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As business leaders, getting involved with charity and nonprofit work can be a powerful avenue for us to impact our communities positively. As the National Council of Nonprofits notes, nonprofits contribute to scientific research and funding, civic life, the arts and conservation, to name a few issues.
But in our desire to do the right thing for our communities, we must do our due diligence before getting involved with a charity or nonprofit—and if we do get involved, we should also consider taking political action alongside it for maximum impact.
Conduct Thorough Research
Although there are many legitimate charities and nonprofits, there are also scammers who end up undermining and endangering the real work these organizations carry out. According to BDO’s and the Fraud Advisory Panel’s “Charity Fraud Report 2022,” 69% of surveyed U.K.-based charities reported that they “experienced financial loss due to fraud.”
Business leaders can minimize their chances of getting scammed by conducting thorough research before getting involved with a charity or nonprofit. According to an IRS official, the Tax Exempt Organization Search is a good research starting point for business leaders in the United States to vet charities and nonprofits. Business leaders should also look for red flags that might indicate an organization is a scam, such as feeling coerced to donate ASAP and being asked to donate via “cash, gift card or wire transfer.”
Scams aside, some charities and nonprofits might have been embroiled in previous scandals or had key stakeholders embroiled in previous scandals. Before donating, check the background of the charity or nonprofit you have in mind. Of course, there are situations where we might not find anything at that point in time and a scandal breaks out later, or ones where we simply didn’t know about controversies because we didn’t encounter the right resources at the time. In those cases, we can pause to reevaluate our future support of that organization.
Think About Potential Unintended Consequences
As I mentioned earlier, charities and nonprofits have done a lot of good in the world. But sometimes, the story is more complicated.
Consider research from the Kellogg School of Management at Northwestern University: In Ghana and Uganda, “NGOs created unintended negative consequences in the villages they entered, especially when the organization was replicating existing government services.” Specifically, the research indicated that NGOs can “crowd out government-provided services and, in doing so, may inadvertently harm the people they’re seeking to help” and suggests that “independent organizations may not fully grasp the needs of the communities they serve, leading to adverse consequences.”
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It’s not just NGO donations that can have unintended consequences, either. Another prominent example involves donating clothes, something many of us have done throughout our lives. According to the National Institute of Standards and Technology, approximately “15% of used clothes and other textiles in the United States get reused or recycled. The other 85% head straight to the landfill or incinerator. This wastes scarce resources, contributes to climate change and pollutes waterways.”
To be clear, I don’t think people who support NGOs or donate their clothes have bad intentions—quite the opposite. But sometimes, our desire to do the right thing leads to unintended consequences. It is crucial for business leaders to examine the implications of what a donation to a particular charity or organization could mean. I recommend reading as much as you can about the charity or nonprofit itself, as well as looking up research papers about similar charities or nonprofits, before deciding on how to proceed.
Consider Taking Political Action, Too
Donating time and money is a good step, but for maximum impact, I believe that donating to charities and nonprofits must be met with political action. Many of the problems that charities and nonprofits strive to fix cannot truly be changed for the better unless the laws change.
For instance, there are many organizations addressing homelessness in the United States. But according to reporting by The Guardian, many “anti-homeless laws are being passed across the US as funding for social services is widely reduced, raising welfare concerns among advocates for the unhoused.” One of those laws? In Missouri, “a new state law that took effect” at the start of 2023 “makes it a crime for any person to sleep on state property. For unhoused people, sleeping in public parks or under city highways could mean up to $750 in fines or 15 days in prison for multiple offenses.”
Other examples of harmful legislation include occupancy standards “that specify how many people can live in a housing unit,” food safety laws that “restrict people from sharing food with community members who are homeless” and “excessive fines for minor infractions in traffic courts.”
Charities and nonprofits do important work. But in light of such laws, their work can only make so much of an impact. Business leaders who want to address the root of the issues affecting their communities should consider taking political action that can turn these laws around. Ultimately, combining charitable/nonprofit work and political advocacy can lead to some of the most significant positive changes in our communities.
