It seems to me that recently, I’ve been invited to a lot of fundraisers. Fundraisers for families. Fundraisers for dogs. And it goes on. But each is worthy, and in each case, I know
the people organizing or benefiting personally.
So many to choose from, so little time and money to offer.
A friend recently asked me for some ideas about charitable
giving. He and his family wanted to know
some ways to combine their charitable giving with other members of their
extended family to maximize gifting.
When giving to charity, most regular working people think
about dropping some loose change in those Salvation Army buckets, or perhaps
putting in some money while at church.
Or buying Girl Scout cookies, or Boy Scout popcorn.
Last year, I spent 2 hours ringing the bell for the
Salvation Army, and it was an amazing experience. And cold.
All of the recent invites to fundraisers, along with the
questions from a friend, got me thinking about this. Sure the loose change helps, but how can
people really make a difference instead of giving as an afterthought?
Certainly follow your heart when picking what charities to
support. There are several guides
available to help you determine whether the group you donate to is a good
steward of the money.
One such resource is Guidestar – a nationally recognized
non-profit rating organization.
The other is the Better Business Bureau.
Once you’ve decided on a charity, decide on how you want to
contribute.
The easiest way is to simply write a check or give
cash. The advantage is that it’s easy,
and you get a tax deduction as long as the organization is registered 501©3
with the IRS.
Give $10, and you have a $10 impact. Not bad, but not great, but definitely easy
to do.
With bigger dollars or if you want to give other assets,
such as appreciated stocks from your employer, you can use a Donor Advised
Fund. These are available through popular
mutual fund companies.
In essence, this allows you to set up your own non-profit
foundation without all of the paperwork hassles. Your money is pooled with other contributors
and managed and invested by the fund company.
Though in the pool, you get to dictate how much you want to
contribute (from your “account”) and which group you want to donate to.
The advantages include little paperwork, tax deductible
contributions, and potential for growth because it’s invested in a manner you
specify.
The main disadvantage for regular folks is the high initial
contribution minimum. One popular fund
company requires at least $5,000 to start.
I’ve also seen others starting at $25,000.
A third method, but falls under the “planned giving”
category is life insurance.
It is one of
the most flexible ways to give and can create the greatest impact because of
the leverage in the policy.
After all,
you pay a small premium today, but the death benefit is many times greater.
Simple ways to use life insurance can be to designate one of
more charities as a beneficiary. The
policy can be used to make sure your family is cared for, but also set aside a
bit for your favorite charity.
You can structure the policy so that your premium payments
are tax deductible.
You can also use permanent insurance to create living
benefits. For example, you can structure
the policy so that the charity can use the cash value today instead of waiting
until you pass away to benefit.
Or you can structure it so that you can use the money you
are paying for the policy for your own benefit now and simply let the charity
get the death benefit later.
The major disadvantage?
Well, the person who the policy is on has to qualify for insurance.
Separate from ways to donate is a unique option I recently
became aware. Watsi.org is a non-profit
using the crowd funding principle to help poor people around the world get
access to high quality medical care. You
can pick who you want to support and how much you want to give.
Though there’s no leverage involved - $10 gift is a $10
impact – but it’s a very interesting way to give around the world.
What are your favorite charities you support?
What legacy do you want to leave?
