you're a non-profit founder and you want now want to transition to be a staff person here's a couple more things you need to think about are you going to transition to be an independent contractor or an employee now the irs has very clear definitions on the difference and you need to be clear what the difference is because it has an impact on your budget if you are functioning as an employee then the organization has to pay payroll taxes for you that includes social security tax medicare unemployment tax all that tax has to be paid for you okay as an independent contractor typically the organization will not pay that you have to pay your own self-employment tax you have to get a 1099 and pay tax on the income that they gave you typically executive directors aren't really they don't really function as independent contractors right so the rule the way the irs determines the difference is if you can control and direct the work so if you have complete control and direction over the results and over the work that you're doing you're typically an independent contractor you would bill and invoice a certain way and then get paid that way but a lot of executive directors function as employees and so that means they would have to get payroll tax and all of that so you need to make that decision about what you're transitioning to because it has an impact on the budget so before you sign off this video i just want to give you a couple more things to think about your next question may be okay so i know that i can be paid i can transition to be executive director or even another position how do i do that so i just want to keep want you to keep in mind two things first of all if you want to get paid as an executive director and you want to phase into that write it in your budget so if you know for the first year you want to get paid twenty five thousand dollars the board has voted on that put it in your budget because then that holds you accountable for raising it if you don't call it out if you don't name it it's not going to happen there's a huge difference between if your budget is 75 000 and then you put in your salary and now your budget is a hundred thousand you are now responsible for making up as an organization that's 25 000 in order to make payroll right and you should also have a cushion so that you don't have any interruptions in payroll so you need to be actually ready to transition into a salary roll you don't want to rush into this i recommend that you start putting money away you start stashing money in a little cushion so that you can support payroll when it's time for you to fully transition to be an employee if you are a non-profit founder the other thing i want you to consider when you're trying to pay yourself a salary is the type of money that you raise now typically if you're getting money from grants they tend to be more restrictive so they will dictate how you can spend that money a lot of times if you want to transition to be an executive director you're doing a lot of admin work admin work means you're doing things to support the functioning of the overall organization it's not necessarily dependent on a program but most grants most that you'll find specifically cater to a program and only want you to spend money for that program as an executive director you may work a little bit on the program but you're also working on accounting and hr and supervision and all that kind of stuff that can't necessarily be tied to the program so keep in mind that you need to raise unrestricted funding to support your salary if that type of money isn't in your fundraising plan you're less likely to be able to cover your salary because you're going to be doing a lot of admin work in that executive director role so just be mindful of the type of money that you want to raise when you want to cover your salary because that really does matter so thank you so much for watching if you have questions about how to start your non-profit and you want to kind of get going with your nonprofit check out my non-profit startup workbook it guides you through all the different phases of the development of your nonprofit so you can be prepared to build a strong nonprofit also if you have questions for me feel free to visit me at .bostonbudget.com i'll see you in the next video you