A possibly stupid question about non-profit charities.

[white_wolf]

I thought of this after I read about the 500k salary for the Komen CEO, how is making 500k a year "non profit?" Like I said this may be a really stupid question, the term just confuses me.

[Yupster]

1. Salary is a business expense

Profit is money left over after all business expenses are paid.

So you could have a non-profit take in $ 600,000 in donations, pay out $ 500,000 to its staff, pay $ 80,000 for operationas and fundraising and give $ 20,000 to the actual charitable purpose.

[Tx4obama]

3. Yep, you hit the nail on the head. n/t

[avaistheone1]

7. Many sadly do exactly that.

k&r

[Capitalocracy]

8. Worst part is...

you can pass that money on to another charity, further diluting it for overhead costs and possible skimming, possibly to another charity you yourself own, and that counts as spending the money you take in on charitable activity.

[TheWraith]

9. Not quite.

Charities ARE required by law to dedicate a minimum amount of the money they take in to actual charitable action as opposed to overhead, however the required minimum percentage is only about 20% I believe. What charitable groups actually use for their own operations varies--for instance, the Red Cross uses less than 10% of their income for administrative costs and salaries, whereas the March of Dimes uses almost 25%. Anything over 40% is generally considered to be either very poor management or extreme dishonesty.

[Tx4obama]

2. An example is the article regarding Rick Santorum's charity below

The spotlight burns a hole in facade of Santorum's “Operation Good Neighbor.” charity

The Washington Post is reporting Santorum's charity to improve the lives of the lower income people in his home state, in reality spent most if its money improving the lives of his cadre of political friends.

But homeless families and troubled children were not the biggest beneficiaries of “Operation Good Neighbor.” Instead, the foundation spent most of its money to run itself, including hundreds of thousands of dollars in fees for fundraising, administration and office rental paid to Santorum’s political allies.

The charity also had significant overlap with the senator’s campaigns and his work on Capitol Hill. Among the leading donors to the foundation were Pennsylvania development and finance firms that had donated to his election efforts and had interests that Santorum had supported in the Senate.

Santorum, whose last-minute surge in the Iowa caucuses has brought new attention to his presidential bid, portrays himself as a common man concerned about the gap between the nation’s rich and poor. But in the case of his charity, his efforts ended up mostly helping his cadre of political friends.

Before it folded in 2007, the foundation raised $2.58 million, with 39 percent of that donated directly to groups helping the needy. By industry standards, such philanthropic groups should be donating nearly twice that, from 75 to 85 percent of their funds.

http://www.washingtonpost.com/politics/santorum-charity-for-the-poor-spent-most-of-its-money-on-management-political-friends/2012/01/11/gIQAGDKVwP_story.html


Found on DU here: http://www.democraticunderground.com/12511178

[Critters2]

4. Salaries are considered a business expense. So, not profit.

Profits are funds left over after expenses are met, that then go to shareholders or a private owner. There are good reasons to be upset about a salary that high, but as long as the funds go to an employee and not an owner, they aren't profits.

[bhikkhu]

5. Charity Navigator is a good place to evaluate a non-profit

http://www.charitynavigator.org/index.cfm?bay=topten.detail&listid=15&v=1

...and the argument does come up from time to time - I think it was the salary of the head of Goodwill a few years ago that was the issue. Low administrative expenses are generally considered good, but if they are too low then there is the risk that it is poorly run or ineffective. 500k is too much anyway.

[msongs]

6. spend all the money on yourself as expenses and...voila! no profit. that's how they work it nt

[lillypaddle]

10. Non-profit is a misnomer

these organizations are businesses, and of course they try to make a profit. The difference with a "for profit" company, is that the non-profit organization puts profits into programs that fit the organization's mission. Non-profits are notorious for underpaying staff, but to get the best people they should pay competitive salaries.

[meaculpa2011]

11. Whenever you see those celebrity pics...

of them posing at some "non profit" event, you can bet that expenses for the evening have run 80-90% of what's donated.

I've been involved in several and all those beautiful people will only open their checkbooks if they get to be seen and photgraphed at The Plaza with other beautiful people.

[Bluenorthwest]

15. Not all famous people are like that. Some are righteous, others are far worse than you

know. Open their checkbooks? Many celebs are PAID to attend charity events, in fact, more than a few get paid to do the 'carpet'. That is they show up, walk in so the photogs can see, then they go out the back door and into the limo again.
Now again, this is not true of all, and most who are in any way decent do such things only when they are donors, when they do care.
Of course, the argument those taking fees use is that the organizers are also taking huge fees. So some 'non profit President' who makes 40K a month wants others to work for free? Not all see that as fair either.
If the gen pop knew the hows and whys of much fundraising, they'd puke.

[sendero]

12. The term "non-profit" has almost.

.... zero practical meaning. The execs at a non-profit can pay themselves whatever they want. And they can spend their money however they want to be sure that there is no "profit".

It's funny, I was a SGK supporter since way back in the mid 80s. I used to do the runs and donate and etc. But in the last year or so I started getting uneasy with their "marketing" and their absurd assertions of trademark and the like.

As usual, once Republican douchebags take control they can ruin any good thing.

[alc]

13. the owners don't make a profit

Employees, including CEO, make a salary. I don't have a problem with it except where the owners or their friends are high-paid employees. To get it to run best, you usually need a high-power CEO, and they can get paid a lot by for-profit companies.

[TreasonousBastard]

14. It's not stupid. "Non-profit" just means no profits are returned to...

owners and the money spent has to meet minimum standards. All of this is spelled out in detail in IRS rules.

About that $500K salary-- Komen raises and spends around $400 million a year and has hundreds of chapters with thousands of paid employees and volunteers running a vast number of events. What do you think is the proper salary for all that?

[Bluenorthwest]

16. Well the President gets paid $400,000 for running the country....

so I'd say running a charity is not as intense as that gig.

[meaculpa2011]

18. They get paid what...

the traffic will bear. If the President made no salary, every corrupt councilman from every town, village and hamlet would still dream of sitting in the Oval Office.

No problem recruiting candidates here.

Amend that... If the president had to PAY $400,000 per year...

[AngryAmish]

17. Most large teaching hospitals are "non-profit"

They can pay their administrators millions and doctors working there multimillions but still be non-profit.

A DUer from downstate Illinois complained about the local hospital being a charity hospital, paying no taxes and hardly ever treating poor people. Got their tax exempt status yanked.

[Romulox]

19. The President of my local "Public University" makes just shy of $1 million/year. nt

[mdmc]

20. ..