Corruption in the Nonprofit Sector
Charities are widely known for doing good in the world. However, there are a number of people who don’t believe in donating to charities. Why would they feel this way?
First off, it’s important to understand the difference between a charity and a nonprofit. I had always pictured the two terms as meaning the same thing, but was surprised to find that the National Hockey League and PGA Tour are both technically nonprofits. According to Charity Central, a charity “must be established and operate exclusively for charitable purposes, [such as] relief of poverty, advancement of education, advancement of religion, or purposes beneficial to the community.” Nonprofits, on the other hand, “can operate for social welfare, civic improvement, pleasure, sport, recreation, or any other purpose except profit.”
Technicalities aside, the fact still remains that some people are not willing to donate to charities. The reason for this is that a few charities in the past have squandered donations, contradicted their moral values, or even broken the law.
For instance, the Sierra Club was accused of accepting donations from a natural gas company (up to 26 million dollars in donations). To their credit, the charity later severed its relationship with the company after research came out showing that natural gas drilling harms the environment. Still, the scandal may have deterred many possible donors.
Another example is that of four cancer charities that were found to be run by the same family. According to CNN, 97% of the donations went to either fundraisers or luxury goods for those who ran the charities (cars, jet skis, gym memberships, college tuition, cruises, and concert tickets, among other things). The four charities were: the Cancer Fund of America, the Breast Cancer Society, the Children’s Cancer Fund of America, and Cancer Support Services. Rampant nepotism was also a huge problem with these organizations.
This is actually related to a question that a lot of charities face: how much should the CEO of a charity make? Should they be allowed to enjoy a comfortable lifestyle? According to blog writer Joan Garry, nonprofits and charities are put under fire if their CEOs make too much money. This made sense to me at first, but as I read through her article, I started to see why some CEOs of charities feel underpaid if the board of directors doesn’t show them enough appreciation for the work they do. They also feel pressure to support their families, just like anyone else. The article ended with a list of ways that a board can show appreciation for the CEO, which makes the them find much more fulfillment in their work. I bet that a lot of CEOs of charities would rather have an outstanding board of directors than a high salary. This would also lower the likelihood of CEOs getting overpaid, which enhances the public's perception of nonprofits.
Ultimately, it is important to have a practical perspective on the work that nonprofits and charities do and the way they manage their money. The truth is that the vast majority of CEOs that work with nonprofits are really in it for the cause. Scandals are very rare, and of course charities provide a lot of good to the world and help to improve the lives of people in need. Because of them and the generous donors that keep them afloat, more people around the world have access to food, shelter, water, education, and healthcare. It’s also important to remember that the media reports mainly negative information, so it can seem like charities are more corrupt on average than they actually are. Deciding to not donate to any charities based on the few scandals that have occurred doesn't seem like sound logic to me.
In my opinion, donating to a charity or nonprofit is one of the most generous things a person can do, but it is important to do research on a charity before you donate to it to make sure that it sticks to its values. A valuable resource for this is charitynavigator.org, which gives a 1- to 4-star rating on a wide range of charities and nonprofits.