Encouraging Charitable Efficiencies

Ellen Friedman, VP at Tides wrote a recent post  at the Huffington Post asking that individuals find alternatives to starting new nonprofits. From Ellen: The nonprofit sector is a sector of innovation, creativity, and people working for the common good. More than 14 million Americans - 11 percent of American workers - are employed by or volunteer full-time in the nonprofit sector; more than the financial industry and the auto industry combined.

In a recent article entitled, "Charities Rise, Costing U.S. Billions in Tax Breaks," Stephanie Strom of the New York Times raises concerns about an out of control nonprofit sector that is flooding the IRS with frivolous new applications to establish new public charities that will deprive the federal budget of billions of dollars.

There are plenty of reasons for concern about the federal budget, but singling out the nonprofit sector in this way overlooks some important points.

Not only is this sector working on innovative ways to make the world a better place and connecting people with a sense of common good, nonprofits also contribute billions in tax revenue through employee payroll alone.

Moreover, in an age of dwindling public resources, when the role of government in addressing social problems is feverishly debated, the American public is taking matters into their own hands. This heightened wave of community activism, volunteerism and social entrepreneurship needs to be celebrated, not discouraged. In a time when Facebook and Twitter make broadcasting your ideas and passions part of daily life, we should not be surprised that communities are finding new ways to match their values with their time and pocketbooks.

Is there potential waste in creating thousands of new nonprofits every year? Undoubtedly yes, but the problem is not people's motivations. The problem is that not enough people know about the alternatives to establishing nonprofit organizations; alternatives like fiscal sponsorship and donor advised funds that exist to create greater efficiencies and cost-effectiveness for charitable activities.

Read the rest here.