Normally, marketing people prepare what’s known as a Rude FAQ…an internal-only Frequently Asked Questions that tend to be asked by “rude” people like journalists, activists, and pretty much everyone else for whom I have Respect for asking the tough questions. The marketing team then has all their sales people, promotional people, and customer service people memorize the answers. I know; I’ve done this for several companies.

We decided to publish ours for two reasons: 1) we are a company that strives for real authenticity and transparency - not just lip service, and 2) having an internal-only document always made it seem like we had something to hide (in some cases, they really did). As we seek to build community among such distinct groups as college-aged Fair Trade activists and stereotypical “soccer parents”, we want you to have a clear picture of Fair Trade Sports…the good, the bad, and the as-yet-to-be-determined.

So here’s our Top 10 Rude FAQ; let’s start with the big one…

1. If you give away all your money, how can your team afford to work with Fair Trade Sports and still buy groceries?
   Like Newman’s Own (the salad dressing and popcorn brand), we’re committed to giving away our “after-tax profits”.  Let’s be clear; that is different than giving away all our money. After-tax profits are generally defined as what’s left over after you pay items like salaries, utilities company, and of course, your raw inventory. Each year, we’ll also retain a small portion of our proceeds to fund the following year’s growth (likely ~10%). 
   
   What’s left over usually gets distributed to shareholders. Given that Susan and I are the sole shareholders, and we are not interested in making Fair Trade Sports a wealth-generating operation, we decided to funnel the after-tax profits towards children’s charities.
   
   
2. Why aren’t you interested in making Fair Trade Sports a wealth-generating operation for yourself?
   We (the founders Scott and Susan) decided we have already been blessed with a lot. We decided that we had enough, and wanted to use our skill sets to create positive change in the world. And just to clarify, we don’t believe there is anything wrong with creating wealth for yourself while doing good in the world; there are lots of examples of great people doing just that (Patagonia, Seventh Generation, etc.), many of whom are good friends.
   
   
3. What keeps you from setting your salary to be one million bucks like the scandals we read about in the paper?
   Theoretically, nothing I guess. Although all our family, friends, business partners, advisers, and legal counsel would disown us. Even our venture capitalist friends would raise an eyebrow at that.
   
   
4. What is your salary?
   Scott (the founder) writing here…you tell me yours and I’ll tell you mine (seriously, send me an email). My answer until 2009 will be zero (I’m not taking a salary while we start up), and then I’m on half-salary for a few years so we can get to profitability faster and stay there (hint: you can help with that…buy a ball). Basically my (theoretical) full salary will be average for a growing young family in the Pacific Northwest that enjoys buying organic groceries to supplement their own garden.
   
   
5. Why is getting to profitability fast important?
   It makes Fair Trade Sports, Inc sustainable, meaning we can keep doing good by helping at-risk children around the world and promoting the Fair Trade movement here in the States. With our model of giving away all after-tax profits (like Newman’s Own), the more profit we make, the more money is raised for children’s charities.
   
   
6. When will you be profitable?
   According to our best guesses, the end of 2007, although we are not getting our initial inventory in as soon as we hoped. Until we hit profitability, we are donating $1000 annually to each of the charities we support to begin the relationship and show them we are serious. Of course, you can help.
   
   
7. Are you a for-profit or non-profit?
   We’re a for-profit S Corporation, which means we pass through all our after-tax profits to whomever we want. Normally those dollars go into the shareholders or founders pockets. We’re a bit different; all the dollars from Fair Trade Sports will flow into children’s charities. With our bright legal/accounting team, we spent months looking hard at being a non-profit or a hybrid NP-FP model, but they all have significant limitations on how much of the after-tax profits you can give away.
   
   Other for-profit models limit you to 10%, others at 50%. And other hybrid models are even less attractive once you start asking the tough questions about what happens to the dollars that are generated. This is the only business model that allows us to give away 100%. It turns out that what Paul Newman and crew did in the early 80’s is still the most efficient business model for generating true charitable dollars. Nell Newman has proven it to be an effective model, with hundreds of millions of dollars generated for charity. Of course, since Scott is not as good-looking as Paul Newman, we won’t be putting his image on the sports balls.
   
   
8. How will you continue to fund the growth of the business if you give away the after-tax profits?
   Responsibly. Out of cash flow. Not by borrowing “ahead of the curve” or using other people’s money, which always comes with strings attached. We have some good friends who are venture capitalists and angel investors. They are great people and we love going to dinner with them, but we don’t want their money.
   
   
9. Why just charities for children?
   Because we have to start somewhere, and starting with children will (arguably) make the most significant long-term positive impact for their communities.
   
   
10. Can I come work for you?
    Yes, but don’t expect a salary until 2009. Seriously, this is a common question we receive, but Fair Trade Sports is a lean operation designed to generate money for charities. Everyone on our team is either a free agent or a volunteer lending their expertise pro bono. So yes, come work with us and help change the world. Start by ordering the  free Ambassador of Respect cards to hand out to everyone you know involved with a sport. Write your name on the cards. Join our team. I guarantee you’ll enjoy it.
    

Have more questions? Send them to us and we’ll compile a Secrets Revealed! Rude FAQ II. Thanks for letting us be transparent with you, our customers and champions.