Be Charitable
We believe a charity should operate like a for-profit business. The main difference should be that the focus of the organization and the metrics (key data), which are being managed, should highlight the number of “needy” stakeholders being well served rather than the number of dollars of profits.
In business, one only has to count cash to know how well they are doing, which is fairly easy. To help people other than yourself in a meaningful way is much harder to address and quantify, but it should be approached with equal vigor.
Charities do not distribute profits or have stock shares. All of what ordinarily would be profit from their business-like activities should be redirected back into their nonprofit projects. In a properly run 501c3 charity, there are generally staff members who receive modest salaries and other ordinary business expenses, but high salaries and expenses are frowned upon, and even illegal in some cases.
Other sorts of charities, such as churches, associations and political organizations, fall into different tax classes, whereas here, we are focused on fully tax-exempt 501c3 organizations, which are essentially charitable businesses whose monies flow internally after being raised or earned. There are no shareholders, dividends, or stock sales in a 501c3.
No one should directly profit from charitable activities, yet there are abhorrent cases where there have been executive excess at the expense of charity stakeholders and society. One high profile example is the recent discovery that an executive at United Way was misappropriating funds. This is an anomaly and not in the spirit of charity. Cases like this should be prosecuted to the full extent of the law. Furthermore, to use charitable donations on anything other than direct charitable actions and modest expenses (to run and grow an organization) is a moral violation.
Some corporate vendors who serve charities naturally profit since they aren’t nonprofit organizations, but their profits should be limited by managers on both sides of the transaction.
