The Founder and Personal Finance

There is no greater threat to a Founder’s ability to stay within the non-profit sector than his ability to have personal financial security. This has been true for me, and it is true for just about everyone else in the sector. Ask any Founder of a small NPO and they will tell you how difficult it is to feel financially secure.

Those working in the nonprofit sector devalue ourselves, full stop. In order for you to both build a sustainable organization and stay within the sector in any form at all, you must build a financial safety net just like anyone else. I’m going to give you a few things that you already know, but that you need to be reminded of regularly. If there is any section in this book that you should reread every year, it is this one.

Pay yourself on day-one. Pay yourself anything, even if it’s $100 a month, but start your organization by putting a value on your personal contribution. This is important.

Stop using credit cards. Only use cash or debit cards. You will probably be making very little money for the first few years. Live within your means. Do not start each month by paying for the previous month. Credit cards are evil.

Pay off all your personal debt. Whether it is a student loan or credit card, make a plan to pay them off and stick to it. Aggressively kill that debt, because if you can’t get ahead of it on your NPO salary, then you will be forced to leave the sector.

Save six months of your monthly expenses into an Emergency Fund. You are an entrepreneur first and foremost, and for that reason you need a safety net when the shit hits the fan, and there is no avoiding a shit storm coming your way. If you don’t have this in place then you are at risk of being forced to get a “real job” when the inevitable occurs.

Pay into a retirement fund every month. Whether it is $10, $50 or $100 a month, or 15% of your monthly salary, this is the final stage of personal financial health. Don’t over think this at first, pick a low-fee Index Mutual Fund to start there.

Do these steps linearly. To be clear, don’t start paying into a retirement fund if you are buried in personal credit card debt. Clean up the credit card debt, then get your Emergency Fund created, then begin preparing for your retirement.

A few important notes

I am not a financial advisor, so please do your research. With that said, there is nothing on this short list that isn’t common sense, or that should come as a surprise to you.

Read one personal finance book a year. Do this for yourself and do this for your organization. All of these books say the same thing, but it’s good to remind yourself so that you stay on track.

Above all, remember to pay yourself. Have your Board review your salary on an annual basis. A good Board will push you to grow your salary in tandem with the organization’s growth.

Finally, you are by far the biggest risk to your organization’s long-term success. If you have to suddenly leave because an inevitable financial emergency shows up, then your organization will suffer and possibly fail because of it. Get your house in order so that when trouble does show up you will be prepared.

This is important.