TOPIC 7

Donations and
Government Income
 Formed in 2000.
Founded by Bill and
Melinda Gates

Primary aims:
Enhance health care
Reduce extreme poverty in
America
ONE BOOK
To expand educational
ONE PEN
opportunities
ONE CHILD
Access to IT
ONE TEACHER
CAN CHANGE THE WORLD?
 The importance of private giving
Most Social Entrepreneurs and other non-profits rely on
donated support.
• 16% of educational organization revenue
• 20% of human service charity revenue
• 44% of arts organization revenue
• 84% of religious institution revenue

Without private giving, the nonprofit providers of many critical

service areas would disappear.

Social entrepreneurship is inseparable from private giving.

 The sources of private giving
• Living individuals
• About 70% to 80% of adults donate to charity
• The average family donates > $1,000 annually
• Omitting those that don’t donate, the average family
contributes > $1,800 annually
• Bequests
• Institutions
• Corporations
• Foundations
 Individuals and families support nonprofits
• About one third of individual gifts go to support religious
activity
• The balance is for secular activity
• For example, education, health, social services, arts
• Volunteering is another way to contribute
• Between 50% and 60% of households volunteer
• About 40% of volunteer hours are in religious activities, about 30%
in youth-related activities
• Figure 7.1 shows average contributions to various kinds of
nonprofits in 2003
 Donations and volunteering occur together
• People who donate formally are most likely to donate
informally as well (either time or money)
• Table 7.2 shows behaviors of those who do and do not formally
donate to charities
• Americans give a larger share of GDP to charities than do
Europeans
• Figure 7.2 compares the generosity of Americans to others in a
Johns Hopkins University study
• Other data show that Americans are much more likely to volunteer
than citizens of many other countries
 Factors that help predict private giving
(1): Economic ability
• Income
• Charitable giving tends to grow by 7% when income grows by
10%
• So, donations to charity grow more slowly than the economy, but
also shrink less when the economy is contracting
• Wealth
• Charitable giving tends to grow by 3% when wealth grows by 10%
• When wealth expands (as in the 1990s), charities can benefit
 Factors that help predict private giving
(2): Religious behavior
• The single biggest predictor of American charity
• Those attending houses of worship at least weekly are far more
likely to donate, to donate more, and to volunteer than those
who attend only a few times each year
• Religious people give more than non-religious people, even
controlling for race, education, gender, or income
• These differences extend to informal giving
 Factors that help predict private giving
(3): Family life
• Individuals in households with larger families tend to donate
more
• Children model their volunteering and donating behavior on
their parents’
 Donors benefit as well as recipients
• Giving and volunteering improves one’s sense of control over
their environment
• Giving improves happiness and probably health
• Giving behavior is associated with leadership
• Helping the needy boosts overall prosperity
• Giving builds social capital and cohesion
• Most Americans think that voluntary charity is an important
virtue
 How social entrepreneurs can use this knowledge

• They can connect givers to the provision of this service

• Social entrepreneurs seek efficient means of addressing social
needs
• Find ways to accomplish social objectives privately (i.e., no
government funds)
• Use the willingness of people to give as a key resource
 VENTURE PHILANTHROPY
Venture philanthropy funding for social entrepreneurship and is
usually associated with new wealth who experience high returns
in their business and are comfortable with relatively high risk.

The term venture philanthropy was first coined in 1969 by John

D. Rockefeller III who used it to describe “an adventurous
approach to funding unpopular social causes.”

The main elements of venture philanthropy is building operation, close

engagement between donors and recipients, and clear performance
expectations.
 Role of Venture Philanthropy and Risk

Creates dialogue (private and public) on how much such

precious new resources can be best put to improve schools,
health care, and the other delivery systems for basic needs
(Mario Morino)
Venture philanthropy look for four things before finding and
enterprise:
1. Favorable characteristics of the entrepreneur.
2. Favorable enterprise characteristics.
3. A good request.
4. Good advice.
 DONATIONS ON TIME

Most social entrepreneurs are interested in getting volunteers to

help provide their services and allows social entrepreneurs to
embed themselves into the community.

The use of volunteers also involves costs, however.

1. Because volunteers are unpaid, they feel less beholden to an
organization. That is, they are harder to control and are less
likely to be reliable.
2. Volunteer recruitment can be difficult and expensive.
3. Competition between volunteers and paid staff can develop.
Six principles in designing a volunteer program:
1. A social enterprise's paid staff must be behind the activities of
the volunteers.
2. Volunteers must have a clearly defined job expectations.
3. An effective volunteer program requires and effective
campaign.
4. Effective volunteer programs make use of interviewing and
matching.
5. Volunteer training is the key to make sure that the individual
volunteer knows how to carry out the job.
6. Volunteers require supervision.
 GOVERNMENT SUBSIDIES

Provide subsidies, payments and other kind of grants.

Support In the form of tax advantages.

Easy to comprehend, Tax payments foregone

subsidies

Subsidies
Direct

Indirect
but do not comprise all on corporate activity
of the government and tax deductible
funding to non-profits contributions.
Tax credits.
Funding through non-
profit partnership with
government.