When it comes to philanthropy, there are many myths that plague the industry. As a major proponent of charitable causes, I wanted to help dispel any and all myths. With the being said, here are some of the most common fallacies regarding philanthropy.
Charity is All About Helping the Poor
Helping the poor is what typically what comes to mind when people hear the term charity. However, there are a lot more ways that people can be charitable. Many people donate money to social services, scientific research and health care. In fact, the biggest components of the charity sector in America are hospitals. More money is donated to profitable hospitals than non-profit hospitals.
It is easy to get started with a charity. In fact, 99.5 percent of applications are approved by the Internal Revenue Service.
Charities That Have a Low-Overhead Cost Should be Rewarded
Many people believe that charities should spend most of their money on services and as little as possible on overhead costs. The Charity Navigator recommends that organizations spend less than 30 percent of their money on administrative costs. They also reward people who spend less than 15 percent on administrative costs.
However, if an organization does not invest enough, then it could end up coming up short on what it really needs. The American Red Cross struggled to help victims of Hurricanes Sandy and Katrina because they did not invest enough money in their infrastructure.
People Give Because of the Tax Incentives
Low-income people give more money than wealthy people. Not only do low-income people have less disposable income, but they are less likely to itemize tax incentives. However, there are certainly people who take advantage of the tax incentives. In fact, 25 percent of online donations are given the last two days before taxes are due.
Non-Profit Organizations are Not Profitable
In 2010, American charities had over $2.7 trillion in assets. Ascension Health had over $2.7 billion in reserves. This is twice the amount that Walt Disney Co has. Many people prefer to donate to smaller charities because they feel that this will make the most difference. However, small charities may not be as good at building financial reserves.
Finding a Good Charity to Support is Easy
It can be difficult for you to find a charity to support. For example, you are trying to find a charity that supports veterans. There are over 60,000 charities that support veterans, but most of them do not have a lot of information about what they do. It takes time and research to find a good charity.