The economy has a affected privately held companies, but finances for charities are rough this year, too. Not only has the private sector felt the crush, but so have governments and philanthropists. Those charities that have historically relied on government grants and large donations from foundations are scrambling to figure out how they will continue to provide services to their constituents.
Although charities are non-profit organizations, and most have a 501(c)3 tax status, they still have to run like a normal business. They have employees, buildings to maintain and bills to pay. Without a strong finance department, most don’t last very long. In a tough economy, it’s those less stable organizations that tend to disappear. What is left are the older, larger and more established charities.
Even when financing from public and private donors gets slim, these well established organizations typically know how to weather the storm. Most have been around long enough to have experienced more than one national economic down turn. In some cases, they may be forced to close offices in more remote locations, but the headquarters and larger locations usually hold out.
The only real losers, where charities are concerned, are the people they serve. If locations are closed, and services are cut, then the most needy in society are left even more vulnerable than before. With that in mind, individuals who are still able to give, even a little, should continue to do so. In many cases, even twenty dollars can make a difference. It should be mentioned that it is during hard economic times that the donors need to demand the most transparency from the organizations and charities they support. It is even more important than usual to feel good about how a charity handles its finances.
Unfortunately, there are many stories about executive directors embezzling funds or misusing funds from a charity they work for. It’s also possible that the organization as a whole simply has poor financial leadership. By demanding open communication and access to financial reports, you will guarantee that your money gets to the people the charity is serving.