Anachostic

My tagline, let me show you it.

The Business of Charity

What image comes to mind with the word “charity”?  Is it Salvation Army bell-ringers? Is it Girl Scouts selling cookies?  Is it 24-hour telethons?  Is it a cashier asking if you’d like to give a dollar for this or that?  In any image you may have, you are thinking of a business.

Apparently, accepting money from some people and giving it to other people is very difficult.  And because a “non-profit” organization has been used for less-than-honest purposes, there are plenty of regulations to prevent that from happening.  But it still happens, and in more subtle ways.

Let’s first look at cases where you are asked to donate a dollar to help some organization during checkout at a store.  Be cynical for a moment.  Why should you do this?  If you were a charitable giver, you would donate through the organization’s website or through some other direct channel, not through Perkins or Denny’s or Walgreens.  What’s in it for me?  Well, nothing.

However, the other parties involved are both getting a boost.  The charity itself is getting reach and exposure.  They have hundreds or thousands of people asking for money on their behalf.  The company partnering with them is getting money to claim as a charitable donation.  You’re not getting that tax deduction for $1, the company is getting tens or hundreds of thousands of dollars in a deduction.  And when they advertise promoting that charity, it’s a donation as well.  They’re donating advertising dollars (but their name is on it too, so…)

Yeah, ok, no big surprise that a company is going to take advantage of this opportunity and maximize their profit from it, but surely the charity benefits from this, right?  It sure does.  But stop and think about most well-known charities.  They are businesses.  People love the term “non-profit” (or “not-for-profit” because the “not” makes it sound more aggressive).  What do these terms mean? It means there’s no shareholders, no one who invests in the business and expects a return on the investment.

Non-profit means the money stays in the company.  It doesn’t explicitly mean that all excess income goes to the beneficiaries of the charity.  It could mean that the excess income goes to capital improvements, like real estate or equipment.  It could go to salaries or even bonuses.  It could be invested.  It could be spent on advertising  (which are termed “awareness campaigns”).  Sounds just like a business, doesn’t it?

And the most backwards, nonsensical part of the whole thing? Salaries.  When someone works for a non-profit, they are making a living off of donations.  Think about it.  The non-profit organization is paying people enough to make a living, while at the same time, providing somewhat light assistance to many others.  And in many cases, there are executives that are living very well while running this business, this charity, built from donations just like the ones you are asked for when you check out.

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