The Problem with Non-Profits – Episode 072

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[00:01] Welcome to the Prosperity Podcast, fresh alternative personal finance talk for independent thinkers who prosper outside of Wall Street. Here’s your host, bestselling author, Kim D.H. Butler, and No BS Money Guy, Todd Strobel. Hey everybody, welcome to another edition of the Prosperity Podcast. This is No BS Money Guy, Todd Strobel. We’re here in 2016 and once again, I have my co-host and bestselling financial author, Kim Butler with us. Welcome, Kim. Thank you, Todd. Happy to be back from the Consumer Electronics Show that was in Las Vegas the first week of January, and boy, some very interesting items of technology there that we’ll get to talk about a little today along with some financial messages.

[00:49] Super. Well, today we’re addressing the concepts of non-profits. And again, some people are going to find this a little bit offensive, but we believe that the concept of non-profits on a lot of levels makes non-sense. You want to elaborate on that? Absolutely. It’s so interesting when you look at results, because that’s really what we should be about as human beings, is getting results. And the non-profits that are out there often do not get the results that the for-profit environments do, because the for-profit environments have essentially the same structure. They’re taking in money, they’re trying to get results. But a for-profit entity has a goal of continuation, and a non-profit entity often has a goal

[01:44] of just giving away the money that it’s gotten. And yes, of course, they’re trying to raise money all the time, but isn’t that the same thing as providing a good or service and getting paid for that? And if you just take an example of Richard Branson, what’s interesting about somebody like that is he continued to provide gifts or donations to his various charitable interests. He started to see that the for-profit companies that were in the space of creating the water wells or providing food for the people or whatever it was that they were trying to do were getting better results than the non-profits. And so he’s gone about starting up all these different businesses that compete in the space that he wants to get results in.

[02:33] And they compete with both for-profit companies and non-profit companies. And it’s so fun to see the results that those types of companies can get, faster, better, cheaper, doing more with less, et cetera, than the non-profits, which often tend to be slower and often actually more expensive in the way that they operate because they tend to be very bureaucratic. So we saw some examples of this inside the Consumer Electronics Show in Las Vegas. So my husband, Todd Langford, goes every year, it’s definitely part of his business to stay up on technology and see what new products are being created. And it’s so fun because there’s all the big companies, you know, the Sonys and the Ford Motor and the various companies that are out there with large, large capability

[03:22] and these huge booths and all kinds of fancy things. And then you go to another area and there’s these smaller booths that, you know, little like 10-foot booths that little medium-sized companies basically pay for. And then there’s another area where you truly have a two-by-two space on the floor where these individual inventors have created their product or their service. It’s usually a physical product and they’re showing it to potential buyers and also potential investors. And it’s really fun to get to see some of the things that are out there. You want to hear about it? Sure. So one of the things that I thought was so cool and is going to be a for-profit company and has started out on Kickstarter is a little vacuum cleaner called HiZero.

[04:15] So the way that you find out about this is go to Kickstarter.com and in the search section up at the top, you put in HiZero, H-I-Z-E-R-O. And this HiZero little vacuum cleaner that’s chargeable vacuums up both water and hard items. So the example that they used was Coke and spaghetti. Literally, they poured Coke on the floor, they put spaghetti noodles on the floor, they ran this thing over it, and it sucked up both the spaghetti noodles and the Coke, and I was a lot of it, and separated those two things. So for recycling, for trash consistency, et cetera, it poured the liquid stuff into one container all inside this tiny little vacuum and the spaghetti noodles inside another container, which you just opened up and then dumped into the

[05:12] garbage can or poured the Coke down the drain. It’s not going to be available until July, but I’ve already bought one. It was 300 bucks. They had a pro version as well for a little bit more. And I’m so excited about it. We have cement floors. They’re a royal pain to keep clean. And this little system operates with a very, very sticky, very squishy kind of roller that just somehow sucked up the liquid and the solids. And this was a company from the Orient. I don’t remember Japan or China, and three or four individual investors, they were so excited about sharing it. It’s just so amazing what technology can do and good minds put together with a product that is meant to serve. That’s what we’re talking about.

[05:58] That’s where profits can be built and service can be provided so much better than in a nonprofit environment where the goals are just different because of the way that the business is built. Well, and from an economic standpoint, which is where we like to approach a lot of things, the money that drives a non-profit has to be originated in a four to profit world, meaning that the investor has to put their money in, a profit is generated, then the donations come from the money that they make there, or it comes from somebody working for a for-profit company, generating income in order to be able to donate to the nonprofit. So in a way, you have a nonprofit that even if they do a fantastic job could be

[06:50] affected greatly if the for-profit sector that the money’s coming from. Like we said, I mean, there’s a lot of the automobile companies that used to be huge donors in a lot of areas that when they’re filing bankruptcy or borrowing money from the government, a lot of the things that they funded as charities no longer able to be funded, even though the charities may have been doing a great job. So, you know, that’s the biggest objection I see is that you skip that because now all of a sudden the people are earning a good rate of return. One, it’s sustainable and two it’s scalable. How do you grow a nonprofit when a for-profit will automatically grow as it serves its marketplace? Well it’s a good question and the neat thing about our first principal

[07:42] prosperity is to get people to think. So if this is getting people to think, then that’s a wonderful thing. And really when you look at the nature of business, it’s out there to solve problems. That should be the order of every business. And I know sometimes we roll our eyes at the problems that our own businesses are there to solve, but isn’t it wonderful that those problems are there and isn’t it wonderful that human beings and their creativity and ingenuity can come up with products like high zero or solutions like the bridge loans or the life settlements or even just using life insurance as a place to store cash or that there’s a health connection that can a product that can do so much better job of helping people stay in shape once they get in shape or

[08:30] there’s just numerous examples out there of creativity and thinking applied to problems. I got to admit the whole time you were talking about your high zero thing and it’s separating, I’m going, please don’t tell me it gets to the point where you can eat it. We just separated the spaghetti out. I put it on my kid’s plate and I gave him this can of Coke that came out of the back of the vacuum cleaner. Oh dear. Now, you know, they are doing that with water, but no, no spaghetti. Well, that’s funny. Well, I have to tell about one other thing that we saw at CES that I just absolutely loved and we saw it there last year and we were able to track one down again this year. And I hinted at it, it’s a machine to help people get in shape,

[09:21] but it’s also to help stay in shape. And I’m just absolutely enamored with it. This is available on the website H N B connection. So H as in Harry and as in Nancy B as in boy connection.com. And it’s not a cheap little guy, but this is a vibra therapy. So these are the machines that shake. And so we’ve dubbed ours the shaker and it has two motors in it. So it shakes both forward, backward, up and down sideways, the whole bit. And it’s just a really amazing, extremely efficient. They recommend 10 minutes a day machine that can either get somebody in shape or more importantly, help people stay in shape and provide a completely different approach to working out. I mean, this is a great example of really thinking.

[10:13] And it’s a great example of providing a service because 10 minutes a day anybody can handle the capability and the thoroughness with which this machine helps your body get the workouts that it needs is incredible. So I’m not connected to either of these products, but HNB connection.com is another fun one to take a look at that was there. And they were there last year at CES as well. And as all good companies do, they’ve even improved their offering. The woman who developed that technology is actually a friend of mine and she has an absolute incredible company, ton of knowledge. And this has been like super tested on athletes, Olympic athletes is where this technology was developed for, because it would literally flush the lymph out of their system,

[11:09] which would allow them to perform better. So part of me, when you’re saying this, thinks, well, didn’t we see Lucy with the belts around her on the Lucy show, like in the fifties, highly different than that, but this is not, I mean, it’s a very well sound technology. So we’d encourage people to check that out. It is interesting. Yes. Lots of good stuff there. So I think there’s other Google sources that you can see some of the other things at the consumer electronics show, but I spent the rest of my time with my sister hiking in the mountains. So two products are about the extent of my ability. My husband happily spent four days there. Super. Well, again, we hope we’ve, you know, maybe even if this greats your nerves a little bit to think, you know,

[11:56] Hey, I really like giving my money away. I don’t think we’re trying to discourage so much people from giving as we’re trying to encourage people to step up, solve problems, make money and show how you can employ other people in your business and make a profit, not hide from the profit while creating a better world for all of us to live in. So anything you want to add, Kim? I do have one more thing to share and that’s that we got to tour Zappos. So my sister and I toured zappos.com, which of course is owned by Amazon. Now Zappos is owned by Tony Shea, who is well known for his book. So we’ll have to include a link to the book and the thing that I learned they are heavily, heavily into their culture and they do everything

[12:48] they can to support and maintain their culture, which is one of extreme customer service and providing value. And they do not have call limit times for their people to help. They do not have commissions or rates or any amount of sales that are required by their people. What’s interesting also is that they require their vendors to meet up with their culture as well. So one example is Zappos, which I had a misunderstanding about them. I thought they were just an online shoe environment. They truly only have about 26 vendors, so they only sell certain brands of shoes. Well, for a while, they used to sell Tom’s shoes. And Tom’s is owned by Blake Mykoski. He has a great book out called Start Something That Matters.

[13:39] And he had a challenge in his business because they grew too fast and they were not providing good value and good service. And so Zappos dropped them because Tom’s was not meeting up with Zappos culture of good service. And Zappos actually has 10 principles. I would encourage anybody to look them up. And they’re a little zany and fun and they’re they’re perfect for Zappos. But everything that they do operates around these 10 principles that define their culture. And if they find a vendor that does not meet up with their culture, they will no longer offer those vendors shoes. Now, as time progressed, Tom’s got their act together. And so Zappos offers Tom’s again. But it’s interesting to me that they’re so into their culture

[14:27] that they chose to eliminate a product because it didn’t have a fit. And that’s frankly how serious we should be about our seven principles of prosperity is that we should not be doing things with our money that don’t fit our principles. Assuming that you as a client agree with those principles, then that’s a lesson for you to learn as well as potentially not doing things with your money that doesn’t fit the principles. Just like Zappos won’t hire anybody, won’t bring in a vendor, won’t even bring in an outside vendor that does not agree with, resonate, use and live by the principles of the Zappos culture. I think that’s fascinating. And we can contrast that to I was involved with a major airlines

[15:13] who has decided in the last five years that they wanted to win the J.D. Power Customer Service Award. And they enabled everybody in their culture to do extreme things to win this award. And as soon as they won the award, they’re like, great, we no longer have to offer this level of customer service. We’re going back to business as usual. Oh, dear, that’s sad. Yeah, we want to develop sustainable environments and whether your culture or your principles or what you’re talking about, whatever you are doing and whether it’s with your money or your health or any of the things that we talk about, you want to do it in a sustainable way. It’s funny, just a quick life insurance example. You know, people want to get in and get out.

[15:58] They want to make payments for a few years and then stop making payments. Why on earth would you stop doing something that’s working? Now, if you’re shifting gears and you’re going to head into a different period of income earning, i.e. retirement or something like that, OK, fine. That’s a different issue. But when you find something that’s good, stay with it. So much of our society today is jumping chip, jumping chip, jumping chip. If we don’t get results right away, we’re on to the next thing. We have to remember that the life insurance products have been around a couple of hundred years, so we need to have that same kind of staying power. Super. Well, this is No BS Money Guy Todd Strobel wrapping up, inviting everybody to go to partners.

[16:38] The number four Prosperity dot com visit our blog over there. Thanks so much, Kim Butler, and take care, everybody. Thank you for listening to the Prosperity podcast to take control of your money and have it work for you. Visit us at partners for Prosperity dot com. If you liked this episode, make sure you subscribe and leave a review.