Many of us make decisions for our personal giving based on assumptions we have regarding nonprofit organizations and rules we think apply. In the following Denver Post article by Bruce Deboskey of The Deboskey Group, several of these assumptions are challenged by facts. Have you ever thought that your small gift won't make a difference? Or that nonprofits that incur a certain percentage of overhead costs are therefore poorly managed? Read on for a fresh perspective - based on facts.
Over generations of giving, generous people have developed a wide range of “beliefs” about philanthropy. In fact, many of these beliefs are actually myths.
Many beliefs about philanthropy are based on false assumptions or an inaccurate understanding of how contemporary philanthropy actually works. Ultimately, these myths can inhibit giving by discouraging people from believing that their philanthropic actions can make a meaningful difference in a world filled with challenges.
Among the most pervasive myths is the belief that — in order to be a philanthropist — you have to be a multi-millionaire or even a billionaire. This myth is perpetuated by media coverage of mega-gifts to universities, hospitals, the arts and other worthy causes by a small number of uber-wealthy people.
The term “philanthropy” is a combination of two ancient Greek words: “philos,” meaning “love,” in the sense of caring for, nourishing, developing and enhancing; and “anthropos,” meaning “human being,” in the sense of our common humanity.
Using that definition, a philanthropist is any person who expresses love of humanity through charitable efforts – no matter the size or scope of those efforts. Each of us can be a philanthropist by giving, by volunteering or in our daily interactions with others.
Recently, professors at Indiana University’s Lilly Family School of Philanthropy published a list of eight myths about philanthropy that call for debunking. They include:
- Religious giving is declining. Although religious giving may be declining as a percentage of overall giving, donations to most houses of worship and other faith-based organizations are holding steady — and probably increasing.
- Women are less philanthropic than men. Since the most significant predictors of philanthropic giving are education, income and wealth, and since women today have increased access to all three, the data show that women are more likely to give than men. In addition, they are likely to make larger donations than men.
- Immigrants take rather than give. Statistics show that immigrant households are in fact less likely than native households to receive assistance from governmental and nongovernmental sources. Immigrant status has no significant effect on charitable giving.
- African Americans are emergent donors. African Americans have contributed to charity for hundreds of years. In fact, African Americans contribute the highest proportion of their wealth to charity. The only “new and emerging” phenomenon, note the authors, is the growing interest of mainstream nonprofit organizations in donors of color.
- Small gifts don’t matter. Particularly in cases of dire humanitarian need and disaster relief, aggregated amounts of small gifts are the lifeblood of philanthropic campaigns. Even in other situations, small gifts can help donors get to know an organization, inspiring larger donations in the future. One plus one can eventually lead to a million.
- Endowments tie up cash. Although some giant university endowments (such as Harvard University’s $39 billion) have come under well-deserved scrutiny, the situation is different for most nonprofits. Endowments provide long-term stability for funding programs and operations, especially in periods of financial volatility and uncertainty.
- People give for solely altruistic reasons. Research shows that people give for many good reasons, including enhancing their own self-interest. My own experience confirms this. Although donors are certainly drawn to causes they care about, many other factors often influence the extent of their generosity and engagement.
Another common fiction about philanthropy is the “overhead myth” — the belief that high administrative costs reflect a charitable organization that is poorly run. This myth holds that the less a nonprofit organization spends on administrative overhead, the more effectively it will achieve its mission. Some donors apply a test that consists of the ratio of administrative costs to overall program outlay. Unfortunately, adherence to the overhead myth creates a “starvation cycle” that undermines the actual capacity of nonprofits to achieve their missions and fails to take into consideration the actual costs of administering challenging programs that address truly challenging problems.
A corollary myth is that the executives of nonprofits should not be paid as much as the executives of for-profits. As a result, nonprofit leaders are routinely underpaid. To tackle today’s difficult problems, we need the most talented leaders. Improved nonprofit compensation will eliminate the conundrum faced by many qualified candidates: “Should I choose a job in which I can do well or a job in which I can do good?”
The best philanthropic decisions are based on facts – not myths. Understanding the difference will help donors maximize their individual and collective philanthropic efforts.
For more than 40 years, Bruce DeBoskey has been dedicated to community building and social change through his professional and volunteer work. It is with that mission and commitment that he founded The DeBoskey Group in 2010, to help individuals and families, businesses, and foundations organize, strategize, evaluate and maximize the impact of their philanthropic initiatives. Article originally published in The Denver Post on 2-9-2020.