There's a lot of reasons a charity might keep a reserve and it is not guaranteed to go to the charitable cause. Charities take their operating expenses out of donations, so it is possible the reserve is in place to ensure that the charity can meet their operating expenses should there be a downturn in donations. Operating expenses include charity employee salaries and marketing spend. There's sort of a chicken-and-egg situation here for a lot of charities, in order to drum up donations, you need to spend marketing dollars to spread awareness of your charity. Without those donations, there's nothing to go to the charitable cause in the first place. So unless you're a name that everyone knows like United Way, you basically have little choice but to divert some donation money towards perpetuating further donations.
That being said, there's a ton of scam charities out there so I encourage everyone to do their research before donating. But don't expect 100% of your donation to go straight to the cause, running a charity isn't free.
|