Does a business with the best of intentions make for a good investment? Entering Week Five of our Six Week Philanthropy Challenge, we set out to help students grasp the quantitative side of our evaluation. They've identified casuses they'd like to support, located and visited organizations that support these causes, and have performed a level of qualitative analysis. Now, it's time to get into the numbers.
Most non-profit organizations' tax returns (Form 990) can be found on-line. However, for most of us, sifting through a tax return has about the appeal of a root canal. To make this a little easier for them, we first went over some basics on taxes, why we file returns, and what can be found in them. We discussed what it means to get a tax deduction for making a donation to a qualified charity. (Do you know the difference between a tax deduction and a tax credit?) Finally, we went through the returns for the organizations they had selected and visited. While there is all sorts of information that can be pulled from an 990, we focused on a few key items: expense ratios -programs, management, and fundraising; the cost to raise $1, and their short term sustainability (how long can they last on liquid assets if fundraising and revenue was to stop - a situation some have come close to experiencing these past two years). If you'd like a copy of our worksheet on Form 990 Quantitative Analysis, shoot me an email! (ryanponsford@yahoo.com)
I was extremely impressed at the ability of the students to jump into a tax return, pull info out, and do the calculations. It turned into a fun, healthy competition over which organizations had the best ratios. Who was most efficient? Who would survive the longest? In one case, a student made the observation that he had noticed while visiting that they sure could have used air conditioning in one of the facilities. After doing his analysis, the organization seemed to be flush with cash, perhaps too efficient in some of their ratios, and probably could afford to add air conditioning. Great observation; now we need to share our findings!
Once we completed the math, it was time to really evaluate which organizations they would choose to support. For some, the additional analysis had made them more confident in their decisions, for others, they were taking a second look at which they would fund. Each group has two or three that they will choose from. Some will completely fund a single charity, some will split evenly, and another will spread different amounts based on their analysis and findings. As with any big decisions, we suggested that they sleep on the decision, and report back with their final conclusions. Groups must all agree before any distributions are made.
Next Tuesday, joined by the generous family that has made these donations possible, we'll be climbing into vans, touring organizations, and delivering checks! Seeing the progress and growth of these students is truly amazing. They've come from little or no understanding of charity or philanthropy, and transitioned themselves into true philanthropists. The comment we received last week, "I never realized how hard it is to give away money" was music to my ears. They get it! It's not about hand outs; it's about making an impact. It's about making sure that our participation helps those we intend to help.
Do you donate your personal capital? Time, skills, or financial resources? Are you participating in charity or philanthropy? Need some guidance in how to be more intentional with your giving? I have a list of nearly 20 students that are qualified to help! Week Six coming around the corner; good times!
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