With Charity For All | Ken Stern

Summary of: With Charity For All: Why Charities Are Failing and a Better Way to Give
By: Ken Stern

Introduction

Welcome to the enlightening summary of ‘With Charity for All: Why Charities Are Failing and a Better Way to Give’ by Ken Stern. This book delves into the history of charities in the United States and their growing presence in the economy, fueled by tax incentives and government policies. However, it also exposes the often-ineffective or fraudulent nature of many charitable organizations, revealing a need for better focus, transparency, and accountability. As you read through this summary, you will gain an understanding of the factors contributing to the problems in the charitable sector and discover how to identify genuine, effective charities worthy of your support.

The Rise and Growth of Nonprofits

Nonprofits have become a significant part of the US economy with annual revenues of around $1.5 trillion. However, this was not always the case, and the growth of nonprofits is a relatively recent development in US history. Financial incentives such as tax write-offs, government policies, and expansion of the welfare state led to the explosion of nonprofits during the 1950s-1970s. This growth in charity, however, is not always a good thing.

The Ineffectiveness of Charities

Charities often provide short-term solutions to long-term problems, with projects that aren’t backed by careful testing. Many charities drill new wells but don’t maintain them, making them unusable after only a few years. This is because charities need to create compelling images to ensure that donations continue flowing in, and maintenance work doesn’t provide these images. Despite this short-sightedness, charities still receive generous funding from the public and the government. For most people, it doesn’t seem to matter whether a charity demonstrates effective work. The book suggests that charities should focus on solving long-term problems and should be willing to test and learn from their work.

Blurred Lines of Charity

The legal definition of “charity” is ambiguous, leading to numerous non-profit organizations that serve little community benefit while resembling for-profit corporations. A Stanford University study found that the Internal Revenue Service approved 99.5% of all applications for tax exemptions in recent years due to a lack of control over the definition, which states that charities are organizations “beneficial for the community.” Hospitals that employ for-profit practices and use aggressive debt collection to recover medical costs may classify as “charities.” Non-profit hospitals were more profitable than for-profit hospitals, with 77% profitability in 2008 compared to 61%. Even events such as the Allstate Sugar Bowl, which spends $150,000 on executive meeting expenses and $500,000 on subsidizing fan travel, can be classified as “charities.” The lack of a clear definition of “charity” allows non-profit organizations to appear charitable while serving little community benefit and resembling for-profit corporations.

Charity Fraud

Charitable organizations have always been a haven for fraudulent activities. After the disastrous 2010 Haiti earthquake, many organizations came forth, but not all had positive intentions. Stories of organizations hoarding funds meant for relief prompted an investigation that unraveled many fraudulent charities. The lack of transparency and accountability within the organization and the insufficient regulatory mechanisms outside provide fertile ground for such practices. The availability of large sums of money, coupled with the scarcity of checks and balances, makes charity fraud a lucrative and easy business. The article cites examples of such fraudulent practices, including the case of Bobby Thompson and the US Navy Veterans Association, which spent only a small portion of the raised money on the veterans rather than using it for personal gain. Similarly, the article discusses the criminal activities of Andrew Liersch, the CEO of Goodwill Industries, who stole millions from the genuine charity for personal gain. The article concludes that an overhaul of the regulatory framework for charities is necessary- to ensure transparency, foster accountability, and to ultimately protect the vulnerable.

Celebrity Donations and their Consequences

The Impulsive Donations of Celebrities and Their Negative Impact on Charities

Celebrities have always donated to various charitable organizations for the greater good. But have we ever questioned the effectiveness of their big donations? This summary explores the impulsive behavior of donors who tend to respond to personal requests and immediate appeals without contemplating whether their contributions will have a broader impact on the crisis in question.

Many people donate to reap personal benefits without analyzing where their money is needed the most. The direct involvement of donors in managing charities may not be positive, as the stipulations they impose on donations can divert charities from their fundamental goals. For example, Joan Kroc once donated $1.5 billion to the Salvation Army, but her donation included a plan to build high-end community centers, which didn’t match the mission of the charity – providing food and services to the poor.

In addition, celebrities often establish new charities, thus incurring extra costs for new offices and employees, which can ultimately lead to failure. Madonna’s charity, Raising Malawi, was founded to build a girls’ school in Malawi, but ended up spending nearly four of $7 million in donations on office space, salaries, and architects. This money would have been better spent by donating to an established charity with existing infrastructure.

Overall, this summary urges donors to consider the broader impact of their charitable contributions and emphasizes the importance of donating to established charities tailored to addressing the specific needs of people and communities.

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