Profit vs Non-Profit: What You Need to Know Before You Donate

If you want to spread some joy this holiday season, an easy way to do that is to donate. Although it is fantastic that you’re considering this, it is also important to make sure your money is going directly to the cause you want to receive that check. There are a few simple things to keep in mind when looking into an organization.  

  1. 1. Non Profit vs Profit

    It’s common for people to believe that when they send money to a non-profit corporation, it is being sent to a benevolent organization that only spends the money on the cause. This is actually entirely false.

     

    Despite how it sounds, non-profit organizations receive a substantial income. A nonprofit works around the idea that they operate to better the public while a for-profit company has the goal to earn money for the business owners involved.

     

    Additionally, running a non-profit often makes the company exempt from federal taxes. This is a much more complex concept to understand, but the basis is that classifying a company as a non-profit organization means that money should be going directly to the designated cause. When the money isn’t directly spent on bettering humanity, it should be ‘reinvested’ into the company.

     

    That’s a vague statement to make, and there has been plenty of scandals within non-profits that prove that they are non as altruistic as many may believe.

  2. 2. Did You Know These are Non-Profits?

    The College Board

    The College Board is the distributor of college entrance exams (SATs) and is run as a non-profit organization. The CEO of the College Board sits comfortably making over a million dollars a year off of the company that is worth over $1 billion. Although the college board is a non-profit organization, it is an extremely profitable ‘non-profit.’

     

    The NRA

    Yes, the National Rifle Association is a nonprofit, tax-exempt organization. Their mission statement, which can be further read into on their website, states that the “gun rights advocacy group based in the United States. Founded to advance rifle marksmanship, the modern NRA continues to teach firearm safety and competency.”

     

    Despite how you may feel about the SAT or the Second Amendment, this is a way to show how a non-profit doesn’t have to be what people may conventionally see as a charity.

  3. 3. Scandals Within Non-Profits

    Non-profit organizations are required to release their spending every year, but oftentimes these corporations have ambiguous spending labeled under titles such as “program expenses.” Where exactly this money is going towards is still a bit in question. 

     

    Goodwill is a famous non-profit organization “that provides job training, employment placement services, and other community-based programs for people who have barriers preventing them from otherwise obtaining a job.” They are famous for their thrift stores placed all over the countries.

     

    Similarly, organizations such as Red Cross and the Wounded Warriors Project have had accusations that they splurge on lavish accommodations and are not being forthright with where all their money goes. Red Cross states that 90 cents of every dollar go directly to the cause they are assisting (ex. disaster relief) when there have been numerous accusations that this number may stand much lower. 

     

    One accusation towards the Red Cross was from an article published on the site ProPublica. ProPublica and the NPA (a financial organization) accused the Red Cross of its spending being closer to 9 cents of every dollar going to charity rather than the 90 cent claim. The Red Cross has stood by that their spending 90 percent goes toward charity work, and the claim of 9 percent has been deemed outrageous. The accuracy of the 90 percent figure does remain in question.

     

    The biggest scandal within the Red Cross organization, which is still is a problem, is the fact that the Red Cross sells the blood people donate. This was discovered around a decade ago but still occurs today. For over $100 a pint, Red Cross will sell the blood that was donated for free to hospitals, laboratories, and pharmaceutical companies for a profit.

     

    Although they may have a great cause they are connected to, with any corporation the people ontop make a lot of money. The CEO of Red Cross, Gail McGovern received $694,000 in 2018’s salary. 

  4. 4. But Don't Be Scared to Donate

    This article is not written to dismantle every non-profit in existence. It is to make you aware that just because an organization is deemed non-profit, it does not mean that all of your money is going directly to the hands of those in need.

     

    Most of the corporations mentioned previously are renowned as well-run companies that aid countless people all over the world. The purpose of this is not to say that every non-profit steals money, but to clear up the fact that someone running a company as a non-profit may not be for the benefit of the greater good, but perhaps for ulterior motives.

So, just because you hated the SAT and you now know that the College Board is non-profit, it doesn’t mean a non-profit is bad. Non-profit just doesn’t necessarily mean that every dollar is being spent towards the cause allotted. It is important to research before sending off money; try to make sure your money is going exactly to who and where you want to help.