How does a “charitable” organization start? A few years ago, I used to write newsletters for apartment complexes. All the apartment managers told me that I should really join the local apartment association, a non-profit organization apparently devoted to the plight of the impoverished real estate magnate. One might think that such an organization was founded by a group of concerned apartment owners, worried that their interests were not being represented in local government. After working with the association for a few months, it became clear that this was not how things worked. The association was formed by an enterprising individual who realized that by heading up this “non-profit,” he could provide an opportunity for apartment owners and managers to shmooze, while earning a substantial salary for himself as president of the organization. The primary “service” the organization provided was a monthly banquet where the apartment managers got to know each other. This came in handy later for them as individuals if they were ever in need of a job: they already knew all their potential employers.
Is this a typical “charitable” organization? Let’s take a look at another — the local church or synagogue. How much of the money the faithful parishioners donate each week goes to the “truly deserving,” and how much goes to sustain the institution itself? This is not to say that the church doesn’t provide a useful service for its members, the same way the apartment association provides a service for its members. In the end, however, the result is the same: non profit organizations are not much different from businesses. The people working for them, while they may be very dedicated to their work, are also looking to make money from the enterprise. The people “supporting” them are in fact their clients or primary beneficiaries.
I don’t know where I first heard the phrase, “non-profit isn’t a philosophy, it’s a tax designation,” but taking a cynical look at non-profit organizations, it becomes clear that most, if not all of them are really just businesses under a different name.
So, why do we provide a beneficial tax designation for some “businesses,” but not for others? Probably because of what millions of Americans are told in church every Sunday: that we should help others, that we should be generous and charitable. By concealing business in the guise of charity, we can feel good about purchasing the goods and services we need. Every time we head in to the “Y” for a workout, get together with our friends for the church social, or turn on public TV, we can pat ourselves on the back, because we are doing a “good” thing. Instead of buying the things we need, we’re “supporting charity.” Doesn’t everyone need a little charity now and then?