Bank On Yourself for Nonprofits
How Bank On Yourself can apply to a variety of nonprofit situations and goals. Some generic examples might be charitable giving, employee retention, and retirement planning.
Mark Willis, CFP® is a man on a mission to help you think diﬀerently about your money, your economy, and your future.
Mark is a CERTIFIED FINANCIAL PLANNER™, a three-time #1 Best Selling Author, and the owner of Lake Growth Financial Services, a ﬁnancial ﬁrm in Chicago, Illinois. As co-host of the Not Your Average Financial Podcast™, he shares some of his strategies for investing in real estate, paying for college without going broke, and creating an income in retirement you will not outlive. Mark works with people who want to grow their wealth in ways that are safe and predictable, to become their own source of ﬁnancing, and to create tax-free income in retirement.
For more information, go to https://lakegrowth.com/
Read the Interview Transcript
Hugh Ballou: Greetings, everyone. This is Hugh Ballou, founder and president of SynerVision Leadership Foundation. We create synergy by focusing on the common vision that we have for doing good in the world. SynerVision transforms leaders, transforming organizations, transforming lives. This is episode #309 for The Nonprofit Exchange. Our guest today is Mark Willis. I want you to tell people about who Mark is and your passion for the work you’re doing.
Mark Willis: Hugh, I am so honored to be on the show. Thank you for all you’ve done for nonprofits and clergymen around the world. My passion and background are wrapped up together, like most of us, I suppose. Most of the time, our backgrounds inform our passion, don’t they?
I stumbled out of seminary with six figures of student loan debt to my name and no real plan to pay it off. They kept calling me every month, wanting more money. They wanted that money back. After all those student loans were taken out, they wanted that money back, plus interest. My wife and I had to figure out this money stuff out.
At the beginning, we were so bad at figuring this money stuff out that we had to sit in a public space in case there needed to be witnesses to figure out our budgets, cash flow, and financial plan every month. Every month, how were we going to survive? Month by month, step by step, we got our feet underneath us and figured out where we wanted to go.
We ultimately got so interested in this thing called money as a means by which to meet our goals, not only our goals, but our life dream and mission, that we started a financial firm, Lake Growth Financial Services. We work with folks all over the country—business owners, nonprofits, individuals, families—to help them reach their financial goals without taking a bunch of unnecessary risk and doing it in a way that is counterintuitive to the oh so average financial information you get on the radio and TV these days.
Hugh: We have a lot of myths associated with our work. It starts with the word “nonprofit,” which is not a truthful statement. It’s not a philosophy either. We have to make proceeds, if the word “profit” bothers you, but it’s proceeds. We are stewards of other people’s money. Why do people have such weird ideas about money and don’t want to talk about money? What do you think is behind that?
Mark: That is probably a couple of therapy sessions right there that we probably don’t have time for. But there is a relationship with money. We seem to think it is somehow counter to the values of the charity that we might be helping to lead. You’re right. There is a misnomer in the name. I know a number of really awesome organizations that are nonprofits but are running very successful businesses to help support that nonprofit. There are wonderful organizations that the IRS tax code allows us to have, where we can still run a profitable enterprise, but the profits go back into supporting the mission of the business. A number of different scenarios there.
You’re right. So many charities are on the brink right now, mostly because they are holding onto an old model, where they are 100% dependent on the donations of their supporters. If you lose a donor, like passing away or moving on, that puts the charity at risk. By the way, every donor has an expiration date on our backs. That means you and me. All of us have an expiration date. We have to figure out a profitable, sustainable way to move to multiple generations. As a Certified Financial Planner, I sit down with nonprofits, individuals, and think not just about this year’s fundraising event, but how are we going to last the next 100 years and beyond?
Hugh: It brings up the question of legacy. Do we want our vision to die with us? I see some really interesting stuff on your website. It’s called LakeGrowth.com. They have a chance to book a meeting with you when they go there. What else will they find?
Mark: The website is a teaser of what it is like to work with us, what it feels like to have more control over your financial future. Most people live their entire financial lives out of control. They hand away their control to banks, finance companies, Wall Street, and other financial gurus that may or may not have their best interests at heart. I think that’s no more true than with the nonprofit. Too often, we think, “Let’s let somebody else handle this money thing.” I don’t care if you’re a church or synagogue or nonprofit or 501(c)3 of any sort. Even if you’re not the accountant, if you’re a board member or leader, you need to know what your numbers are. Otherwise, someone else is going to build a plan around your money. We don’t want that, whether it’s your own personal retirement plan or the nonprofit’s account statements and balance sheets.
There have to be some non-traditional methods of giving beyond passing the hat once a year, or those year-end chicken dinners that we put on. We can certainly look at donor advised funds and wills and trusts and life insurance. All are part of the overall package for our nonprofit clients to help think strategically and long-range about how to last that next 100 years.
Hugh: I had a legendary event Sunday. I went to a picnic lunch with area clergy. It was the first time in my memory we did not have fried chicken. We are in the South.
Mark, let’s talk about financial strategies. There are personal strategies and organizational strategies. Is there any relationship to us as a leader being astute about our finances so that we can lead the organization in a more efficient manner?
Mark: Yes, I think money is half of every transaction in the entire world. In fact, that’s a really eye-opening statement. As a Christian myself personally, I was surprised to find that Jesus talked more about money than virtually any other topic. I never really understood why. As I went through seminary myself, I was surprised to find that there was very little in the way of education around personal finance for the clergy that they were training or the conversations that clergymen might have with their elders or deacons or whomever might be helping to organize and run that congregation. It was a surprise to me. Maybe I missed it. Maybe I didn’t take that elective. I take responsibility for not learning the money thing myself. But it really struck me as I graduated with a graduate degree that I just didn’t have a theology of this thing called money.
About 30 days after I graduate, my Sallie Mae friend starts to give me a call and regularly sends me bills. Sallie continues to pester me until we get a plan together to start paying her back. Sallie Mae being the student loans we had incurred. That forced me into an education around money. I would suggest that your personal relationship with money will impact your financial future, but also that of the organization you’re helping to lead for sure.
Hugh: There is an integrity in having your own house in order before you put the other house in order, isn’t there?
Mark: Absolutely. There is a fractal relationship for sure. If you’re faithful in those small things, you will be faithful in the big things.
Hugh: Amen. If you could create a perfect financial strategy for life, what would that be?
Mark: That’s a question too few people ask. Most of us go through life being handed retirement accounts, savings accounts. When I was five years old, my mom took me with my paper bag full of coins and dollar bills and opened up a checking account. I was handed this thing called a checking account at five years old. What’s a five-year-old know about a bank account?
Fast forward, you get a 401k dropped in your life or a 403b in the case of nonprofits. You could grab a crypto account if you’re feeling dicey. You might get some credit cards. You might get a house. All of these things start falling into our laps. Never do we ever sit down and say, “What do I want my money to do for me?” That’s no more true on a personal level than it is at the organizational level.
Where you put your money makes it do different things. Seems like a brain-dead, obvious statement to say coming from a CFP. I can’t tell you how often folks have never really sat and said, “What do I truly want my money doing for me? Do I want there to be some tax advantages when I access this money? Do I want there to be liquidity, access to the money for whatever I want? Do I want a competitive rate of return? Do I want it to be accessible to creditors if I fall into bankruptcy or hard times? Do I want it to be private, outside of the reach of the government or banks or even people who might attach themselves to my estate if I pass away?”
Creating for myself a wish list, if I could wave a magic wand and create a brand new, perfect financial instrument, those would be some of the initial questions I would start asking. What do I truly believe about taxes? Will they go down or up over my lifetime? I’m curious. I don’t mean to turn the tables too much here, but if you could create your own perfect financial vehicle, what attributes or characteristics would you want it to have?
Hugh: I can give you an update on it after this interview. Certainly, we have a CFP, and all of our money is under management. My wife works for the Methodist church, and they have a container as well. We are at the place in life where we are debt-free. We have ultimate choices, and we have more income than our expenses, so we have been very frugal. I am a recovering Scottish Presbyterian. We use the word “frugal.” Other people have different names for it. The Scots are the ones who pray for forgiveness of our debts in the Lord’s prayer.
For my next question, there is probably one person out there who doesn’t recognize CFP. Would you give the significance of that?
Mark: A Certified Financial Planner. That is a very specific kind of financial advisor. There are any number of hundreds of thousands of financial professionals out there. They could be merely investment gurus selling you stocks. They could be an insurance agent. They could be a lawyer. They could be your cousin Eddie, who took a weekend course on budgeting. The words “financial advisor” mean almost nothing on any kind of official standpoint. Beware of generic terms.
A Certified Financial Planner has to act in your best interest and has gone through rigorous testing. It took me about three years to get those letters after my name. I count it right next to my Master of Divinity as some of the best education I’ve ever had in life. I count them together. In fact, I jokingly say my favorite book of the Bible is the Book of Numbers because I have a CFP right after getting my MDiv. I have always loved the idea of working on the client side of the table in their best interest to make sure that whatever we set up and recommend is going to help them get through their goals.
Hugh: That’s a very strong discipline. I could be called a broker because I help people get broker. We won’t go there.
Mark: Or oftentimes, the financial brokers, the stockbrokers, are broker than you or the client. Too bad. You want to be careful who you’re getting your advice from because they might be broker than you.
Hugh: That’s right. I have met brokers who have made people small fortunes. Did you start with a large fortune? You’ve heard all those jokes.
We are entrepreneurs. We are social entrepreneurs. We like to think we are clergy or nonprofit leaders. We are, but we are forging new entrepreneurial ventures. We are filling the void and bringing value in a different way supposedly to humankind. As an entrepreneur in that broad sense, if you buy that nomenclature, how can we fire a banker and become our own source of financing?
Mark: The biggest reason I see nonprofits and businesses go belly up and bankrupt is not because they picked the wrong market, or they didn’t market enough, or they had too much glue in the back of the inventory. It’s because of banks. Banks have taken people out for thousands of years.
In fact, there is a great book by David Graeber. The title is my favorite part: Debt: The First 5,000 Years. What a title. The First! What I take from the book and the title even is that banking has as much to do with human civilization as almost any other tradition we have. It’s as old as friendship as far as I’m concerned. It’s as old as just about any other art, music, whatever.
The problem is none of us have banking in house. I had outsourced my banking to a student loan company. Many of us outsource our banking to mortgages, credit cards, college loans, etc. What if you could in-house your banking? What if you could actually pay yourself the interest that was currently out the door to banks, credit cards, finance companies, lines of credit, etc. and pay yourself an interest above and beyond paying cash for things? You could be paying cash. In fact, I do.
Now having done this myself for over a decade, this is how I paid off all my student debt. Rather than just paying my debts off and having nothing to show for it, instead, I borrowed against myself, paid myself an interest, and wiped out all my creditors, my snakes, my student loans, and became better than debt-free. This to me is better than paying cash. When you function like a banker in your life, boy, you can achieve things beyond just simply being debt-free.
Hugh: That is great. We are halfway through this interview, and we didn’t talk about the title yet. Shame on me. “Bank on Yourself.” I noticed beyond you there is a book with that title. Explain that title please.
Mark: It’s a great metaphor and philosophy as much as it is a particular financial tactic and strategy. I will start with the philosophy. It is a philosophy. Bank on yourself. Why not? There are other things that are asking you to bank on themselves, whether it’s the government or a large industry like Wall Street. When you bank on things that you cannot control, you’re going to be in a world of hurt. If I don’t know what my account values are going to be worth when it is time to retire or tap into them, do I really have a financial plan? Do I just have hope and pray strategies?
At a philosophical level, I would prefer to rely on things that I at least have some control over. I am a big believer that no one has complete control over anything. We control less than we think we do in our lives. I have been through a couple of curveballs in my life to get that pretty well. I have been hit upside the head many times with that truth. We don’t control as much as we think we do. I do believe we can influence more than we think we can.
By saying “bank on yourself,” it’s a book written by Pamela Yellen; it was a New York Times best-selling book a few years ago. Great book and great concept on the philosophy of taking control of your financial future. It uses and employs a very old-fashioned form of whole life insurance but modernized for today’s more modern needs, like capital expenses and so forth. It’s the idea of using a cash value like a bank. The life insurance has a death benefit, sure. It has a cash value though that you can access like a liquid pool of money, like a bank. Not truly a bank of course, but like a bank. You can access it and even borrow against it and buy your cars, pay off your student loans like I did. Invest in your nonprofit’s capital needs, whether it’s a church van or a bunch of inventory you might need or a marketing campaign. Pay yourself back.
It’s both a philosophy of, “What if I could bring the banking function back in house?” but it’s also a tactical strategy that has been around for 200+ years.
Hugh: Wow. That’s really key. Give me a couple more examples of how that is being debt-free. Whet our appetite for more, would you?
Mark: It’s a counterintuitive concept. When I first stumbled across it, I was very skeptical. As a CFP, my radar was up. I was desperate to find a good way to become debt-free myself. I was following certain advice that I had heard on certain radio stations to do the debt snowball method. That is a method by which you pay off your debts one at a time, smallest to largest, that sort of thing. I was following that pretty religiously, and I had thrown extra cash at it every month. We were living well beneath our means.
I was getting that empty feeling. You know that feeling when you eat a ton of candy or cake or cookies, and you get that sugar crash? It feels great for about 15 minutes, and then you crash. That is how it feels when you pay cash for something, whether it’s paying off a debt like I was or buying a big purchase like a car or a large real estate investment. If I pay cash, I’m still financing that purchase, even though I paid cash.
Let me explain because that sounds pretty weird. Either you pay interest to a banker, or you pay cash and pass up interest you could have earned on that money. Therefore, I believe through something called opportunity cost, the opportunity cost of my dollar in my pocket right now, it might be $1 in my pocket, but it might be $6 over my lifetime. See what I mean? If I don’t buy that cup of coffee this afternoon, then that $1 could grow to $6 over my lifetime. The true price of that coffee was not $1; it was $6 due to the power of compound opportunity cost. Does that make sense from the outset?
Hugh: It does.
Mark: If I was to pay off all my debts, let’s say I’d be four years older and back at net zero. I’d feel great for about 15 minutes until I realized, I’m now four years older and at net zero. That doesn’t get us further down the road. That might bring me to the starting line of my marathon. I need to build more than the starting line of my life. I need more than just baby steps. I needed a marathon running.
What I did in my case to be better than debt-free was I packed as much as I could into one of those policies I described earlier. Efficiently designed. We refer to them as bank on yourself policies because there is a lot of inappropriately designed whole life insurance out there. We designed it for maximum cash value. We pumped everything we could into a couple of those policies. As we could, we borrowed against them to wipe out our debts.
The nice thing about this is when you borrow against a life insurance policy that is designed this way, the policy itself will continue to compound and grow even on the capital we borrow. Let’s say I had a $30,000 cash value. Let’s say I borrowed out $25,000 to pay off a student loan or buy a car. That year, my policy will continue to grow with guarantees within it, plus dividends, on the entire $30,000, even the $25,000 I borrowed to pay off the debt. To me, that beats paying cash. When I pay cash, that money is gone forever.
Hugh: That is amazing. It’s a paradigm shift. Having the knowledge to know about it. Does that work for saving for college for kids or charitable giving or buying a car or a house?
Mark: Yes. Any major purchase. I’ll tell a quick story. We worked with a church that wanted to set up one of these policies. They dumped a large sum that was sitting in a CD, earning 1% for them. They wanted something that was going to give them a much better return. These policies are not wild and crazy. They might give you middle single digits, 4, 5, 6% maybe. What they liked about it is it beat their CD for sure. That was very nice to get 4x as much growth as a CD might get them. Now they can use that like a bank. They were using a line of credit against their church building to buy vans and do an expansion on their building. Instead of using a bank and having to kiss the ring of that banker, getting approved for loans is not guaranteed. Now they use that policy and send folks on mission trips with their church vehicles. They have done an expansion on their worship area of their church building.
I have had another church that uses the policy every year for a Jubilee Sunday, where they pay off everyone’s consumer debts. Several of the neighbors and members will come forward and bring a bunch of their phone bills, light bills, and credit card bills. They will pay it all off, and the members will pay back the church with maybe low or no interest over a period of time. They get some money counseling along the way, so they don’t fall back into debt.
I think creative ideas like that can bring a sense of hope and light to our communities. Whether you are a church or nonprofit, or you are just a family member or person who wants to help their kids go to college or fix up the kitchen, what a cool way to make a major purchase, whatever it might be.
Hugh: That is a specially designed whole life policy. What is the top age for somebody to consider that?
Mark: We’ve had folks approved for those policies even as young as 80 and 81. By joking, I say “as young as 81.” I’ve seen it go as high as 85, but not me personally setting those up yet. Now having done this for over 10 years, you don’t have to be a spring chicken to get one of these policies. I wouldn’t recommend everyone run out and get one. Obviously, I would love to chat about whether or not it makes sense to do this for anyone’s particular circumstance. Age shouldn’t be an issue.
I had a guy who had just had open heart surgery and was not insurable for life insurance. What we instead did was we put a policy on his wife, his adult children, all of his grandkids. He is the owner of 12 policies, but he is not necessarily the insured.
Hugh: That is creative. Nonprofit executives or clergy, how can we use this to benefit our employees?
Mark: This is one of my favorite, most exciting pieces to the puzzle. I’m glad you asked. We are all trying to keep our best employees with us these days. Hiring is tough for everyone right now at the current state of affairs with our world economy. Wouldn’t it be cool if along with the qualified plan, like your 401k or your 403b, as an employee, if your employer, the nonprofit, gave you a policy, like we have been describing today? The employer would help contribute to it. Maybe they match something the employee puts in. Now the employee has a liquid bucket of money they can access and use even before retirement.
403bs, 401ks, are great for the future. What about your employees’ needs today? Wouldn’t it be cool to selectively choose which employees could get this extra benefit? This is actually qualified in the tax code under section 162A. It’s been this way for many years. Employers can give employees an executive bonus into a life insurance contract. That policy then is the asset of the employee. The employee gets to use it for vacations, kids’ college, paying off their own credit card debt. What would that do to a staff if everybody was their own banker? No longer needed to work because they were under the thumb of some credit card company.
Hugh: Wow. That is liberation. That’s amazing. You can make an appointment with Mark and let him share some of these ideas with you. People can call you from anywhere in the country, I guess.
Mark: We actually have clients around the world. You somehow have to be tied to the United States or Canada to get one of these policies. I’d be happy to answer questions in all 50 states for sure.
Hugh: Great. There is a lot to learn and stay current on. Having somebody knowledgeable to share is key. Thank you for being willing to share your trade secrets with everybody today. This has been a helpful interview. This area of money is an important area for us to continue to stay in the front of this education curve. As we’re leaving this interview, Mark, what thought do you want to leave people with today?
Mark: We are already in the banking business. We are just sitting on the wrong side of the bankers’ desk. If we can sit on the right side, I believe we can control our financial environment. Banking controls half the world’s transactions. If you can become your own banker and sit on the right side of the desk, you can control the environment in which your money lives, and you will win by default as a result.
Hugh: Mark Willis, thank you for being our guest today on The Nonprofit Exchange.
Mark: Thank you!
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