PHILANTHROPY Americans make big business of giving

Lester A. Picker

April 01, 1991|By Lester A. Picker

Philanthropy is so ingrained into the American psyche that it is almost a rote response.

We attend the weekly church or synagogue service and drop off our checks for support. During the week, we open one of countless letters appealing to us for money. Perhaps today's letter touches our heart and we return $10 to help. At work, we listen somewhat reluctantly to the annual United Way appeal, yet when it is over, we check off that little box which means a still larger bite out of our paycheck -- and we actually feel good about doing so.

Without a doubt, Americans are the most charitable people on Earth.

Whether we look at donations per capita, percentage of income or any other measure of giving, Americans have few equals elsewhere in the world community.

In 1989, the latest year for which statistics are available, we collectively gave away more than $114 billion to charitable causes. That figure represents gifts from individuals, corporations, private foundations and bequests.

What surprises many people is that the overwhelming majority of that money -- more than $96 billion -- came from the pockets of ordinary citizens like you and me.

Translated, these statistics mean that philanthropy is a business in America -- a B-I-G business.

Nearly one million non-profit organizations work hard to meet our social service, cultural, religious, recreational and educational needs.

Together, the non-profit sector employs nearly 15 percent of our total work force.

More than $350 billion in donations, tuition, ticket sales and other revenues pass through the industry each year -- and that figure is growing, according to J. Richard Taft, founder and former chairman of The Taft Group, a Bethesda-based research and publishing company.

Together, non-profit organizations manage a staggering $1 trillion in assets!

Unfortunately, we rarely hear about the non-profit industry, unless we are being solicited for funds.

However, an industry this large has not gone entirely unnoticed by vendors and service providers.

Non-profits require the same types of products and services as their for-profit counterparts. They purchase office supplies, mailing lists and automobiles. They contract for building construction and fund-raising services. And, with the competition for our charitable dollars heating up every year, they increasingly hire management experts to help them trim operating costs and provide services more efficiently to their clients.

In recent years, many entrepreneurial companies have catered to the non-profit sector and have done well.

Even banks, traditionally viewed by non-profit executives as unresponsive to their needs, have begun to develop marketing programs with an eye to capturing the management of their not-insignificant assets.

Non-profit leaders refer to their industry as The Third Sector, as vital to the American way of life as private industry and government services. And most experts tend to agree.

Without the services provided by non-profit organizations, our quality of life would be radically different.

Our university system, the strongest of any nation, educates our young adults for the work force.

Social service non-profits counsel people with emotional problems, boost the self-esteem of inner-city youth, help the homeless and work tirelessly to prevent alcohol and drug abuse. Religious institutions minister to our spiritual needs in a time when the American family is under extreme stress. The list goes on.

In fact, setting up and managing non-profit organizations is one of the consulting areas most in demand by Eastern European governments that are recovering from years of neglect by communist systems.

While not uniquely American, our non-profit sector is always on the cutting edge.

Often, the contributions made by The Third Sector are not apparent.

In a leading study, researchers at The Johns Hopkins University's Institute for Policy Studies found that the Baltimore metropolitan area non-profit sector was a major economic force.

The more than 700 non-profit agencies in the city spent more than $2.5 billion in 1987.

Compare this with the $2.4 billion spent that same year by Baltimore, Baltimore County and the four other surrounding counties combined.

Even more surprising, this pioneering study found that the city's

non-profits employ 30 percent more people than the three leading regional industries combined.

Like any other industry group, the non-profit sector faces its own set of challenges and opportunities. New tax laws create confusion in terms of donations and accounting practices. Reducing overhead is a continuing problem.

There is a critical need to improve management practices. Boards of directors need opportunities to improve their skills. Better means need to be found to deliver important services to clients.

And, perhaps most importantly, better ways need to be found tmarket the organization's mission to the public at large.

One of the most fundamental shocks reverberating through The Third Sector today is just that.

In today's economic climate it is no longer acceptable to do business as usual, even if your business does not seek a plus sign on the bottom line.

Lester A. Picker, a consultant in the field of philanthropy, works with charitable organizations and for-profit companies.

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