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My name is Joshua Sheets. I'm your host. Today is Thursday, April 27, 2023. And today I'm going to tell you why I don't like not-for-profit organizations, why I'm generally significantly biased against being involved with not-for-profit organizations. I'm biased against being involved with the founding of not-for-profit organizations. I'm against being involved generally with the operation of not-for-profit organizations.

And I'm against being involved in giving to or donating to not-for-profit organizations. Now, hopefully I got your attention with a little bit of salacious sounding opinions. I'm going to justify these opinions. And I think you'll walk away from today's show with something useful to think about to also help you to be skeptical of being involved with not-for-profit organizations.

I'm not going to say that there is no place for them. I am going to emphasize the fact that they're often overdone. And I want to break them apart. We're going to break them apart on two levels. The first level is not-for-profit. The second level is organization. And while you may continue to be involved in some way, shape, or form with not-for-profit organizations after this show, I want to help you be skeptical of that.

Let's begin with what I believe is the most important criticism of not-for-profit organizations. Not-for-profit organizations are not in any way morally superior to for-profit organizations. And you should not judge them or even be biased in the direction of thinking that a not-for-profit organization is morally superior. I often hear this in my work as a financial planner.

Somebody says, "Well, you know, I really want to do good in the world. So I think I'm going to go and join some non-profit organization and really give back." I think non-profit organizations are rightfully viewed skeptically. The first reaction that we should have to not-for-profit organizations is that these organizations are leeches on society.

Think about it. If they can't do enough good in the world such that people actually want to buy their products, if they can't do enough good in the world such that they can actually create enough profit to be sustainable, this organization is probably a leech. And that's the bias that we should begin from.

That would lead us quickly to the question, "Well, Joshua, does that mean that profit is the right marker for everything important? Does profit mean that's the marker for doing good?" No. No, on both levels. And let me state it unequivocally clearly. No. There are two aspects in which that opinion is wrong.

Profit is not the sign, the one true sign, that an organization is morally right and should be respected. There are many activities and industries that are profitable, financially speaking, but that are utterly destructive. Enter global, international arms manufacturing and distribution. Enter pornography. Enter any number of companies. You just fill it in yourself.

But there are lots and lots of things that are profitable, and yet are morally reprehensible and cost us dramatically. So profit is not the marker that something is fundamentally good. In addition, not all important work is compensated in terms of money. And in fact, for some of the most important work, money often just gets in the way.

Your next-door neighbor died a couple months ago, and you look out the window and you see that his elderly widow is struggling to get the lawnmower out of the garage and back to go out and mow the lawn that's getting a little bit too tall. Should you trot across to your next-door neighbor and say, "Hey, listen, if you'll pay me 50 bucks a week, I'll mow your lawn for you." Or should you just simply go out and take your lawnmower and mow her lawn and say, "Please, go back inside.

I'll take care of it." Obviously, the second one is a vastly superior moral choice to make. So why do I say that not-for-profit organizations are rightfully viewed first and foremost as leeches? Well, profit may not be a perfect indicator of moral rectitude in the affairs of a company. But if there is a free market, and if a company is engaged in honest competition, and if a company's profits are generated from the free will decisions of customers to buy that company's product or service, then profit is an indication that the company is doing something that the customers value.

Profit is an indication that the company is bringing value to the marketplace. So while we do need additional screens to understand if this is true value, real value, or if it's just financial value, we do also need the screen of financial value. Financial value indicates that a company is doing something that people value.

As long as there is no coercion or control or manipulation in the marketplace, then profits are a sign that the company is doing something that people want. That's a very important first screen. Profit also implies some measure of sustainability. When a company has profits, it implies that there is a model here in which the company can continue to deliver that value.

That the price that customers are willing to pay for the product or service is in excess of the raw materials and the labor and the inputs into that process. That's what profit means. In addition, if there is profit, there's a good indication that the company itself may be sustainable.

I use the term "leech" intentionally because leeches are things that cannot survive on their own. If you detach a leech from its host, the host that it's sucking on, the leech is going to die eventually for lack of food. It only lives if it has a host to suck on.

Compare that model with the host. The host that can go out and find the organism. Let's say it's a human being. A human being that can go out, can find food, and can generate things and do things. When you have a not-for-profit organization that relies upon donations in order for it to do its work, then it is by definition unsustainable.

If the donations stop, it cannot sustain its operations. It is not a self-perpetuating organism. Rather, it's something that is entirely dependent upon other people for its existence. And this means that a lot of the problems that we'd like to solve, that many people try to solve with a not-for-profit organization, can't be fully solved because there is no ability of these things to replicate.

Now, I'm touching on some things that are well-known in the world of international aid and charity, etc., and nobody has perfect answers. Because while I used a little bit of a sensationalistic approach to try to get you interested, the truth is that not-for-profit organizations might be necessary. But it's important that we're skeptical of them in order to not make issues in the marketplace.

Those who are involved in aid, charity, etc. often understand that when you are involved in charity, you can very easily do much more harm than good. And if you think about models that include profit, those models often face certain restraints that limit the harm they do in favor of good.

I want to illustrate this to you with two practical examples that make this the most clear. I want you to show you how simply giving things, simple charity, while it seems fantastic, can have unintended harmful consequences. I'm going to play the audio for you from a video here from an organization called Poverty Cure that works in this area.

I'll link to the actual video in the show notes. In the last few decades, we've seen increased awareness of extreme poverty. Celebrity campaigns like Live Aid, Make Poverty History, and the One Campaign have made great strides to raise awareness and get people involved in helping the poor. We've seen the growth of social entrepreneurship, nonprofits, and NGOs.

We've sent trillions of dollars to the developing world, and thousands of people have volunteered and dedicated their lives to working with the poor. Some of these things have done a lot of good. Unfortunately, others haven't had the positive effect that we're hoped for. This brings us to another core focus of this series.

How do we connect our good intentions and desire to help with things that actually work? The rock star Bob Geldof, who's worked with Bono and other celebrities to increase awareness about extreme poverty, once said, "We need to do something, even if it doesn't work." Now, Geldof's commitment and his advocacy for the poor is an example for us, but notice that his remark overlooks a possibility.

The "something" that we do may actually cause harm. Our good intentions may have unintended consequences. I had my eyes opened to this through a friendship with Jean. Jean was a friend in Rwanda, and he told me the story that after the Rwandan genocide, that he had a church from Atlanta that started sending over eggs and ended up just distributing eggs in a small community outside of Kigali.

This seems like a great thing to do, right? The church wanted to help after the genocide, but did it in a way that was not just about helping the poor? But Jean, a few years before, had started a small egg business himself. He put this investment in all the materials that he needed to start this egg business.

His business was starting to grow. It was starting to take off. And then all of a sudden, in one summer, there became this surplus of eggs that were flooding the market in his area. And so this desire that the church had to really take care of a need, it did take care of a need, but the problem is that it put Jean out of business.

He ended up selling his hens, and then the next year, the church decided to focus its attention to somewhere else in the world. Jean was out of business. No one else was there providing eggs. And so they had to bring the eggs in from another community. So this desire to help in that community, according to Jean, actually had a long-term negative impact on that community.

When I was growing up, we didn't have secondhand clothing from Europe and the U.S. and Canada in Kenya. My mother took me to a store, and she bought me a beautiful T-shirt that said "Made in Kenya." Kenya cotton. Today, I would struggle to find a T-shirt like that for my daughter.

Why? Because the influx of secondhand clothing that makes its way here from Europe and the U.S. and Canada has negatively impacted on our textile industry in Kenya. Massive layoffs in the '80s and the '90s. Factories that shut down. What happened to our cotton farms? When I was growing up in this country, we could have bought cotton in varieties and types that are incomparable.

But that's all gone because of the impact, the negative impact, of the upper-low imports at a secondhand level. Christians have a natural commitment to fighting poverty. That comes from the foundation of Christian beliefs. But that motivation must be allied with being smart. The world is complicated. And so, the actions we take, we must be confident that they're going to help and not make things worse.

So if you're interested in that, it's called "Poverty Cure." There's a series on YouTube. I'll link to that short clip that is there. But I just want to focus on those stories that were told. Because that egg example, it's such a simple example and yet demonstrates the point of how profit can cause sustainable solutions to be provided.

But not-profit can often destroy the thing that you're trying to accomplish. If that church in that story from Rwanda, if that church in Atlanta that had had eggs, had not sent those eggs from Atlanta to Rwanda, however they did that, I assume the story is true, it's being told secondhand, it's hard to imagine how they're shipping eggs in.

But if they had just sent money instead, if they had simply given money to the local people in the village they were trying to help, it would have had a transformative impact that would have been much more for good than for bad. Why? Well, here's what might have happened.

Or conjecture, but here's what might have happened. Number one, if they'd sent money to people, then those people would have been able to use that money to buy the things that they wanted and needed. And that might have included eggs, but it might have included other things as well.

That money would be spent in the local community, thus enriching the entrepreneurs who are trying to meet the needs within that local community. And so the entrepreneurs who are selling eggs would be able to say, "Hey, we're selling more eggs because there's more money in the community." Now the money coming in would have created distortions, but the entrepreneurs would have looked at that and they would have measured and they would have increased the size of their flocks because they're selling more eggs.

Those eggs created profit for the entrepreneur, which incentivizes the entrepreneur to expand his operation and provide more eggs. Then at a later date, even if the money flows disappear and there's no more money coming in, there would be more of a supply of the product that is necessary, which is eggs in the community.

The prices would have come down. They probably wouldn't have collapsed. But even if they had collapsed, all of the infrastructure would still have been there. The farmer selling eggs would have had a sale on eggs. If there wasn't enough money in the local community to buy those eggs, then he would have slaughtered half of his flock and at least the flock would still be there, so eggs are still available.

The profit that was there for the egg entrepreneur is an indicator of success for him and he's able to provide eggs for the community. But when you take the profit out and ship in eggs by an international not-for-profit, or in this case a church from the United States, you destroy the local infrastructure completely unmeaningly.

That can happen in other areas, as the lady from Kenya talked about, with the destruction of the textile manufacturer. So when you bring in aid in some way, or when you start a not-for-profit organization, you can carelessly destroy very delicate systems without having any understanding of what's actually happening.

And this is something that has happened throughout our lifetimes. We've done this at all levels of our life and of our society. We wade into a virgin forest and we immediately start chopping down trees to put in monocrop agriculture. And then all of a sudden we wonder, "Why is there no rain coming down?" Well, trees make rain.

And so we didn't understand the fact that trees make rain in the first place. We went in, we chopped them down, now we have a drought, now we can't grow anything, so we move on somewhere else and then we have a destroyed ecosystem behind us. So we wade into delicate, complex systems.

Same critiques could be applied to things like welfare programs. What does the government do? The government comes in with a new welfare program, War on Poverty. Sounds like a great idea. Let's go in and let's distribute money among people who don't have any. Again, probably one of the least destructive ways to do it is to distribute money.

And what happens? Well, you destroy relationships, you destroy families, and you create welfare dependency, and you destroy the human networks that once sustained a vibrant community. If you have a community of people who are poor and they're still alive, they're alive because they've learned how to work together. They have created a complex web of relationships and interdependencies among them.

They may be poor, but they have figured out how to survive. And they survive in the context of family relationships, the checks and balances that come in that, in terms of a local culture, local tribal identities, local religious identities, etc. And there's a community spirit, there is leadership that emerges in a community.

When money gets pumped in, those things disappear. And so you have a couple of things that happen. If somebody now has money, then those relationships that they previously depended on often grow cold. And this has a couple of problems. Number one, it removes the checks and balances from a community.

Things like community shaming are now not effective anymore because the person doesn't need the approval of the community. And so now a community can't get rid of the deadbeats and can't affect the behavior of the deadbeats. So what does the deadbeat do? Deadbeat continues being a deadbeat, takes the money from welfare, moves on and says, "I'm a deadbeat, doesn't matter, but I got enough money and I'm good to go," and doesn't care about those relationships.

And so it creates a sense of dependency. Well, what happens then when the money dries up? The deadbeats have nothing to fall back on and they suffer much more because instead of being corrected by the community and the community process of shaming and relationships and promotion and approbation, etc., that were all cultural and familial and not financial, the finances and the money came in and messed everything up.

We do this so frequently in life. We come in with some great idea, "Well, let's turn society upside down. Let's change this thing." And we have no concept of what we're doing. Now, lest my expatiation devolve further into social issues or something, let me just return to the question of profit.

Profit is an indicator of value in a free system, and profit is also a helpful limiter. It is both an incentive and a disincentive. The search for profit has a way of right-sizing an enterprise and right-sizing an organization that is quite elegant. In the beginning, the search for profit means that somebody has to focus very intensely on what works, and this is different than the not-for-profit approach.

The not-for-profit approach often depends upon massive levels of donations to get started, not always, but many times. And those massive levels of donation can lead to a significant distortion in the marketplace. And so a not-for-profit organization that sets out to collect lots of money and go in and solve this thing is so big, so fast, that well-meaning, ignorant people can come in and destroy something before they have any idea what they're doing.

Whereas somebody who has to search for profit goes through a process of discovering the minimum viable product, remarketing it to the marketplace, see what the marketplace wants, come back, iterate, improve, etc., go out, offer it again. And especially if the reliance for growth is on those profits, then there's a natural limiting factor, and the person has to make good decisions.

This leads me to the discussion of efficiency. One of the things that people look for when they're thinking about where to donate money is efficiency. And yet by their nature, not-for-profit organizations are always biased in favor of inefficiency. They generally don't have any imposition of efficiency. There are donors that will choose to donate or not donate based upon the efficiency of the organization.

There's generally no market-based constraint on how well that organization is actually functioning. And very rarely is there any one donor that has significant enough power and control to adjust and transform the marketplace itself. So my point is that if you go out and you want to solve an issue, your most sustainable way to do that is going to be with a for-profit organization.

Because in a for-profit organization, you can establish something that replicates and can maintain and can serve these people in a strong and incredible way. Imagine this, okay? Let's talk about poverty. Maybe we'll use poverty in the United States. Imagine that you want to go and relieve rural poverty, and you want to help people get the things that they need.

So you go and start a great not-for-profit organization to go and help people get what they need in their life. You go out and you create free stores where people can come and get stuff or reduced prices, etc. You can even elicit donations from the rich inner city to go and give this out to people that are out there in the marketplace.

Well, that sounds great. But you're always relying on those donations in order for this to go. And what you will systematically do is you'll systematically kill any of the local enterprises that could function and flourish in that area. Now, another person could come in with a goal of making a profit.

So who serves, what store serves more than anybody else people who are in poor rural areas in the United States? My answer, unscientific just observation, would be a company like Dollar General. Another answer would be Amazon, amazon.com. Serves these people very, very effectively in rural areas. But let's use Dollar General because we can see with our eyes their stores.

You go around the country, you find a Dollar General here and it serves as a valuable way for people to get what they want. And yet it's sustainable. Dollar General expands itself. It continues to expand into more and more communities. And so while this doesn't always feel good to see markets change, at least there are people that are still served.

Let me use another example. I am a huge admirer of Walmart Corporation and Sam Walton. The reason I admire Walmart and what Sam Walton did with the development of Walmart is that he figured out a way to serve customers more effectively. And poor people in the United States are better off because Walmart exists than they ever were before Walmart existed.

That's why Walmart exists, because he served his customers. I'm not going to get into minor arguments about the US government subsidization and whatnot of Walmart employees based upon government programs. Listen, that's fine, but I'm all for ending welfare programs of any kind. So when you come over to that, I'll help make that argument.

As long as we're offering welfare programs, don't expect companies not to exploit them to the degree that it's in any way intentional. The market sets the rules. Sam Walton disrupted the lives of thousands and thousands and thousands of individual shopkeepers. This disruption was painful for those people. But at its core, that disruption that happened because there was a constraint of profit and profit margins, that disruption was only in the lives of those storekeepers who had to adapt to it.

Because the customers all across the United States have voted with their dollar and they've chosen to use the services of Walmart. And they're better off because they decided, I get better service, better quality, better selection from Walmart. My point is not that markets don't change. The history of the world is full of markets that have changed.

There once was a day in which there was a thousand percent markup on the spices that you got from India. And all of that changed when water routes were discovered and a whole lot of people who made their living on the Silk Road changed. Markets change. All of us have disruptions that come to our lives and our careers.

We're all facing it. But to the extent that companies have to rely on profit to subsidize their expansion and growth, the demands of the customer lead to the fact that the customer continues to be well served. And the disruption is much less intense than when you can eliminate profit as a motive.

So my first major point here is this. I don't believe anybody should see not-for-profit corporations and organizations as in any way morally superior to for-profit organizations. To the extent that bias is appropriate, I think we should have an anti-nonprofit bias. If I want to solve a problem that I see in the world, I do not want to start a not-for-profit enterprise.

Because from the beginning, I am admitting that this enterprise will only exist as long as I can have donors. If I can successfully start a for-profit enterprise, then I can create something that is sustainable, that can outlast me and my donors and their pocketbooks. And thus it has the potential of solving the problem for a longer period of time.

Related to this point is simply this. The amount of profit that you choose to generate from your business is highly optional. One argument that people make in favor of not-for-profit organizations is that, "Well, there's a tax deduction. I can deduct the money that's there." Guess what? All business expenses that are ordinary and necessary are completely tax deductible, even in a for-profit corporation.

All business expenses in a for-profit corporation are completely tax deductible. So if you don't want to pay a bunch of tax on your profits, then you can choose to operate your business in a way that solves the problem and yet minimizes the overall profits in order to control your taxes.

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Don't lose out on your chance to get a Maverick X3. Visit Del Amo Motorsports of Orange County in Santa Ana and get yours. Offer in soon. See dealer for details. I think you have vastly more control while following the law over your taxes, etc. in a for-profit business than you do in a not-for-profit business.

Because of the tax deductible nature of contributions to a not-for-profit organization, the scrutiny is higher. The disclosures are higher and the requirements are higher. So if you see a need in the marketplace, go out and start a business trying to assess that need. And if your business winds up creating losses, with appropriate structuring and pre-planning to make sure you have the right use of that, those losses may be completely deductible against your income, just like your contributions to a not-for-profit organization would have been.

So in this area, like in many other areas, we have a choice. Do we want to focus on being effective or do we want to focus on feeling good? The best corollary I would give to this principle would be my encouragement of price gouging after a storm or something like that.

Years ago I recorded a whole podcast on it. When governments impose price controls, as in anti-price gouging laws or rent controls or something like that, any form of price control, when governments impose price controls, they create a distortion in the marketplace that leads to shortages. Every time. Sometimes those shortages are small and temporary, sometimes they're long-term.

But when governments impose price controls, and the most obvious example is anti-price gouging laws, quote-unquote, which are a euphemism for a price control, government price fixing, they impose shortages. There are always shortages because of these price fixing laws. So they make people feel good because we say, "Well, people aren't being ripped off because of price increases." Okay.

But what they lead to is shortages. So the people can feel good about the fact they're not getting ripped off, but they can't get the stuff that they want. And so many times people will sit around, they feel good about something, and they can't get the stuff that they want.

And if you get rid of the idea of feeling good, and you want to focus on what's effective, the answer is let the market adjust prices. And when the prices shoot up massively, it creates incentive. Incentive for entrepreneurs to come in and solve the issue, which increases supply. Incentive for people to find an alternate choice, which decreases demand.

And within a very short time, often mere days in the times when these price fixing laws are employed, such as, again, after a natural disaster or something, within a very short time, the prices are fixed. Shortage is over, opportunities passed, et cetera. But you have a choice. Either you have shortages and you feel good because you say, "Get those nasty price gouges," or you don't have shortages, you don't feel good because you don't want to go and pay it, which regulates supply and demand very, very quickly.

As for me, I care about results and the maximum well-being and flourishing of human beings much more than I care about feeling good and perceptions. One more component of my little Jeremy ad here against not-for-profit organizations. There are two components of what I'm saying. The first component is not-for-profit.

The second component is organization. Organization. And here also, I think organizations create more harm than good because of their inflexible nature. In many cases, the problems that we see and the things that we want to solve are best solved by simply going and doing something, going and trying something, moving quickly, being lean and mean.

And the entire concept of an organization, while helpful in some contexts, implies the opposite of that. Organizations involve rules, standard operating procedures, they involve accountability, controls, et cetera. And organizations have to have a certain size to be effective. If you observe that your neighbor needs her lawn mowed and you go and you mow her lawn, that's something that is probably sustainable for you in the long term.

You can mow her lawn every week for as long as she needs it. And if at some point in time she comes and she says, "Thank you so much for mowing my lawn. I'm so grateful. It's been six months since my husband died and I just got his life insurance settlement.

I just want to let you know that it's such a blessing that you did this for me. I can afford to hire a company now." Then she can just go and hire a company. Because of this interpersonal relationship, most of the issues tend to work their way out. If you feel you're being taken advantage of her, she shows up in a brand new Lexus and you're like, "Can't she afford a lawn mowing service?" You just stop mowing your lawn.

There's no contract, there's no commitment. You were just doing something on an ad hoc basis because you saw the need. She needed her lawn mowed. And she, because of her personal obligation to you as her neighbor and her just good sense as a human being, she feels a sense of responsibility not to take advantage of your largesse.

Now on the other hand, if you had involved an organization, the Lawn Mowing for Widows organization, and you had gone out and you had solicited donations from all the rich people in your town and they were happily writing your donations and you created this system whereby any new widow could make an application to the organization and there would be an official vetting process, they wanted to see the death certificate of the husband, etc.

and improve the finances of the person. And then they're going to send out an official crew and they're going to go and pay the official crew, etc. to do it. Then now we create problems and opportunities for abuse at every level. She's possibly going to abuse the organization because now instead of feeling the natural constraint of human relations, she feels, "This is just an organization.

I can take advantage of them. No big deal. I'm not going to go out and do more and more and more." And you feel good, but you may be handicapping the organizations and the neighbors that would otherwise do it. Once again, my goal here is not to pick on government funds and government programs, but I think you see this most clearly in government programs.

Government programs that are well-meaning, such as many welfare programs and other various forms of social subsidies, they mean well. They really do. But they destroy the basic fabric of society and they're so organizationally huge that they eliminate the ability to, for example, to discriminate. I believe one of the most important rights that we have as human beings is the right to discriminate for whatever reason that we want.

That word often offends people because we think of it in terms of racist discrimination, etc. That exists. But discrimination is very important. We have a positive sense that we use it and a negative sense. Discrimination means to make wise judgments, to choose carefully among various options, to be a thoughtful and intelligent person.

So back to the concept of charity. If you notice that your neighbor is a newly widowed woman and has young children and you worry that the kids are looking a little skinny, you're going to go and you're going to get food and you're going to bring it to her.

If you notice that she's sitting around being lazy, you're going to say, "Let's talk about a plan. I may give you food for a little bit, but let's get you back to work here." On the other hand, if the government sets up a program to give her food, then they can't understand what's happening, whether she's being lazy and abusing the system or whether she's being industrious and just needs a helping hand.

Organizations tend to get so large and they have to come up with standard operating procedures that it eliminates the opportunity for human judgment. And human judgment is right in most cases. It's up close, the ability to choose. So organizations, they're often clumsy and unwieldy. They have to mobilize so much that people are left out.

And in many cases, if you see a need, just go meet the need and you can move faster. And that's something that we want to facilitate. Organizations also face a high degree of scrutiny for all of their affairs and things that can limit their effectiveness. Here, let me give an example.

This is a personal example from something that many of my listeners were involved in. A number of years ago, I was involved in some relief work in the nation of Venezuela. Venezuela was going through, still is, but it's improving. A massive, extraordinary collapse in every way. A total economic collapse, total collapse of the nation state, horrific issues, etc.

And there was, and still is, a refugee crisis of refugees fleeing Venezuela, going in and out, all kinds of crises across the board. And I was involved and I found some needs, some people who were in need and some different things. And I decided that I wanted to use my platform here to raise some funds.

And so I put out an appeal for that. I made those appeals and I raised, I forget now, I'd have to check my records, but it was several tens of thousands of dollars. And those tens of thousands of dollars went to, I directed them, I collected them, I directed them, added money and contributions of my own, of course.

But I directed all of those funds directly to the needs. However, I specifically avoided funneling those through any form of organization. I had a couple of donors who needed a tax deduction and I directed them to an appropriate organization. But the vast majority of the funds, I specifically avoided directing those funds through an organization.

Why? Because I care about effectiveness and the needs that I wanted to meet, it was most important that they were effective rather than organized. And some of the actions that were undertaken with the funds were flat out illegal in international organizations. Organizations could not participate in them. They were not immoral, but they were illegal.

We smuggled food across international borders. We moved into some places where they weren't, where organizations would never have been permitted. We provided funds to a couple of people who were in need, purchased some vehicles, purchased food, purchased seeds, etc. Because of the contributions of the radical personal finance audience, there are a couple of very hardworking relief workers who have vehicles that they're using to provide for the refugees who were in need and are in need.

And then all across the nation of Venezuela, there is an extraordinarily successful food program that is facilitated within Venezuelan prisons, which are primarily full of political prisoners, that are feeding the prisoners and creating large amounts of sustainable results. And those results are partly with food and also with an element of spiritual renewal and spiritual transformation in terms of the various Christian missionaries that were able to organize it.

None of it would have been possible through an organization. None of it. But it was all possible because I avoided the use of the organization. I saw a need for money. I raised the money as quickly as possible. I sent the money in literally stacks of cash right to the people who needed it.

I deployed the money very quickly at the time when it was urgent, and then I stopped. And I kept the source of the funds secret from those who ever knew about it. I tried to make sure that there was virtually no connection between the transfer of money. I was the center point of it.

It passed from you to me. And then I passed it through a couple of conduits, trustworthy men, who were able to put it to what it was needed, but it was never tied back to you. And so there was no connection, and thus it created no dependency. Nobody knows that you were the one who gave it because there's no records exist.

It doesn't, it's not there. It just passed it along. So I gave stacks of, again, I gave stacks of cash to people that I know are trustworthy, who then quickly took the stacks of cash, put it to what it was needed, purchased the things that were necessary, etc. By the way, I never gave aid.

All of the stuff was purchased from as close as possible. All the supplies, the seeds, the tools, the medical supplies, etc. All the stuff that we purchased, we purchased it from the closest possible place so that those merchants would have profits, so that those merchants would continue to do it.

So I intentionally didn't solicit international donations of stuff for all the reasons that I've discussed. It doesn't, it's not as effective. And today, again, thousands and thousands and thousands of imprisoned men are eating food that is being grown because of the initial catalyst of your donations. One of the more successful projects I've been involved in, I don't talk about it because there was questionability about it, and it was it was imposing people to danger at the time.

That's why all of those past solicitations and everything, they're all gone from the public record. But longtime listeners know about that stuff. And it, again, it was, it was and is extraordinarily effective. But I couldn't have done it with an organization. An organization can't know that it's breaking laws, right, of smuggling food and medicine across international borders.

I'm happy to stand in front of any trial, any jury, and confess that I was involved in that. Because that's morally the right thing to do. When laws are immoral, and there are hungry people, you don't sit around and say, "Well, law says we can't do it." You find every way you can to comply with the law and to honor Caesar.

But at its core, we have to meet the needs of human beings. And so I have no moral qualms about breaking the laws. But from a practical perspective, if an organization is involved, the organization is limited. It cannot move quickly. It cannot do that because it has a whole system of governance.

Another element is just that of continuance. I'm not starting an organization devoted to international humanitarian relief. Not going to do it. Don't want to do it. All that I saw was a need. I did my best with what resources I had to meet that need, and I moved on.

And the good thing about it, again, is that the development, the later development of it, the work that has continued, has continued from native levels of support and local resources. It's not funded by an outside organization. And thus it doesn't create welfare dependency upon an outside organization. But I'm talking about for me personally.

If I had had to feel like I needed to go and start an organization, I wouldn't have done it. I would never have been involved. Because I don't want to do it. It's too complicated. How do you start an international organization? Where do you base it? Where is it all?

Too complicated. I don't want to continue it. If I had felt like I needed to start a not-for-profit organization, then the need may have gone unmet. And the thousands of men who have food today, and the communities that have been established, and the tens of thousands of refugees that have had their needs met, it may never have happened because of the slowness of an organization and the fact that I don't want to do that for the next 10 years.

Because of moving light and moving quickly, then I was able to use the resources I had, the need was met, and success was there. If we want to put a principle name on it, we would call this the doctrine of subsidiarity. Basically, the doctrine of subsidiarity started originally in Catholic theology in the Roman Catholic Church.

And it basically says that you should meet whatever the needs are, or whatever is being involved in, at the smallest and lowest and least centralized level at all possible. And if you do that, you will often have the right sized solution. So if you can meet a need at an individual level, meet it at an individual level.

If it's a family level, family level. Community or neighborhood, do it there. And expanding outwards. And there are very, very few needs that should ever be discussed at a level that goes probably beyond the community level, the localized community of people that know one another. And when we move into the organizational space, we quickly take on things at a much bigger level than those levels.

And this has the effect of discouraging those who would be involved in good works and charity and aid, etc. Has the effect of, because they say, "Well, there's some organization that does it." And it has the effect of making it too big, something that more people feel like they can't do.

And for not-for-profit organizations, we should be skeptical of them, and we should be biased against them. That's my basic idea. The only time and place where we should turn to not-for-profit organizations is if we're dealing with something at a level that can't be dealt with otherwise. There is important work that cannot be done on a profitable basis.

And in fact, some of the most important work in the world is never done on the basis of profit. Our family relationships of caring for our children, caring for our parents, caring for our siblings, these things are not remunerated with money. They're remunerated in other ways, and yet they are the fabric of our civilization.

If those fail, if those relationships fail, the civilization fails, regardless of the amount of money and aid organizations that are there. You can create all the government child care programs in the world, and you will never get a better outcome than loving mothers and fathers who sacrifice their lives to pour into their children.

You can create a Meals on Wheels program, but a better defense than Meals on Wheels is a neighbor who looks across the fence or looks across on the other front porch and notices that her elderly neighbor is getting skinny and makes sure that he's got enough food going to her.

So this work is not compensated, and I'm not denying the value of charity. What I'm saying is that when you move to the point of doing a not-for-profit organization, it should be something for which there is not a profitable method, or at least there is not a profitable method that you can see at this point in time.

A good framework to use for when it's appropriate to use not-for-profit activities is that of research and development. In a company, you have certain parts of your organization that are profitable, and certain parts that are not profitable but that could contribute to long-term profits. A good example here is research and development.

Research and development can be focused R&D, as in, "Here's a problem we're trying to solve, here's some money and a budget, and here's resources, and I want you guys to think of ways to solve it." This could be something more casual, exploratory R&D. I'm not competent enough to cite good examples here, but I just think of years ago, I don't know if Google still does it, but it was the 10% time or something like that where, "Hey, just spend 10% of your time goofing off with ideas and trying to come up with something." Forgive me, you Googlers, for getting that wrong, but that's just what comes to mind.

The idea is sometimes you're trying to solve a specific problem and you're investing money and resources into it, in many cases for years and to the tunes of millions and millions of dollars, and sometimes you're just goofing around looking for some idea and waiting to see what would come out of it.

If I'm going to get started with a not-for-profit organization or not-for-profit activities, I want to think of it like research and development. I want to think of it like, "Could I invest some money in this, not expecting a return, in order to solve a problem that I observe in the marketplace with the hope and the ambition and the goal that once I get this initial thing going, then it could at some point in time become profitable?" To me, this is a useful metaphor because if you look back at the history of most of our advances, this is kind of how they go.

Somebody is doing something, involved in something, tinkering around, playing around. There's a technology that's created. Somebody else gets involved with it, starts to expand it a little bit, but there doesn't seem to be a lot of usefulness to it. Then people get an idea, it starts pushing, and then entrepreneurs jump on and make the idea boom, and they expand it.

If I'm going to get involved with some form of not-for-profit activity, I want to see it in that way, and I want to be working towards a profitable solution as quickly as possible. This naturally leads me to some of the inherent problems with organizations. If you look around and you think of some of the largest and most, ironically, profitable not-for-profit organizations, what you see is that it seems like the organization has no end date.

It doesn't have a point in time at which it ever intends to end. It just tends to self-perpetuate itself. This is really repugnant to me because these organizations, they become leeches that attract all of the wrong people that are fundamentally looking for a job that's easy, that pays a lot of money.

Not-for-profit organizations attract people who are looking for something that's easy, that sounds good, and they're not facing any significant scrutiny generally by the marketplace or by their boards of directors, etc. This is especially bad if the original founder has died. The most productive not-for-profit organizations are generally going to be driven by one man who says, "This is a problem I want to solve," and invests a significant amount of money into establishing an organization.

As long as that founder is there, that founder wants results on his money, and he pushes and he pushes and he pushes and he pushes. But if the founder dies, the energy goes out, and you wind up with "managed by committee." You have these committees of people who come together, and half the organization is devoted to continuing the organization.

Yes, we do a little bit of work to advance the cause, but it just gets worse and worse and worse. What's even more horrific is that as the generations go by, so frequently, the organization itself strays massively from the intent of the founder. The organization betrays all of the original founding principles of the founder.

Think of a university founded by a Harvard University or something, founded by some devout religious zealot who wants to see the gospel message go forth in the world. Fast forward a few hundred years, and you wind up finding someone who is an organization that is the absolute enemy of everything that that original founder stood for.

Dad starts an organization to solve diabetes in the world. The kids come along, and they're on the board of directors, etc., and they care about diabetes, but they're not nearly as passionate about solving diabetes as Dad was. Dad's dead and gone. They care about the cause, but they tend to view it as a gravy train, and they enjoy the tax advantage transfers of wealth to them from being involved in the high-status position that gets them invitations to all of the nice charity galas and balls, etc.

So, forgive me if I sound cynical. I'm not cynical. It's just that I think we should focus on being smart with our money and try to actually find solutions to some of these problems. The greatest problem solvers in the world, as far as I'm concerned, are entrepreneurs, because those entrepreneurs see a problem in the marketplace, and they have to figure out how to solve that problem for people, and they have to figure out a way to do it that is profitable.

In so doing, they create a sustainable, long-lasting solution. If you can't see a sustainable option, try to limit the amount of money that you put into it and see it as R&D, that I'm only going to fund this for a time until we figure out a sustainable model. Don't set something up that is self-perpetuating, because if you do that, there's a very low chance it's ever going to accomplish its actual objective.

Recognize that if you get involved in charity work, which is another way of expressing what many not-for-profit organizations do, the distortions that you bring to the marketplace can utterly destroy your ability to solve the actual problem you're trying to solve. So before you get involved heavily, make sure you test in small portions on a local basis for a long period of time the solutions that you're trying to bring about globally.

Don't get too big too fast, or you'll wind up destroying an ecosystem that you don't understand. If you're going to start an organization, which is appropriate at certain scales, set an expiration date on that organization. I don't know for sure, but my guess is that an organization shouldn't last for more than 20 years.

That's a bias I have. I can't prove the number, just one of those things that feels about right. You could convince me of a little longer, a little shorter. 20 years is probably the maximum duration that any organization should have, any not-for-profit organization should have. An organization should be funded, and it should solicit the money that it needs, and then it should disappear in about 20 years.

If it's long enough to do good work, it's long enough to advance the cause of science, if it was an organization that was designed to solve breast cancer and it hasn't succeeded in that, then it clearly is a failure if it's been going on for decades and decades and it hasn't succeeded.

What it should do is take all of its resources, publish them all, make them available to the world, put all of its research available, create a standalone website or something like that, make the information, and then terminate itself and let somebody else come along to work on the problem.

Again, I'm making up the 20-year number just based upon a gut instinct, but it's hard for me to imagine any project that is worth doing that there's going to be any sign of success if it endures for more than 20 years. Probably the most inspirational example would be the Apollo Moon Project in the United States.

In less than a decade, the US space researchers, the NASA, etc., the US government, were able to go from no concept, no clear way to do it, not knowing how to do it, to putting a man on the moon in less than 10 years. So let's give us an extra 10 years, about 20 years, and let's be focused on our results.

And if we're not getting results, I'm not saying that all problems can be solved in 20 years, that's not my point. I'm not saying that if breast cancer isn't solved in 20 years, then we're going to stop working on solutions. What I'm saying is that the organization is probably unnecessary, and that organization should probably disappear, it should make public all of its research, it should publish everything so that it's available for others as a common good, and the organization should disappear, and some other organization with some other set of people, and some other set of founders and directors and donors, etc., with some other set of ideas of an entirely new and novel perspective should come along and pick up the baton.

And try to solve that problem. And that if you find yourself in the position where you are funding something like this, then you should seriously consider putting an expiration date, because you've got to get rid of the professional organization fillers, the professional seat sitters that are going to be attracted to your organization.

You need to make sure that your really important positions are filled by true believers who care about the cause, and that they understand we're here for a time, we're going to make a difference in this cause, and then we're going to move on. And if you're the donor, it's very much within your best interest to make sure that all of the money is spent during your lifetime while you are around to supervise it, and/or within a very short time from your death, where those who knew you and who want to honor you are around to get the job done.

Otherwise, there's a good chance that in the fullness of time, your organization will be taken over by your ideological enemies, who it starts with a slight difference from what you think, and it winds up being taken over by your enemies who come in and co-opt it, because guess what?

There's money and there's power and there's influence here, and we don't have to do it. All we've got to do is control the organization, and we're good to go. And because of the lack of feedback loops, appropriate feedback loops from the marketplace of the need to continue to serve clients and customers in a profitable way, the need to continue to run a competitive organization in the face of fellow competitors, then we face significant problems.

In conclusion, there are people who need to establish organizations, and those organizations probably in many cases to solve significant issues will be not-for-profit organizations. And these can be done, and there are good reasons to do it, even in terms of financial planning and creating an impact for the money.

But it shouldn't be our bias in favor of these organizations, and it shouldn't be our bias to favor a not-for-profit endeavor instead of a for-profit endeavor. If we care about results, we should focus on undoing those two things, and only bring them in as a last resort for the very wealthy, for whom they're appropriately suited.

And in the same way that I apply the lens of scale to all financial planning decisions, which shows you why one action is correct at one stage and incorrect at a different stage, you know, it's the same action, we should apply the lens of scale to our charitable work and to our charitable donations.

I don't understand why a guy who's got $5,000 in his donor-advised fund is giving that money to a big organization. I think that's silly. You should always take your money and give it at the level at which you can actually make an impact. If you're going to give $5,000, you should give it in a place where you can impact it.

So that's probably to a person or to a few people. Give $5,000 to some giant multi-million dollar not-for-profit organization? What was the point? On the other hand, if you got $5 million that you need to get to work, you're not going to give it to an individual, generally speaking.

So that's where you need to get it into an organization. And what we can do is we can catalyze in our day this appropriate thinking, and we can start to rebuild some of the broken webs of relationships and community ties that have been so destroyed by the professional fundraising system and by the professional governmental system.

If my little monologue here was hyperbolic, it was only intended to attract your attention to these important points. I hope that it's useful to you. I genuinely do believe a lot of not-for-profit organizations cause more harm than good. But I'm not saying there's not a place for them, but that we should be careful of them.

And we need to be very, very careful with our charity in such a way that is actually effective. And we should give our charity dollars in a place where we can control it and in a place that we can make sure that it is doing good. Because it can take an awful long time for an organization that is filled with people whose salary depends upon their not noticing that the organization is causing more harm than good for them to actually notice that their organization is causing more harm than good.

And you as an individual can notice that pretty quickly and you can adjust and adapt. Profit is not an enemy. It is not something to be looked down on. It is not something to be discarded. Profit is the indication of sustainability of an enterprise. So before you go and look for a not-for-profit solution, look for a for-profit solution.

Before you go and build an organization, ask yourself if you can start to work towards the solutions that you want to see without an organization. And make the establishment of or the support of a not-for-profit organization the final thing on your checklist. Make sure that that organization has a termination date.

If you were thinking about leaving $50 million and establishing an enduring organization to solve this problem, don't do it. Because the $50 million will continue for a very long time and the problem will never be solved. So set the $50 million and say at the end of $50 million, sorry, at the end of 20 years, this $50 million is going to be gone.

And if you haven't figured out how to spend it on the cause, then it's all going to be given away. One final practical note, back to the example I used in the beginning. I have changed my mind over the years about the topic of donations. Growing up in the United States and seeing the homeless culture in the United States of people begging for money and donations, who in many cases didn't need it, I absorbed the suspicious view of giving people money.

And I think there's a good set of arguments to that of giving people money. But what I have learned, meaning of not giving people money, people say, "I'm not going to give this guy money because he's going to go buy beer and drugs." Maybe that's true. That may be true.

And so they say, "Well, I'm going to give him food instead." Okay, maybe that's true. In fact, it is true in many cases. And I don't have a solution for homelessness other than discernment, to actually discern and talk to people enough to get an idea of who they are.

But what I have learned is that money in many cases is the thing that is most needed by someone who is in need. And if you're not confident giving money, you maybe shouldn't give at all. But giving money is not the enemy. Money is the omni-tool. It's the thing that can be used for everything else.

And money incentivizes the creation and establishment of economic ties, local businesses, entrepreneurs, etc. And so contrary to the opinions I once had that, "Well, it'd be better to give donations of goods and materials," I've come to the conclusion that if you're going to give, giving money is actually in many cases the most important and necessary thing.

In the cases where you don't want to give money, it's because you have specific discernment into the needs of a person. But when you give money, it's a good way to help a person get what they actually need. You might be giving food, just an example I'm making up, but if you give the homeless guy food, that may be helpful because he's hungry.

But what he actually needs is money to pay his cell phone bill so he can get a call from somebody that he was applying to a job for. And if you don't give him money, he can't pay his cell phone bill, etc. Now that's an example that admittedly I made up on the spot.

But money given is often the best tool because it allows the person who's receiving aid and charity to prioritize. And if you can bring money with counsel, then the money can be wisely spent. And if you're concerned that the money is going to be misused, then don't give. Don't give.

Leave the pressure on somebody so that they have to solve the fundamental problems. I can't go further because I'm not prepared mentally to give a lecture on this kind of charitable giving. I guess I should have probably ignored the point, but I'll leave it in anyway. That in many cases, money is the thing that people need.

And it's what I have come to appreciate and respect. So now if I want to help, usually I just want to give money and let the money be spent, let the things be purchased in a local area rather than trying to give in kind donations. So that's it for this week.

I hope this was interesting. Hope these are useful ideas for you and I'll be back with you very soon. Grand Canyon University, an affordable private Christian university, ranked top 20 campus in the country, offers 330 dynamic academic programs informed by industry and student learning outcomes. In addition to federal grants and aid, traditional campus students received nearly $180 million in scholarships in 2022, with many attending for less than the cost of a state university and less debt after graduation.

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