Are you donating to nonprofit organizations? If yes, are you wondering where it is going? If no, are you having hesitations?
The most convenient and common form of donation is money. Money comes easy in the form of cash or cashless transactions, easy to transfer and receive. Hence, most nonprofit organizations prefer monetary donations. Aside from the fact that it is an easy form of donation, it can be converted too. Money can buy goods, pay for services, rents and it can materialize a program.
Nonprofit organizations are charitable organizations that collect funds and donations for charitable and sustainable social, educational, environmental, and any other projects. Projects are usually in the form of programs with specific beneficiaries. In order for programs to start, a nonprofit needs a fund source and the monetary donation is the most common funding for nonprofits.
Given that money is given and entrusted to nonprofits for good use, many critics are skeptical about this. Are nonprofits a form of business? Is there profit in nonprofits? First, yes. Nonprofits are business. However, it is a non-profitable business. It means that ate the end of the fiscal year, the nonprofit cannot make use of the savings or money left in the organization.
The money collected from a nonprofit funding source is spent solely for the continuance and benefit of the organization itself. The excess money is not given to the personalities behind the organization. On the other hand, like any organization with employees, the organization is required to pay its workers for their wages in the form of salary.
As donors, we would like to know and see where the money really goes. In recent, many nonprofit or claiming charitable institutions were put in the spotlight for corruption, misallocation, and wasting of resources. According to Consumer Reports, one of the watchdog organizations, there is really an ongoing mistrust in charitable and nonprofit organizations. This affects the image of nonprofits as a whole and creates a cloud of hesitation and unwillingness for donors to give.
As much as nonprofits would like to spend 100% of the donations to pure charitable works, the world does not go like that. There are fees everywhere and every move needs money. This is the typical breakdown of the nonprofit money in 7 out of 10 nonprofits in the US.
First, the admin cost which is around 15-28% of the money. This is needed to keep the nonprofit business going and working. Second is the fundraising effort. Fundraising is a good nonprofit source but it cannot be done without cash out, as they say, “you need to spend money, to make more money”. This comprises 6-12% of the money. Lastly, the programs and aid, which comprises ideally in 65% of the money. Almost all charities follow this threshold.
At the end of the day, when you give, you are not really after where they spent that. As a donor, you are after the impact and change your donation has brought. Also, donating on nonprofits is out of goodness and was never mandatory. While this could be true, it is still best to know where the money is going and nonprofits should be transparent about it.