Ethics Behind Charitable Contributions

When an individual thinks of contributing resources to a for-profit entity, they tend to research the firm. Oftentimes, the investor would analyze the published financial reports of that firm, as a means to determine the entity's health and profitability. Based upon their results from this investigation, the investor can make a fully informed decision as to whether or not they will invest in the firm. However, when it comes to a nonprofit entity, contributors are not given the same opportunity. Currently in the US, a nonprofit entity that qualifies as a 501(c)(3) nonprofit are only required to make their US tax return available to the general public. As a result, contributors are faced with the burden of making their contribution decisions based on limited information about that nonprofit entity. Essentially, a public charity or a religious organization can solicit donations and use it for any purpose they so fit to use it within legal limits of their status and are not legally accountable to disclose what it is actually being used for, beyond the classification of the tax return. Unfortunately, this practice poses some ethical dilemmas.

Americans are always willing to give to charity. Our society encourages us to help those who are less fortunate. The concept of giving is embedded in many of the teachings of various religious institutions. Even with consideration to the current economic environment, the working class is still wanting and willing to give what they can. The American Red Cross found that 68 percent of Americans believed that was important to give, because of the economy. The survey also found that contributors would rather that people donate to charity instead of giving an unwanted gift. During the holiday season, many nonprofits will have high volume of donations. So given these circumstances, why is it that these organizations feel that it is not necessary to disclose their financials? If these organizations are solely engaging in activities... [continues]

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