Archive for Charitable Giving

Ripping off charities

It can be hard to do good.  From each client payment, I set aside a specific percentage of the check and put it in a savings account. I’ve found this far easier than coming up with a lump sum at the end of the year. I can fund things throughout the year, rather than in a blitz in December. And, I know exactly how much I have to give—whatever the account balance is.

However, like all of us, I get multiple appeals from GoFundMe, Facebook friends, etc. I also just had a rather odd experience with a donation on Giving Tuesday (note to self: always write thank you notes when someone does something for you). I started to wonder about how this all works, and whether it was the best way to donate the maximum amount. Here’s what I found.

Donate your bag credit at Whole Foods?

Unless someone convinces me differently, I think this is a scam. Apparently, Whole Foods takes this as THEIR charitable deduction, not yours, so you’re actually funding a giant tax deduction for them. Also, you have no receipt. Keep your bag credit, put it in a jar, and give it to an actual charity at the end of the year. For me, 8 bags a week ($0.80) x  (say) 48 weeks would be a $38.40 donation.

Petsmart?

This turns out to be an actual donation to Petsmart Charities and you should save your receipts showing this if you do so. However, according to my research the deduction will be reduced by whatever the merchant credit card fees are, if you use a card.

GoFundMe?

Not only is this not deductible, since it’s considered a personal gift not a charitable donation, but the recipient is charged 5% by GoFundMe as well as 2.9% by payment processors. This is an outright waste in my mind, and I recommend never donating in this way. Just send the person a check if you really do care.

Facebook?

These donations are deductible if the organization is a 501(c)3. However, FB charges the charity 5% to sign up. FB did match the amount if you donated on Giving Tuesday—but only up to $7 million, a pittance which was gone in minutes, as far as I can determine. For all my kind friends who have been induced by FB to post donation requests on their birthday—maybe think again? I suppose 95% of something is better than 0% of something but again, a direct contribution would be better.

Credit card, Paypal, or Square payment?

Once upon a time, some credit cards did not charge charities for donations put on cards. As far as I can determine, this is no longer the case, and charities are charged whatever the merchant fee is for the card. Pay through Paypal and they’ll be charged 2.2% + 30 cents per donation. Square rips them off at 2.75% if there’s an actual credit card to swipe through their reader. It’s an even more whopping 3.5% + 15 cents if the number is manually entered.

Sure, it’s easier to give a charity request a credit card, but for most charities, especially small or local ones, every cent really counts. Many people tell me they no longer have checks, but here’s the ideal place to use them if you have them—or learn to send one directly online from your bank if you don’t use this service.

For more information, check out this site:

How to Maximize Your Online Donation to Charity

Don’t put your money where the guns are

As anyone who has tried it knows, investing in socially responsible funds is a thorny problem. Even if you drill down to a mutual fund’s holdings, it’s really hard to be okay with everything in a portfolio. Most people interested in the area can agree that tobacco and arms manufacturers are not socially responsible. But what about drug companies (at least some)? Or makers of junk food? Mining companies? Oil companies? Banks with exploitive lending or account opening policies? Or tech companies that are known to exploit workers overseas? Depending on how involved you are, it becomes really difficult to pick a portfolio as well as have a realistic chance of actually making some money.

Nevertheless, while nothing in this world is perfect, we, and investment products, can move toward better choices. Socially responsible investment funds have lately done quite well compared to the market as a whole, so it appears that even with this selection process, you can still find solid investments. But then we get to the issue of guns.

There’s a website, www.GoodbyeGunStocks.com, where you can input your mutual fund and find out if the fund invests in gun companies or purveyors of guns. Sure, withdrawing your own investments from funds that own gun stocks won’t, in itself, change the world. But, making your opposition clear definitely has an impact long-term on both the mutual fund manager’s choices and screening, and the attractiveness of the underlying company.

I conducted an analysis of all the funds I recommend to my management clients. It was rather depressing. Again, there’s going to be a tension between what would be ideal, and what is possible. I can make my peace with managers owning Walmart, one of the largest retailers of guns and ammo, because they are such a large company that they sell just about everything. Getting them to stop selling this would, I think, require a change in gun laws and so action is better taken on the political/legislative front, in my opinion.

The next level, and this is where it starts to bother me, is investment in sporting goods stores who promote guns and ammo as a major business angle. I, personally have a problem with funds that invest in, say, Vista Outdoor and Dick’s Sporting Goods and will be reviewing investment recommendations in funds that own them. I’m going to leave this up to a client’s decision if this disturbs them, but from now on I will be raising the issue. I do live and work in an area where there is great support for stringent gun control.

The ones that really bother me are the ones that directly invest in gun producers, like Ruger and American Outdoor Brands (Smith & Wesson).  I’m not sure I can personally invest in any mutual fund with holdings in such companies, and I will be making clients aware of this in discussing investment possibilities.

In addition, I have contacted the managers of these funds to raise my objections to these specific holdings. Hearing directly from advisors and investors makes a direct contact. You can easily find the managers of your funds on Morningstar.com, or contact me and I’ll get the names and addresses for you.

Most international funds are free of these investments. Thanks to stringent gun control in other countries, most gun manufacturers and sellers are in the U.S. Sigh.

 

Giving to charity: doing the best you can

By now, your mailboxes (IRL and virtual) are probably crammed with year-end catalogs and heart-rending appeals for donations. But just as with spending, we want to maximize the use of our hard-earned dollars when we make charitable donations.

As I’ve suggested before, it’s worth checking out any potential charity with Guidestar.org and Charity Navigator. These ratings groups aren’t infallible, but they can give you some idea of how well your money will be spent. There are lots of well-known charities whose funds seem to go mainly to publicity and their CEO’s salary. Really, look up a few that come to mind—you’ll be shocked. And just because the charity says they focus on minorities, or women, or autism, or your favorite religious orientation doesn’t mean they’re good stewards. As Harry Truman once said, when anyone prayed too loud in the Amen corner, you’d better go home and lock your smokehouse.

Many of us are considering directing more of our charitable contributions to advocacy organizations this year and going forward.  However desirable and necessary such donations are, they may not be tax-deductible. For example, donations to the American Civil Liberties Union are not tax deductible, although donations to their information and education arm, the ACLU Foundation, are. Another organization that interests me greatly, the National Lawyers Guild (motto: Human Rights Over Property Interests) is also an advocacy organization, and donations are not deductible except to their foundation. However, the Southern Poverty Law Center, which constitutes its mission as fighting hate through education, is a tax-deductible charity organization. You want to look for the term ” 501 (c) 3″ if you’re looking for the tax deduction.  Of course, if you care passionately about current issues, you may not feel the tax deductibility of your gift is the most important factor, or you can allocate some portion to advocacy and the rest to educational or service delivery organizations.

Most of us have a tendency to give small amounts to any request that crosses our paths. However, I’d encourage you to consider a more planned approach. Giving larger amounts to fewer charities actually helps them: it saves on fundraising, processing, and other administrative costs.  Consider where your priorities lie or where you believe there is the most need: rights advocacy (disability, women’s, ethnic & racial groups); international poverty; animal rescue; anti-violence; gun control; legal change are all areas to consider.  While you’re at it, try not to use a credit card until you determine if the charity will be charged the fee for use by that card company (some don’t charge charities, some do).

As with any money management, there will always be more demand than funds available, so do think about your priorities. Many of these organizations will be particularly embattled or short of funds under the next administration, so need for your thoughtful contributions can only grow.