Mentor RIA Consulting - Allowing you to focus on what you do best

Recent Posts

Sales Incentives: Who Really Pays?
Could an IRA Trust Work for Your Plan?
Is the Pandemic Changing Your Plans?
Form CRS: Prop or Flop?
Using 401(k) Loans for Short Term Liquidity


RIA Business
powered by

My Blog

When Mission is Second to Bureaucracy

One of the things that frustrates people is when it is the stated mission of an organization which they choose to support but what ends up getting supported by their donations is not the mission but the organization itself. There are examples of this in many areas but one of the most common – and most damaging – is in the realm of charitable giving. A word of advice: before you contribute to a charitable organization, do some due diligence and try to assess whether the mission you wish to support is going to be best supported (or supported at all) by that charity you are considering.
First, remember that just like insurance companies (for example), charities will make promises in advance to secure your money but are highly unlikely to remember those promises much less keep them once the deal is done. Second, understand that although the term non-profit is applied to these organizations, taking care of their bottom line is job one – not taking care of the stated mission of serving those in need of their help. Yes, something will be given to those who seek help from these charities but it will not be to the detriment of the charity itself and particularly to its continuation.
Case in point: A large mid-western charitable foundation accepts a bequest to provide for higher education for students in a somewhat rural and poorer region. In discussions leading up to the gift, it is understood that the primary goal of the donor is to make as much funding available to students as possible and that preserving the entire capital indefinitely  is not a goal.
Within a year or two, the foundation announces that because other charitable organizations charge higher fees for managing and administering donations, the foundation is going to raise its fees as well. Not because they were going to provide better or more service, mind you, in fact quite the opposite. The next development was an announcement that the foundation was going to cut the annual allotment to the recipients of awards from the foundation, thus keeping more money in hand. Today, with the huge returns achieved by most investors last year, do you think the foundation will increase the annual allotment for distribution to reflect these gains? Not particularly.
The bottom line for this foundation seems clear, keeping the money, ensuring the fees come in and that the organization can continue on its way indefinitely is what is important. Not the distribution of money to those the original gift was intended to assist. Make sure you stay away from these types of charities – fortunately there are, in fact, some charities that do not play this game.  Your money is better off with them.

0 Comments to When Mission is Second to Bureaucracy:

Comments RSS

Add a Comment

Your Name:
Email Address: (Required)
Make your text bigger, bold, italic and more with HTML tags. We'll show you how.
Post Comment
Website Builder provided by  Vistaprint