How to Choose a Charity

Choosing a charity should be easy. You find a cause you support, and you send you in your check. However it is a little more complicated than simply picking a group for your donation.

Unfortunately, like everything else in this world, unscrupulous people are out there taking advantage of kind hearted individuals. For example, anybody can build a web page and set it up to take charitable donations. But, what you read is not necessarily so. While claiming to be a foundation for helping underprivileged kids, a person can rake in a ton of money-until they get caught. Yes. The scoundrels usually get caught, but will it be before they take advantage of your pocket?

I am in no way suggesting that people cease to give to those less fortunate. But, there are a couple of things you can do to make sure your money gets where you expect it to go.

First, check out the charity. Although it can profess to be a non-profit organization, it must be registered with the Federal government. If you can claim your gift as a tax deduction, it first needs to be recognized as such. If the charity is not registered with the IRS, be leery, unless it is a community fund-raiser for an individual in need. Then, you just have to trust the people collecting the monies to spend it wisely-which bring me to my second point.

Even government-recognized charitable organizations do not always spend your donation wisely. In fact, some administrator at the top may be getting rich at the expense of the needy. Before donating to a particular charity, ask to see how your donation dollar is spent. Does only 20 cents on the dollar actually get to the needy, and the rest go for a plethora of administration costs? (Personally, I would rather send my money directly, in that case).

Of course I understand that administration costs are necessary. But, why not 20 cents on the dollar go for expenses and 80 cents actually spent on the purpose for the charity. It can be done.

For example, as a former recipient of the Shriners, I know that people who donate to their burn centers and orthopedic hospitals can expect 100% of their money to go to the children needing medical attention. Shriners pay for their own expenses.

Recently, I saw an organization on the news that sends care packages to soldiers in Iraq. I am not being in any way political here. No matter how you stand on the war, there are people who are in harm’s way, missing their families, in order to do their duty. One mother thought to start a group. Now, there are 1000s, and the workers donate out of their own pockets as well. If money is an issue, they sit down and write millions of cards or help box goods.

In short, charities are a wonderful thing and kudos to you if you give. Simply be careful.

Do you know of other charities that will spend our money wisely?

Tina

A Kiva Loan can Change a Life

“Loans that change lives” is Kiva’s tagline. Based upon the testimonials I have read, I believe they are keeping their word. So, how can they make such a claim?

Kiva is a peer to peer lender with a charitable mission. Unlike their counterparts who pay interest to the lenders, Kiva matches small business owners around the world with lenders who want to help them get the financial backing to succeed, without paying interest.

A more traditional social lending site will loan money for home renovations, education, loan consolidation and more. But, Kiva is concentrating on the poor who want to start a business and raise their standard of living. So, they do not loan money for building a new deck, consolidating credit card debt, purchasing a new car, or whatever. It is strictly for helping others help themselves. The people borrowing the capital don’t pay interest on the loan but they do have to pay the money back.

This idea of microcredit or microloans is somewhat modeled after the successful Grameen Bank which was initiated by the winner of the 2006 Nobel Peace Prize, Professor Muhammad Yunus. Kiva has a good example to follow in Grameen Bank and adds in their own approach by making great use of technology to connect developed country lenders and 3rd world borrowers. In a recent interview the CEO of Kiva, Matt Flannery, shared Kiva’s next goal. To connect people in developing world who are willing and able to lend capital with people looking to borrow money in the same country or region.

Kiva lenders can search through over 1556 pages of journals from men and women in Bolivia, Ecuador, Uganda, and other less fortunate nations to read how the money they lend is making a difference. Kiva is constantly adding new lenders and borrowers to the site so would-be entrepreneurs world-wide can succeed and start to climb out of poverty.

Altruistic at heart, I love this idea. So many people have more money than they know what to do with, yet they take it for granted. The borrowers at Kiva simply want to have the opportunity to have a decent life.

Check out www.kiva.org. Let me know what you think.

Tina

What is the Most Effective Way to Donate Money?

Do you ever wonder how much of the money you donate actually goes to the people that need it?

Overhead Costs
Companies that solicit contributions on behalf of charities get some type of payment for their services. A co-worker once told me that some of these organizations get a percentage of all the money they bring in. It seems it would provide a good incentive for the calling company, the more contributions they get, the more money they make. The problem is I’d like as much of the money I give to go directly where it’s needed instead of into the pockets of another company.

I asked this question of a phone rep working for a third party who was calling on behalf of Mercy Corps this week and never received a good answer. The longer the person on the other end of the line avoided answering the question, the more I realized it might be a mistake to pledge over the phone. I ended up saying I did not want to donate so his company wouldn’t take a cut. Instead I plan on taking my usual approach of donating directly to Mercy Corps.

Stewardship
Not only do I like the mission of Mercy Corps, I also like the fact that the organization works hard to keep overhead low so the money goes where it’s needed most. Mercy Corps includes a financial summary and balance sheet at the bottom of its annual report. They don’t have 2006 listed yet but in 2005, 11% of their spending was for administrative support.

I would like to see more detail provided here, for example how much do they pay third parties to fund raise for them or how much do they spend on mailers asking for donations. Since charitable organizations are making an effort to be as efficient as possible, I decided to come up with ways I could be more effective about donating.

How Can We Make Our Contributions More Effective?
1) Donate directly to cut out any middle men. I’ve donated via their website in the past but I should think about mailing in a personal check so they don’t have to pay credit card fees either.

2) Sign up for monthly giving. Often if you choose this option, the charitable organization will remove you from mail & call lists which will save them on promotional costs.

3) Donate what you pledge. If you speak with a representative of an organization and pledge a certain amount make sure you donate at least the amount you promised. From what I understand, some organizations allow for those pledges in the budget in some way. If many people give less than estimated it could cause problems with the planning the charity has done.

4) Use matching programs. Increasing the amount that is given is always more effective.

What are other ways we can be more effective with our donations?

Take Nothing for Granted

We think we have it bad with credit card debt, crappy health insurance, and high gas prices but in reality we’re living a life others only dream about.

A Different World
My parents make bi-annual visits to Central America to provide health care for some of the poorest people in the Americas. They recently returned from a trip and relayed the sad yet hopeful story of a mother who had suffered a stroke and could no longer care for her family that lived in a tiny one-room home with a dirt floor high in the mountains.

With only a minor amount of teaching and practice the family learned how they could help her regain her mobility. Despite their meager household and medical obstacles, this family works together and continues on with life with the best attitude they can muster.

Take Nothing for Granted
After hearing many stories such as these it’s easy to realize that I often take many things in life for granted. It’s easy to get caught up in the rush of our society but remembering this mother and her family reminds me of how fortunate I really am. Thinking of their situation helps me stop and enjoy a quite moment with my son or marvel at a fresh spring day.

Making a Difference
Not only do these stories make me count my blessings, they also remind me of my responsibility as a global citizen to help out those less fortunate than I am. I’m ashamed to admit that other than annual cash contributions to Mercy Corp there isn’t much in my life that helps those in need. I have several ideas for changing that in 2007, I’ll let you know how they go.

Are Girl Scout Cookies Tax-Deductible? It Depends.

I’ve had a lot of people asking if the purchase of girl scout cookies is a valid tax deduction. I consulted my tax friend and he pointed me the answer on the Girl Scouts website.

Basically, if you take posession of the cookies then you can’t write off the purchase because you received something in return for your money. If the Girl Scouts keep the cookies, I don’t know how often this happens, then the money you spend is tax-deductible. The information from the Girl Scout website is below.

Q: Is the purchase of Girl Scout Cookies tax-deductible?

A: No and Yes.

No
If the customer keeps the cookies. Individuals who buy Girl Scout Cookies and take the cookies home, or consume them, have purchased a product at a fair market value. For this reason, no part of the price of a box of Girl Scout Cookies used in this way is tax-deductible.

Yes
If the customer leaves the cookies with Girl Scouts. Many Girl Scouts ask customers to pay for one or more boxes of cookies for use in their community service project, for example, collecting for a food pantry. The customers not receiving any Girl Scout Cookies do not benefit directly from paying for them. Those individuals may treat the purchase price of the donated cookies as a charitable contribution.

Profiting from a Non-Profit. Ethical or Rotten?

Is it wrong to make a profit off of the Girl Scouts? I don’t think so. Read on before you disagree with me.

We Are Suckers
My wife and I don’t eat Girl Scout cookies but we buy them from the neighbor girls when they come knocking on our door. I think I inherited this trait from my mother. She’ll buy anything kids sell door to door just because they’re making the effort. So we spend money on the cookies to support the girls but they sit in our cupboard uneaten.

Cookies for the Highest Bidder
When I first started selling on eBay, I sold anything I could get my hands on. I ran across several boxes of Thin Mints sitting on the shelf and quickly put them up for auction. It was off-season for Girl Scout cookies so the law of demand had pushed their price on eBay over what we had paid for them.

Cookie Police
My excitement over watching the bid price climb was suddenly dashed one day when I received an email from a Girl Scout mother, chewing me up one side and down the other. I was an awful person from profiting off the Girl Scout organization and the hard work of those little girls. I responded to the scathing email in a courteous fashion but defending my actions.

After several such exchanges I realized I wasn’t going to get a pardon from the cookie police and left it at that. Of course I left the auction running and profited from shipping the cookies to a satisfied cookie fanatic somewhere on the East Coast.

Taking the Stand
I saw this season’s batch of Thin Mints on the shelf today and decided I needed to try my case in front of the world.

We help these girls out every year by spending money on something we don’t want. Is it wrong to resell them later on for a profit? It wasn’t Girl Scout cookie season when I sold them so I wasn’t stealing any business from the little girls. It seems like a win/win/win to me. The Girls Scouts sold a few boxes, I made a little money, and I delivered the cookies to a cookie junkie, craving a fix during the off season. I rest my case.

What do you, the jury, think?

Increase Your Tax Deductions, Don’t Give Cash at Church

The Pension Protection Act of 2006 gives the IRS the authority to disallow deductions of undocumented cash gifts to charities, including church offerings. If you put cash into the collection plate you can no longer write it off on your taxes.

Document Your Donations
Instead of putting dollars or coins into the offering plate, write a check instead. What’s the difference? The new law requires donations to be documented as this article describes:

“Individuals must show a receipt from the charity, a canceled check, or credit card statement to prove their donation. No tax deduction will be allowed if the taxpayer cannot provide any supporting documentation.”

Be a Good Steward
Many religions emphasis the importance of being a good steward with your money. If you can reduce your tax burden by documenting and writing off your donations, you’ll have more money left over to live your life and to donate to your church!

Act Now and Double Your Charity Donations for Half Price

Wouldn’t it be nice if you could donate $100 to your favorite charity and have them get a check for $200?

Matching Gift Program
Some corporations have a matching gift program where they will match their employee’s charitable donation dollar for dollar. You can search MatchingGifts.com to see if your employer has such a program.

Free Money!
Once I discovered that my employer would match my gifts I felt guilty not utilizing it, I was basically throwing away free money for people that needed it!

Things to Consider
Pre-Approval
Corporations typically only match gifts to charities that are on their pre-approved list. Check with your Human Resources department to see if your charity is on their list.

Meet the Deadline
The donation must be made prior to the end of the calendar year. Your Human Resources department may have their own policies, be sure to check with them.

Follow the Rules
In order to be eligible for the matching gift through my company, I had to submit the donation check to my employer who then matched the money and forwared it on to the charity. If I donated directly to the charity they would not offer the match.

Act Now!
There are still a few more business days before the end of the year take advantage of your company’s matching gift program and double your donations!

Help Feed The Hungy, It’s Free!

Almost every day for 8 years I’ve been visiting The Hunger Site where one click of the mouse can help feed the hungry. Click on the big yellow button labeled “HELP FEED THE HUNGRY”

After you click, the next page tells you how much your click will give:

“Your click helps feed the hungry with the value of 1.1 cups of staple food. Please click every day and thank our sponsors below”

There is also Hunger Site apparel you can buy to spread the word about the site, proceeds go to a variety of good causes.

A simple way to help others, why not click?!

Simple Strategies for Donating As You Shop

Do you ever feel guilty spending tons of cash on Christmas presents, knowing there are many people in the world that could use that money to improve their situation in life? I know I do.

With the upcoming holiday shopping season, Smart Money magazine reviewed several ways we can donate to a good cause while gift buying. Compared to the annual charitable donations we make, these methods are pocket change but the more people that participate, the bigger the result. The article lists 4 different approaches we can use:

1) Affinity Cards
How It Works
Banks partner with a charity and send a small percentage of each purchase made with the branded card to the charity.

Examples
Sierra Club and the National Breast Cancer Organization both have affinity cards.

Things to Consider
If you carry a balance, interest rates on these cards tend to be high.

2) Credit-Card Rewards
How It Works
Any cash back, rewards points, or airline miles you earn on your credit card can be donated to charity.

Examples
Any cash back card will work here. Once you have the money, you can donate it to the charity of your choice. For rewards points, American Express and Citibank will send a check to your charity based on the amount of rewards points you’ve earned. United Airlines and Northwest Airlines partner with charities and allow members to donate miles to the approved nonprofits.

Things to Consider
Rewards points may get you a bigger bang for your buck than cash back. For example, American Express will give you $50 cash back if you accumulate 10,000 points but if you have them make the donation directly, they’ll contribute $80.

3) Purchases for a Cause
How It Works
Known as “cause marketing”, a small percentage of the purchase price goes to benefit a charity.

Examples
When you purchase a red 4GB iPod Nano, $10 of the purchase price goes to the Global Fund to Fight AIDS, Tuberculosis and Malaria.

Things to Consider
Don’t use the excuse that you’re giving back to rationalize buying something you’re craving. If you’re really buying it to give back, the charity would be better off getting a check for the full amount of the purchase rather than a small percentage.

4) Charity Shopping Portals
How It Works
An online portal links to different retailers’ websites. If you make a purchase the retailer sends a commission to the portal, who then donates it to your charity.

Examples
Both GreaterGood.com and iGive.com donate money to your charity if you purchase an item through their website.

Things to Consider
Different retailers offer different commission rates to the portal. If you can buy the same thing different places, check out each company’s rates and buy at the one with the highest.