Non-profit organizations accomplish vital tasks in the communities where they are located. They may provide services that residents cannot get elsewhere, or they may make information easier to access so people can seek help and stay informed.
As non-profits, these organizations rely on the charitable donations of the public in order to continue their work. While there are many benefits to donating to a non-profit, those who contribute their time or money may be accomplishing more than they realize.
The Top Benefit of Donating to a Non-Profit
The primary advantage of donating to a non-profit is that it enables the organization to continue its mission and further provide services, products or information to the public. Without charitable donations, most non-profits cannot survive and will eventually close down. Thus, the major benefit of donating to a non-profit is supporting the community (and even yourself) by keeping critical services active.
Exactly how a non-profit will use donations will vary depending on the type of organization and its mission. In the case of the YMCA, for example, donations allow their facilities to offer social and health-conscious activities for the community and especially children. Without the YMCA, many families would not have a safe place to shower, stay healthy or build relationships.
While their mission is important, it differs from other non-profits such as, for example, the Audubon Society. This non-profit focuses on wildlife and ecological conservation so that future generations can continue to enjoy and benefit from the natural world. Each of these organizations will use donations differently, but the impact of both is equally important.
Thus a primary determinant in your giving decision is to understand a non-profit’s mission.
How Does a Non-Profit Use Donations?
Those thinking of donating to a non-profit are often concerned that their money will not do much good. One question to research before making a donation is to ensure that the non-profit is certified as such.
In the U.S. the IRS certifies non-profits as 501(c)(3) or 501(c)(6), which indicates an organization has gone through the proper channels for registration and reports its income and donations according to standards. Contributions to 501(c)(3) organizations are tax-deductible on federal income tax returns.
Charities without the 501(c)(3) certification may not be non-profits. Charities are free to use money as they see fit—including keeping it if they would like—whereas non-profits are more carefully monitored. In most cases, charities most often use donations to pay the salaries of essential people working there as staff to execute essential elements of their mission.
Another large portion of donations goes towards critical items that are relevant and necessary for the work the non-profit does. In the case of the YMCA, this may include the chemicals necessary to keep the public pool clean and safe. For other non-profits such as the Shepherd’s Center of Northern Virginia, donations help support essential staff with key expertise critical to our programs and services, as well as essential operational capabilities such as telecommunications.
However, our principal resource is our volunteers who graciously commit their time. We have roughly 300 volunteers, and our ratio of volunteers to paid staff is roughly 100:1.
Do Donations Go Toward Personal Salaries?
A key difference between a non-profit and other helpful organizations are federal regulations on how its money, including donations, is managed. Non-profits are tax-exempt, which means they do not pay taxes so that more of their money can go toward their cause instead.
However, in order to maintain this tax-exempt status, non-profits must use its funds specifically to achieve its goals. If a non-profit is audited and found to be profiting off of donations (such as by keeping some donations to fund bonuses for the organization’s executives), it will lose its exempt status.
The exact rules for how a non-profit uses its money will vary based on its categorization. Not all non-profits are 501(c)(3)s, though many are, and these minor differences impact tax liability on the federal and state levels. However, what remains consistent across categorizations is that non-profits cannot operate their finances in the same way as a for-profit company.
Personal Benefits of Donating to Non-Profits
The top benefit of donating to a non-profit is knowing that you are supporting an important cause that you believe in, and enabling that organization to continue to function. In addition, donors can claim state and federal tax benefits for making charitable donations, reducing their overall taxable income.
Your donations also encourage others to donate by example. Finally, in addition to the psychic benefits of giving, studies have also shown that people who do charitable giving see physical benefits, including a reduction in blood pressure.
Help Your Local Organizations Through Time, Money or Word of Mouth
Donating to a non-profit is one of the most powerful things that you can do for your community. As a non-profit, Shepherd’s Center of Northern Virginia relies on the compassion of people like you to allow us to continue to provide our vital services to needy older citizens.
Contact us to learn more about where your donations go or to make a donation so that we can continue to assist our elders in aging in place and living full, healthy lives in the community, regardless of their age.