§Philanthropy and Non-Profit Constraints

Philanthropy is the funding mechanism and Non-Profits are the Organization in an Organization-Funding Diad. (Organizations and their funding mechanisms are coupled)

  • Profit in non profits goes back towards the mission
    • Could this involve investing it?
  • Non-profits must spend all of their income every year
    • This can lead to very cyclic activity
    • Cyclic hiring harms employee’s ability to think long term because there is no buffer to pay them in income draught periods
    • Are universities non-profits? They invest their excess income.
  • Non-profits need to constantly be fundraising
    • Is this because they need to spend down every year?
    • This means that they can’t do anything that looks bad in the short term
  • What’s the difference between a foundation and a non-profit?
    • A foundation is a type of non-profit. The other type is Public charities.
    • The money for foundations comes from an initial gift from an individual or business and spends out of interest.
    • Foundations can only spend in ways that adhere with 501(c)(3) of the Internal revenue code
    • Foundations can be operating or non operating
      • A non operating foundation give money to orgs
      • An operating foundation distributes funds to its own purposes
    • Public Charities
    • 501(c)(3)s all are exempt from paying income tax, but only charities exempts donors from income tax

It’s easier for foundations to pay out grants than anything else (A “Watch-Out” for Private Foundations Offering Prizes)

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