PAD 1700:

Philanthropy and the Nonprofit Sector

Week #2

The Relationship Between Nonprofits & Philanthropy

Part 1

Weekly Class Format

6:15 6:30 Community Learning Team Regroup 6:30 7:30 Lecture 7:30 7:45 Break 7:45 8:45 Community Learning Team-Led Discussion 8:45 9:00 Class Recap 9:00 9:15 Community Learning Team Regroup

Nonprofit Organization:
An organization that does not operate to make a profit An organization that uses its funding to do charitable work Taxexempt businesses that are deemed to operate in the public benefit. An organization that is established as a not-for-profit (or NFP), whether qualified as a tax exempt one or not (many aren't tax exempt - like political action committees), does not have owners in the conventional sense.

While the organization may in fact make money in any number of ways, on investments, business ventures, donations, etc., and pay salaries and other expenses as needed, all of it's 'earnings" are employed (or spent) to further the NFP goals. No dividends are paid and the stock is not traded. Owners (stewards/trustees) do not get anything.

Types of Nonprofit Organizations

501c3 Nonprofit organizations formed to charitable, religious, educational, scientific and literary. A nonprofit organization may fall under one or more classifications. Organizations may fall under more than one category. Example: a Christian charity providing food to homeless citizens could fall under charitable and religious classifications. 501c4 Nonprofit organizations formed to promote social and community welfare An example of a 501c4 is an organization that provides social resources to retirees. Charitable, educational and recreational organizations that don't qualify for 501c3 status may apply under this section. Unlike 501c3 nonprofits, 501c4 organizations may participate in lobbying activities.

Types of Nonprofit Organizations

501c7 Social clubs formed for nonprofit exempt purposes. To qualify under this section, nonprofits can't discriminate against citizens based on race, color or religion. However, religious 501c7 organizations may limit their membership to those belonging to a particular religion. 501c7 nonprofits must receive support from memberships fees and dues. Example of nonprofits with this status include college fraternities and sororities, country clubs and homeowners' associations that meet for the purpose of preserving their recreation areas and facilities.
501c8 and 501c10 Nonprofit organizations operating as fraternal societies. Members of the societies must come together to pursue common goals. 501c8 organizations must provide life, health and accident benefits to its members. Organizations must give reasonable explanations regarding the criteria for excluding some members from receiving benefits. 501c10 nonprofits can't offer such benefits to members, but they may secure thirdparty organizations to offer benefits. 501c8 nonprofits aren't required to offer benefits to all members, but most members of the organization must meet eligibility requirements for benefits.

Philanthropy
1. desire to benefit humanity: a desire to improve the material, social, and spiritual welfare of humanity, especially through charitable activities 2. philanthropic act or group: a philanthropic action or organization 3. love for all humanity: general love for, or benevolence toward, the whole of humankind ( formal ) Synonyms: charity, compassion, patronage, humanity, generosity, benevolence, altruism, clemency, goodwill, amity

How People Choose to Give

Donors typically give because they relate to an organizations mission and the people who accomplish that mission. Achieving tax deductions is usually a secondary motivation. We know of no objective research that suggests otherwise.

Simple Means of Giving:

Two simple means of givingthe outright gift and the bequest that will serve the needs of the great majority of donors and nonprofits:
1. Outright gift: This is appropriate for donors who want to see their charitable dollars at work during their lifetimes. 2. Bequest: The basic method for those who want to give at the end of their life.

SOURCE: Charitable Giving Methods: What Nonprofits Need to Know and Need to Tell Their Donors By Richard Livingston, Donor ARTICLE LINK: http://cpgr.org/lal/files/File/uploads/Methods.pdf

Complex Means of Giving:

For some donors who have unique wealth, tax, income, and/or estate issues, as well as the financial sophistication and time required to fully understand them, the complex means of giving typically the charitable gift annuity and the charitable remainder trust with variations, may be appropriate:
3. Life income gifts and other split interest instruments: This category includes the charitable gift annuity (CGA), the charitable remainder trust (CRT), the charitable lead trust (CLT) and the pooled income fund. These methods are appropriate for donors who want to give assets now for later use, who seek some form of direct financial return from their giving, and who have unique tax and estate issues to deal with. (Some insurance arrangements fall into this category.) SOURCE: Charitable Giving Methods: What Nonprofits Need to Know and Need to Tell Their Donors
By Richard Livingston, Donor ARTICLE LINK: http://cpgr.org/lal/files/File/uploads/Methods.pdf

Philanthropy
1. desire to benefit humanity: a desire to improve the material, social, and spiritual welfare of humanity, especially through charitable activities 2. philanthropic act or group: a philanthropic action or organization 3. love for all humanity: general love for, or benevolence toward, the whole of humankind ( formal ) Synonyms: charity, compassion, patronage, humanity, generosity, benevolence, altruism, clemency, goodwill, amity

Nonprofit Organization:
An organization that does not operate to make a profit An organization that uses its funding to do charitable work

Nonprofits Need:
Support a mission or a cause Operate (human, equipment, property, program & administrative resources) Provide services to members/beneficiaries

Philanthropists Give:
Support a mission or a cause Help favored nonprofits operate Create a legacy Tax relief

Gaps between Nonprofits & Philanthropy?

Identify nonprofit organizations that exist to do work that most people would not consider charitable?

In the USA, is philanthropy always directed towards organizations that exist because of a desire to improve the material, social, and spiritual welfare of humanity, especially through charitable activities? Cite examples.

Weekly Community Learning Team Led Discussions

Purpose: keep the class informed about events, trends and questions happening in real time in the world encourage critical thinking & discussion regarding how current events/trends are impacting "Philanthropy and the Nonprofit Sector." Format: Your group should be prepared to lead a presentation which: presents the facts as provided in the article; raises questions that inspire critical thinking about the information covered in your article stimulates discussion regarding how said events and trends might impact other nonprofits or philanthropy in general. If the information provided in the article impacts the work that members of your team are doing in your respective workplaces, it would be most appropriate to interject this information into your presentations.

Weekly Community Learning Team Led Discussions

Format (continued) Approach this assignment as if you've been asked to broach the subject matter with your colleagues in the workplace or at a professional conference. Your team's presentation should be about 15-20 minutes in length, during which you want to do three (3) things: lay the foundation for your topic; deepen and apply understanding as to the subject relates to philanthropy and the non-profit sector in general and with specific organizations (including those you are or have been affiliated) reflect and assess the information you are presenting.

Because all members of the class are required to read the article regardless of whether or not you are leading the discussion, the presenting team should be prepared to pose 2-3 questions that will generate discussion in which everyone can participate. Your presentations will be preceded by a lecture on a general topic and following your presentation, all students will have an opportunity to discuss how information shared in the lecture ties into information shared in your presentation.

Student-led Discussion: Philanthropy & Politics

Team 4

Class Discussion Questions: 1. How do politics shape non-profit organizations?

2. What type of relationship exists between political philanthropists & the non-profit organizations to which they give?

3. What are the ramifications (good & bad) when the work of nonprofits collide with political agenda?

Session Recap:
1. Types of nonprofits 2. Types of philanthropic Giving

3. Relationship between Philanthropy & Nonprofits

4. Gaps between Nonprofits & Philanthropy 5. Impact of Politics on Philanthropy