Paying Yourself at Your Not-for-Profit

Love or Money PicI love anyone who is motivated and altruistic enough to start a not-for-profit. Starting any business is hard work, but deciding to create a “business’ that you will never be able to sell or reap profits from takes a special kind of dedication. Starting and running a not-for-profit can take up tons of time and energy totaling more than 40 hours a week.  It is no surprise that many people who start NFPs eventually want to earn a salary. The creator often has plans to become the Executive Director. Here are some guidelines you should keep in mind if you want the not-for-profit you created to eventually hire you.

First: Your Board of Directors should be made up of volunteers. This means if you want to be on the Board of Directors (the group responsible for making decisions about who the executive director should be and making strategic decisions about the organization) you should not plan on taking a salary.

Second: If you are on staff you WILL have to give up some control to the Board. The group of people that make up the Board of Directors is running the organization.   Technically, they are the boss of the organization’s Executive Director. They should be setting the ED’s salary and providing overall direction for the organization.

Third: You shouldn’t ever receive a crazy high salary. U.S. law sets out that tax exempt organizations should pay “reasonable compensation’ to its employees and executives. The market determines what is reasonable, so before setting a salary for yourself you should look into what other organizations in your field pay their executives.   Yes, this is an imprecise guideline, but it is something to keep in mind.

Final thoughts: Because of the public nature of a not-for-profit, the creator has to give up some control. Don’t be surprised when the time comes to pick your initial Board to hear requests that the Executive Director not be listed as a Board member. Starting from a place where roles are clearly delineated makes the transitions that much easier as your organization grows.

Five Things to Ask for When You Can’t Get More Money

Ripped DollarThe first thing everyone wants is more money.  I don’t want to discourage anyone from asking outright for a larger salary or an increased hourly rate.  After all, I have never heard of anyone reneging on an initial offer just because a contractor or an employee asks for more money.

If the other party is not willing to talk about more money, don’t despair.  There are other things you can ask for that can be almost as good as a larger paycheck.

Here are five things to consider asking for:

1)   More Vacation Time – This is an obvious ask and doesn’t require any additional, up-front finances from the company.

2)   Professional Development and Education – Ask the company to cover you for the time and cost to take a class that interests you.  Knowing more about a topic usually makes you better at your job.  This could be anything from a public speaking seminar to computer programming classes to Spanish lessons.  If you are in New York City check out Smartt Talk, General Assembly, or Brooklyn Brainery to get some inspiration.

3)   Transportation or Travel Expenses – Your employer could offer to cover the cost of your daily commute or reimburse you for business travel.

4)   Special Provisions – The beauty of this is that it can be ANYTHING.  Picture your ideal job – Do you wish you could travel more or less? Do you want a nicer office? A company car? Something else that those lucky people at Google get?  Propose the wild idea and see how the other party responds.

5)   A Scheduled Time to Re-Visit the Issue – If you aren’t completely satisfied, ask the company to give you a date in three or six months to discuss your negotiating points again. Regular and more frequent meetings mean more face time with the people that matter and more opportunities to talk up your skills and hard work.

Have you ever been pleasantly surprised when asking for more at a year-end review?  I would love to hear how the negotiations went!

Clarify Contracts by Losing the “Legal-ese”

bill of rights scrollI have been reviewing a number of contracts and releases lately.  Although the subject matters of each of them have varied, I have noticed they all share the common denominator of using confusing language.  I want to use this blog post to make a plea to businesses and lawyers alike to STOP with the long sentences and giant words.  Confusing terms and ambiguities don’t make your contract better or more important, they only serve to confuse readers and participants.  I always make an effort to simplify my contracts by following these rules whenever possible.

1) Keep sentences short and direct.  Instead of saying “NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:”  Say simply: “The Parties agree as follows:”  It saves ink, it saves time, it saves sanity.

2) Use the active voice, and not the passive voice, whenever possible.  This makes it very clear who is supposed to be doing something and who she is doing it for.

3) Definitions are your friends!  If a term can be construed in more than one way, and it is important to you  or the other party how that is defined, clearly state what that term means in a definition section.  This leads to clarity, something all contracts need more of.

If you have been asked to sign something you don’t understand, don’t hesitate to ask questions of the other party.  Contracts can easily be marked up on the spot with a simple cross out and margin notes.  It doesn’t have to go back and forth for a thousand revisions. Don’t be intimidated by the legal-ese that often shows up.  Instead, ask for clarification and make sure you know what you are agreeing to before signing on the bottom line.

How to Use Summer Slow Down to Your Advantage

256Summer months can mean down time for many individuals and businesses.  This slow down gives you a great opportunity to re-focus.   Take this time to pull out your company’s written materials to review and update them.  Here is a list of some documents you might want to review:

Articles of Organization/Articles of Incorporation

This is the document you file with the state.  It sets out things like your name, business address and purpose.  Has your company moved offices or begun using a different name?  If so, update this record and notify the state.

Operating Agreement/By-laws

In New York, this isn’t filed with the state, so people often tend to draft it and forget about it.  Forgetting it would be a mistake though because this document can prove incredibly valuable when issues arise.  Use your extra summer time to re-read your initial plans for the business and update the document accordingly.  Have you added more partners? Have you decided to invest your profits differently?  Look over the provisions in this document carefully and see if it still serves your current business model.

Service/Employee Contracts

Business owners can often get surprised when an employee approaches asking for a review of his or her contract.  Get ahead of the game and pull out contracts to see where an employee stands BEFORE she asks for something more.  Are you an employee with a contract now?  Take the time to review your contracts and see what you like and don’t like.  Reviewing annual contracts will highlight potential flaws and give you an opportunity to figure out where you can improve.  Do you have someone working closely with you that you never asked to sign a confidentiality agreement?  Has an employee with poor performance been working under an expired contract?  Looking at all of these documents when there is no pressure means you can re-negotiate with less pressure as well.

Use the summer down time to your advantage.  Take the time to locate and review often forgotten documents.  Give them a quick rundown and be sure you like where you stand.  Your productivity and sanity will be greatly improved in the more busy months ahead.

Want Ad Abuses

Most micro and small businesses do not have the resources for a full-time in house counsel.  This means the business owners need to be that much more vigilant to ensure that the actions the business takes comply with state and federal laws.  If your small business is planning on posting a want advertisement, there are a few points you should be aware of in regards to possible discrimination and job security.

The advertisement should be worded so that it does not appear to discriminate against any protected class.  At first this seems like something that can be done obviously, and in most cases it can, but some wording that suggests discrimination is still prevalent in advertisements today.  Protected classes include favoring: men over women (or vice versa); blacks over whites; or one age group over another.  The age group is one that is often forgotten about by many small businesses that operate without the advise of a lawyer.  To comply with the discrimination laws, an advertisement should not contain phrases such as “age 25 to 35 preferred,” “recent college graduate,” or “recent college graduate” as these phrases may suggest the business is discriminating against older persons.

Want ads can also inadvertently suggest the job is more secure than it is.  Many employers post ads that may give employees more rights by using phrases such as “long-term growth,” “permanent,” “secure,” or “career path.”  Phrases like these may create an inference that the employer is offering a job that cannot be terminated except for notice or cause even when the employer has no intention of giving workers added job security.

The best advise is to avoid copying and pasting a similar business’ advertisement until you know what all of the phrases and wording within the ad imply.