Your CFO: The Ripple Effect of Giving

Michelle Hartney, Jeff Mangum

“Remember there’s no such thing as a small act of kindness. Every act creates a ripple effect with no logical end.” — Scott Adams

We often talk about the impact of charitable giving in terms of tax deductions or the physiological impact it has on us (lower stress levels, increased self-esteem, longer life, and greater happiness to name a few).  That ooey-gooey feeling of warmth and happiness when we give is great – and it’s just the beginning of the impact our gifts make! Today, we’re flipping the script and talking about the incredible ripple effect giving has on the world around us.

A recent report by The Philanthropic Collaborative reveals that charitable giving supports millions of jobs, as well as billions of dollars in wages, GDP and tax revenues that extend for generations (nccs.urban.org). Let’s break that down:

Nonprofits generate $1.1 trillion every year providing human services

That adds a whopping $804.8 billion, or 5.5%, to the GDP, spent on education, healthcare, human rights advocacy, natural disaster relief, the environment…need I go on? With over 1.5 million nonprofits in the U.S., it seems there’s something for nearly every cause imaginable, from The Naked Clowns, which produces a calendar of – you guessed it! Naked clowns – to raise funds for MS research, to The Critter Connection, which rescues and rehabilitates abandoned or neglected guinea pigs.

1 in 10 Americans work for a nonprofit, providing 13.5 million jobs

As the third largest workforce in the U.S., behind manufacturing and retail, the nonprofit sector thrived during the recession while the for-profit industry was scrambling to stay afloat.

From 2007 to 2009, the nonprofit sector added jobs at an average rate of 1.9% per year. During that time, the private sector lost jobs at an average rate of 3.7% per year (nccs.urban.org). Better benefits and higher overall wages with more frequent raises help nonprofits attract the talented employees that help them thrive.

For every $1 subject to the charitable deduction, communities see $3 in benefits

Can we just read that again? No other industry can boast a 300% return!

While the for-profit industry uses ROI (Return on Investment), nonprofits are utilizing SROI to calculate the true impact of their donations. “The SROI is similar to ROI but shows the double bottom line: the financial impact AND the social impact of your nonprofit’s work. It’s that last bit—the social value—that’s most important. SROI helps you determine the cost of what would happen if your nonprofit did not exist.” (TheBalance.com).

SROI   =   Tangible + Intangible Value to the Community
______________________________________
Total Resource Investment

For example, a foundation might use the SROI to calculate the following:

sroiinfographic-579d16dd5f9b589aa97df161

(Photo courtesy of TheBalance.com)

Whether you’re giving to reduce your tax burden or giving out of the kindness of your heart, rest assured your donation dollars are making a lasting impact!

Leave a Reply

Your email address will not be published. Required fields are marked *