We believe a charity should operate like a for-profit business. The main difference should be that the focus of the organization and the metrics (key data), which are being managed, should highlight the number of “needy” stakeholders being well served rather than the number of dollars of profits.
In business, one only has to count cash to know how well they are doing, which is fairly easy. To help people other than yourself in a meaningful way is much harder to address and quantify, but it should be approached with equal vigor.
Charities do not distribute profits or have stock shares. All of what ordinarily would be profit from their business-like activities should be redirected back into their nonprofit projects. In a properly run 501c3 charity, there are generally staff members who receive modest salaries and other ordinary business expenses, but high salaries and expenses are frowned upon, and even illegal in some cases.
Other sorts of charities, such as churches, associations and political organizations, fall into different tax classes, whereas here, we are focused on fully tax-exempt 501c3 organizations, which are essentially charitable businesses whose monies flow internally after being raised or earned. There are no shareholders, dividends, or stock sales in a 501c3.
No one should directly profit from charitable activities, yet there are abhorrent cases where there have been executive excess at the expense of charity stakeholders and society. One high profile example is the recent discovery that an executive at United Way was misappropriating funds. This is an anomaly and not in the spirit of charity. Cases like this should be prosecuted to the full extent of the law. Furthermore, to use charitable donations on anything other than direct charitable actions and modest expenses (to run and grow an organization) is a moral violation.
Some corporate vendors who serve charities naturally profit since they aren’t nonprofit organizations, but their profits should be limited by managers on both sides of the transaction.
With our 501c3 charity, Grassroots.org, we are using a variety of strategies to grow and expand. In the same way as a business, we seek leverage, but instead of money, we count how many people or groups are positively affected by our actions. The more people we have helped, the better we’ve done.
One way we try to gain leverage is by encouraging individual volunteers and businesses to help us with their time and donations of services. In this way, Grassroots.org requires less cash to develop and can therefore help more people faster. In other words, we can successfully meet our “business” goals by “employing” volunteers, and instead of buying software and services, they are often donated.
We also sign people up for our newsletters, blogs and discussion forums to spread knowledge of the free resources and social messages we promote. Since we usually deliver information electronically to a broad audience, we are able to reach a wide population immediately for little money.
Once we have contacted our targets, we work to sign them up as new “members.” Since we have a mission that is compatible with many people’s personal interests, the individuals and businesses we target often have a positive predisposition towards our programs. Our prospective members essentially serve the same role as “sales prospects” to a traditional business.
To entice them further to be our members—and more importantly, so we can help them—we give away a variety of free, valuable services. In exchange, our friends and business partners are encouraged to link their web sites to ours. This helps to expand the ever-increasing network of visitors to our site, and the number of people who continually see our logo, just like regular business branding.
The increasing traffic to our website generates more people who can then sign up for our newsletters, post messages on our discussion forums, and volunteer to help our clients with their missions, which creates a virtuous business cycle that leads to success.
These same general processes can be applied to your business in order to gain a critical mass of prospects and customers for your products and services.
In short, businesses and charities should basically be run the same. The main differences are in how you manage money and how you count success.
Although this is a business book, we truly believe that a life with family and charity as the core is better than a life focused on business. Our goal is to teach you how to get the best out of both. We want you and as many other people, companies, and organizations as possible to produce as much as possible, so more spare money and time is created to help other people and causes when you aren’t spending quality time with family and friends.
Some people require extra motivation to make more money than what is needed for their family. For those people, it is important that they learn to appreciate their ability to help the helpless by choosing a charity or cause that can make a real difference in the world.
If you visit Grassroots.org and MakeChangeTrust.org, you will read about some of the other critical, time-sensitive global issues we seek to address. The point is you can help work on these issues, or other issues that touch you personally, as soon as you have some extra time and money.
If you need even more convincing as to why you should optimize your work product, consider how extra income can help you send your kids to better colleges, or allow you to take an extra week per year of vacation, or renovate part of your home, or even allow you to buy a new iPhone—if that’s your thing.
Once you get past the thrill of attaining material possessions, give away as much as you can safely afford to your favorite nonprofits or put it in a charitable trust, donor advised fund or foundation for later.
For a person who successfully follows our business advice and scores big, we recommend committing 15-30% of your wealth to nonprofit interests and about 50% of your available time. Since we are only recommending you do this after you are wealthy, it couldn’t hurt you and will definitely give your life extra meaning.
If you create extra financial padding, you can essentially buy your time back, and if you desire, donate some spare time and cash to whichever charities you choose.