Nonprofits like Giving Center are all around us, however, there are some common misconceptions about what nonprofits are and what they do.
Myth: Nonprofits can not earn a profit
Reality: The term “nonprofit” is a little bit of a misnomer. Nonprofits are able to make a profit. In fact, they should try to have some level of positive revenue to build a reserve fund to ensure sustainability. A key difference between nonprofits and for-profits is that a nonprofit organizations are not able to distribute its profits to any private individual. Nonprofits can, however, pay reasonable compensation to those providing services. The prohibition against “private benefit” is because tax-exempt charitable nonprofits are formed to benefit the public and not private interests. You are able to read more information on this on the IRS guidance page.
Myth: A well-run nonprofit should have low “overhead” costs
Reality: Operating costs, like paying utility bills, rent, salaries, and investing in office equipment are often referred to by a variety of names, including “overhead,” “administrative costs,” and “indirect costs.” The terminology might vary but there is one thing that does not: these costs are important to delivering on a charitable nonprofit’s mission. They have no relation to the level of effectiveness or the outcomes a charitable nonprofit may deliver.
Myth: Nonprofits do not have paid staff; they only use volunteers
Reality: The Johns Hopkins Center for Civil Society Studies and data from the Bureau of Labor Statistics reported that in 2016, nonprofits employed 12.3 million people. That is 10% of private employment in the United States!
Myth: Nonprofits can not lobby
Reality: All nonprofit can and should make their voice heard on issues that are important to its charitable mission. Nonprofits are sometimes required to speak up as advocates about policies, laws, and regulations; lobbying by nonprofits is permitted by law. Tax-exempt charitable nonprofit organizations, however, are NOT permitted to engage in partisan political activity, such as supporting or opposing a candidate for public office.
Myth: Nonprofits get most of their funding from foundations
Reality: Foundation grants are only a small part of the total amount of dollars contributed each year to the charitable nonprofit community. Private philanthropy, including both donations and bequests from individuals and grants from private and corporate foundations, account for only 14% of the total annual revenue to the charitable nonprofit community, of that, the majority is from contributions from individuals.
Myth: Charitable giving incentives only benefit wealthy individuals and elite institutions
Reality: All charitable nonprofits benefit from public support and generous donations, in fact, most depend on private donations to serve their communities. While individual taxpayers only receives a partial tax benefit for charitable donations, the communities served by charitable nonprofits receive the full value of every dollar. Any type of cap on giving incentives negatively affect the community.
Myth: Most nonprofits are large and have many resources
Reality: Most nonprofits are small in both budget size and numbers of employees. Large, well known nonprofits, such as the Red Cross, have high visibility, those nonprofits are not representative of the charitable nonprofit community as a whole. 92% of all reporting public charities had annual revenue of under one million dollars.
There are many ways you can give back to your community. You can donate real estate, donate aircraft, donate cars, and more. To find out more on how you can make a difference, visit Giving Center to get started on your donation journey today.
