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Evaluating Non-Profit Motives


Non-profit is a word descriptive of a type of business entity which has a special tax status. Along with that status comes rules particular to the idea of being not in the business of making a profit. This would obviously seem to mean the business has some other function it tries to fulfill.  One of the reasons for the special tax status is to allow people a tax break on money they give to these entities in order to encourage people to donate to them. Recently an article in SocietyCharlotte, a print and online magazine of varied interest, had a story about Mr. Dan Pallotta’s speech about non-profits, which was in part a fundraiser for HEART Tutoring. Unfortunately I can’t find an online version of the article, so no link, although there is a TED Talk you might look up.

While I agree there many things about non-profits which need to be changed, this statement by Mr. Pallotta raised my ire: “We have a visceral reaction to the idea that anyone would make very much money helping other people. Now it’s interesting that we don’t have a visceral reaction to the notion that people would make a whole lot of money not helping other people.”

Let me parse this.

If you give your money to others, without something directly for you in return, are you giving it so they can have more money, or are you giving it for them to accomplish something with it? So if you give to the church, are you giving so the preacher can make a large salary, or are you giving so the church can do things to help others? The whole of your “visceral” reaction is based on your expectations of how your money would be spent which is why you donated your money. Perhaps Mr. Pallota thinks I should just give money so others, who provide me nothing directly, can get rich? He should look up the leaders of GoodWill. He will, no doubt, be happy with what he finds.

If you exchange your money, for some good or service, with another, then you have agreed to accept what they have to offer is a good exchange for your money, otherwise you wouldn’t make the trade. You know to start with they are exchanging with you to make a profit, so the fact they might get rich doing so is acceptable, even to be hoped for. That is the nature of the capitalistic system. People have the opportunity to exchange goods and services for a profit to themselves and to improve their financial position by doing so.

Beyond that I found Mr. Pallota’s ideas intriguing. He thinks non-profits should be able to spend more on advertising; on risky revenue enhancing ideas, and that if a non-profit doesn’t do what it is in business to do in a timely manner, the donors should just be patient. Wait, wait, don’t tell me, it can’t be true: he wants non-profits to be more like government.

While on the subject of non-profits, there is no question the rules need to be changed. Carolina’s Healthcare System is under the same designation as the Salvation Army? Churches are buying retail properties and taking them off the property tax role? GoodWill is spending exorbitant amounts on buildings when they could be using available empty big box stores. Habitat for Humanity is starting down the same path: look at their new buildings.

If our legislators have the time and the inclination to take on the many special interests, I suggest they give the whole thing a good look.

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