The move towards establishing transparency is necessary so as to protect the charitable institutions that are honestly helping people, and to prevent profiteers from taking advantage of the public's generosity.
It has been established that almost half of all adults volunteer every year, and 90% of all households donate to charitable institutions. Over $207 billion are solicited each year from individual donors, and $41 billion comes from corporations and foundations (Panel on the Nonprofit Sector, p. 9). Charitable groups also enjoy tax privileges from the government, recognizing that they play a special purpose in the community. Likewise, individuals and corporations also enjoy tax privileges by allowing them to deduct charitable contributions when calculating income taxes. This is a measure implemented by the government to encourage the public to donate to charities (Panel on the Nonprofit Sector, p. 12).
Fundraising groups are important in aiding people or animals in need, and in funding research for diseases. It is also a good venue for the public to show concern for their fellowmen and to support causes that are close to their hearts. Some people think that channeling funds through charitable groups and institutions may be a more effective way of reaching the people in need than if the responsibility to help is left to the government alone. This became apparent in the Katrina disaster, where nonprofit groups and individuals came to offer help way before the government arrived with its disaster response.
Despite the good that some charities have done to the world, the reputation of nonprofit groups engaged in fundraising activities is being questioned and the public is looking for more transparency in the accounting and management of these charities. Issues arise from apparent mismanagement of funds, high salaries of officials, and the lack of effectiveness of some of the charities in addressing the needs of the community. Billions of dollars are solicited each year for various charitable institutions, and some of those funds do not reach the recipients they are supposed to aid. There is also the issue of some individuals and groups using names of legitimate charities in order to rake in some of the money intended for good use. Certainly, the nonprofit system is becoming a means of gaining profit for the opportunists.
According to a survey by the Brookings Institute, "only 11% of the public thinks that charities do a very good job of spending money wisely and only 19% feels that charities do a very good job of running their programs and services" (American Institute of Philanthropy [AIP]). This reflects the general public's bad perception of most charitable groups. The same study by the AIP reports that compared to the summer prior to the September 11 disaster, the confidence of the public in charities dropped by 10-15% in 2004.
There are numerous individuals and groups that see charitable pursuits as a profit-making opportunity. An undercover investigation conducted by the AIP and ABC News describes how easy it is to establish phony charities. The investigation reveals that some people
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Fund raising is one of the noblest initiatives that a person of a group of people can develop in order to help other people in need. The number of charitable institutions has been growing steadily and new groups are being established every day. However, with the growing number of charitable groups are issues surrounding their efficiency and honesty in bringing the solicited funds to the targeted recipients…
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