This headline may seem misleading. So allow me to begin with an obvious step-back. Paying dues, making a contribution or sponsoring an event for a non-profit is not part of the headline.
It seems crazy but I have recently come into two gentlemen, each of significantly different backgrounds age bracket and and demographics, ask me about their thoughts on investing on a Non-Profit. I will obviously protect their names and thought-process but I would describe both gentlemen as serial entrepreneurs. Neither with a background in how non-profits work but each with disposable incomes.
Now that I have some time on hand, due to Covid-19, I will describe how THEY wanted it to work. The second gentlemen's situation is way more complicated, so I'll focus on Gentlemen 1. Lets call him, Joe. His name isn't really Joe but Joe seems generic enough to use for this lesson.
Joe and I have known each other for a little more than 5 years. I like Joe a lot. He is interesting, intriguing, hard-working, great family man and pretty successful. He knows I help non-profits so he asked me to join him for the day to explore a non-profit, he has "gotten involved with." Earlier this year, I took a ride with him and learned about a non-profit dedicated to getting drug/ substance abuse users back on their feet. The non-profit not only helps those in recovery but offers them low-cost housing and helps them get jobs, etc. The organization itself is really legit and doing great work.
My thought process was that Joe, who by the way is/was not a drug user, was simply taken in by the cause and wanted to make a donation or be a part of their board. As it turns out, Joe realized a legal but very profitable way to be a part of the organization. The housing units each have a common area where doctors and medical professionals would help those part of the program. For each person they see, their is a monetary government payment. received. They people truly need help, the organization was legit but investing in the sickness of others does not owner the spirit of non-profits.
As it turns out Joe had given the founders of this organization a pretty sizable check (5 digits +). His gamble was he would increase that 10X. Joe wanted me to help this 501C(3) get better organized and motivated. It was the first I ever heard of this until a month later when another gentlemen, Steve (not really his name but sounds generic) enough had an even more convoluted proposition to profit from a non-profit. Both of them are equally good people and in Joe's case, I encouraged him to get his money back or to turn it into a tax deducted gift (maybe start an endowment)..
This goes without saying but no one is profiting in non-profits. Hence the name. Certainly there are staff members and professionals getting paid to run these organizations but there are no stock options and personal gain. Its actually why I argue against commissioned bonuses for membership benchmarks. It defeats the good faith operational mission. Its also why I argue against paid board positions. Are you emotionally invested in the cause or are you only doing this for money.
Please do not fall into these traps. Non-profits of every tax exemption code is EXTREMELY transparent, heavily regulated and often scrutinized. Its actually bizarre to me that past US presidents begin charities as it really exposes them. That's a story for another time. The best investment an entrepreneur can make is to find a a FOR profit company needing an angel investor in exchange for viable and credible stock options.