What is Philanthropy?

That's a question Suzanne Hittman, former president of the Washington State Chapter of the National Society of Fundraising Executives, has answered many times. On more than one occasion, she has explained it to the press. Hittman recalls a particularly revealing exchange she had with a reporter from one of the Puget Sound area's largest dailies. It was prompted by the celebration of National Philanthropy Day, which occurs in November of each year.

"The reporter inquired about the usual things... how many years (the event) had been celebrated, awards given, etcetera. Then he asked the real question he had on his mind: 'Why did you pick such an old-fashioned word as philanthropy to describe this day?'"

"I was a little stunned by the question," Hittman said, so she responded with a question of her own: "What does the word mean to you?"

"It reminds me of rich, old people living in a big house," the reporter responded.

Hittman countered with the true definition of the word, emphasizing that any person, regardless of his means or age or talents, could be a philanthropist — not only by giving money to needy causes but by volunteering. "He said he just didn't see it that way," Hittman recalls.

The Term Philanthropy comes from the Greek word, 'philanthropia,' which means "love of humanity." A more contemporary definition of the word describes it as "voluntary action for the public good."1 Philanthropy is exercised through an individual's voluntary associations; through his or her volunteer activities; and through his or her contributions of financial or other resources.

Philanthropy has been described as one of America's greatest institutions — indeed as an aspect of this country's unique character, on par with its other democratic mechanisms including representative government, freedoms of speech, assembly and the press, and its systems of justice and public education.2

Philanthropy, as exercised through gifts to not-for-profit organizations, supports work that has been described as "creating, nurturing and sustaining values that frame American life. Not-for-profits promote altruism, in a society that reinforces self-interest; community, in a society that rewards individual achievement; and pluralism in a society sometimes threatened with divisiveness. They provoke, challenge and question. They also teach, mediate and heal."3

Most of America's great social movements have been rooted in the community sector. The abolition of slavery, clarification and protection of civil rights and the creation of public libraries are but a few of the causes spearheaded by common men and women.4

If the role of philanthropy could be envisioned as points on a spectrum, relieving human suffering (most associated with the word "charity") would be one of its endpoints and actualizing human potential would be its other. The points in between would include: 1) discovering new frontiers of knowledge; 2) supporting and encouraging excellence; 3) preserving and enhancing democratic government and institutions; 4) making communities better places to live; 5) nourishing the human spirit; 6) creating tolerance, understanding and peace among people; and 7) remembering the dead.5

Collectively, not-for-profit organizations comprise what is known as the "independent" or "third" sector of our society — as separate from the public sector and private enterprise — filling the void between government and capitalism. This sector is synonymously termed the "charitable" sector, the "voluntary" sector, the "public-interest" sector, the "humanitarian" sector and the "tax-exempt" sector. Just as each facet of a precious gem contributes to its overall brilliance, each of the labels accorded this sector reveals something about its unique character. Anyone who hopes to understand the sector must probe the significance of each facet to understand the sector's role in a free society and its contributions to community life.

Some news accounts persistently muddle charitable organizations with other types of not-for-profit organizations, including trade associations, social clubs, and professional sports leagues. Casual news consumers can easily conclude that the National Football League receives the same tax exemptions as a soup kitchen. Nothing could be further from the truth.

Not-for-profit organizations dedicated to charitable, religious, educational, scientific, literary and public safety causes, are tax-exempt under Internal Revenue Service code 501(c)(3). They are the only not-for-profits entitled to receive tax-deductible contributions. Generally, only charities obtain property and sales tax exemptions from states, and even then the group of organizations exempted often is narrower than section 501(c)(3). In return, charities generally are subject to more stringent regulation than most other types of not-for-profits.

Confusing different types of organizations, with different purposes and different bases for tax exemption, does nothing to advance the important public debate about the role of not-for-profit charitable and community service organizations.

— Independent Sector.