Non-profits provide a tax shelter for both the individuals running it and others. Whether you happen to be on the board, members of which often make a considerable amount of money, or you are donating to that organization, you get tax breaks and they motivate you in other ways to take part. It’s not all charity, and I’ve been surprised by some of the groups that quality to call themselves “non-profits”, especially when some board members are being paid ridiculous amounts for their time, usually once or twice a month.
A non-profit by definition is an “organization that does not distribute its surplus funds to owners or shareholders.” It uses those funds to pursue its goals. Some have high overhead costs, and with organizations such as those meant to help starving children often tell you in the fine print that 10%-50% of your donation will actually go to the starving children. That’s certainly not what most would bargain for.
On the other hand, because they lobby for money, organizations like RESULTS don’t actually qualify. So you will not get a tax break. Members of similar organizations really don’t get anything but the satisfaction of knowing that they helped people. The major difference is that those organizations are actually able to donate more money than you donate to the cause.
They Can Offer High Priced Stocks
This is a loophole. You would think that this would specifically be prohibited. After all, if people are buying stocks, this theoretically means that they are making money that may not necessarily go toward the cause. But for whatever reason, they allow this economic activity, even though they don’t allow lobbying.
Non-Profits Are Scrutinized
At least according to government reports, even though there have been multiple cases of fraud, they would say that the government scrutinizes non-profits and holds them to a higher standard than any other “business organization.” They look at economic activity, supervision and management provisions, representation, accountability and auditing provisions, provisions for the ammendment of statutes or articles, provisions for the dissolution of the entry, tax status of corporate and private donors, and the tax status of the foundation. If they maintain these provisions, they get tax-exempt status in the United States. Even their employees end up paying less!
Do Any NPO’s Give All of Your Money to the Cause
This is one more reason to love Oprah. Oprah’s NPO’s are among the few and only organizations that give all of your money to the cause! Oprah personally covers all overhead costs. So for example, if you want to donate to her leadership school in South Africa, you can be confident that all of your money will fund the schools.
She has faced some controversy, first because some believe that she should have created a school in the United States or taken steps to take care of children in the United States. Second because there was one teacher who created serious issues and then tried to sue Oprah. But realistically, I have lost count of all of the charitable donations and contributions that she has made to organizations in the United States, even rebuilding schools for under-privileged children in urban areas.
If You Want to Donate
Pick your cause. There are plenty of legitimate NPO’s out there, many of which donate a lot of your money if not all to your given cause. You can protect the whales, fund computers for school children with Bill Gates, or just about anything else.=
