For Where Your Treasure Is: Should I Give to Them?

One thing many of us hope for as we move toward retirement is to have enough money to donate to good causes.  One thing we do not want to do is to donate to charities that waste our money.  If you have spent any amount of time on facebook, you've probably seen the meme that denigrates Goodwill and the American Red Cross and urges people not to contribute because of the size of CEO salaries, among other things. This article will give you some guidance about which groups should get your donations.

Do you agree with the purpose of the organization, and how important is it to you?

There are a lot of groups out there vying for our money, but most of us have only a limited amount to give. Make sure the groups to which you give your support are groups that support your values.  I am pro-life, anti-abortion.  I don't care what good someone says the local Planned Parenthood clinic does, the fact of the matter is that Planned Parenthood actively supports, and often provides, services I find morally abhorrent--that's a very public fact.  On the other hand, I have no problem with "save the whale" campaigns, but they aren't high on my list of priorities either.  I won't go out of my way to donate to save the whales, but I may give a small donation if approached by the right person.

What is the purpose of the organization, and how good a job does it do?

The purpose of some organizations is drawing attention to the cause.  One way of doing so it putting on large public events, which also serve as fundraisers.  If you look at the organization's balance sheet, you may see that they appear to spend a great deal of money on fundraising, but when you look more deeply you see that the fundraiser also served to publicize the issue.  On the other hand, some charities just plain spend too much money on overhead.

How does the size of the overhead compare to the size of the organization?

The CEOs of national organizations with billion dollar budgets and thousands of employees get paid in six figures.  Is that too much?  The answer is simply, it depends--but probably not.  Running the American Red Cross, an organization with branches in every state and many communities, is not a job for an idealistic fresh-out-of-college twenty-something.  It is a job for someone with significant management experience who could easily get another job.  How much money do you need to pay to attract the right person to the job, and to keep them there?  That's the question to ask about salaries, not whether the CEO makes more than you do.  If the organization is a local food pantry open a few hours per week and staffed primarily by volunteers that has a client base of one hundred families, then you don't want to see a large line-item for salaries.

Can you donate to a particular project?

It is easy to say "no" to a charity if you disagree with its goals and/or activities.  To stick with my example, Planned Parenthood isn't getting any of my money if I can help it.

It is easy to say "yes" to organizations you wholeheartedly support.  My church gets a donation from me monthly and I don't try to micro-manage how they spend it as I support their whole mission and believe that in general they spend money wisely.

However, there are times when you support particular projects of an organization but not the organization as a whole.  For example, you may be fine with donating to my parish's food bank, since you know the donated food feeds the poor who come to the door, no matter who they are, but be opposed to the doctrine of my church and not want your money spent to promote or spread that doctrine.  Many organizations will allow you to direct donations in a meaningful way, and others allow it in a paper-shuffling way.

You may support your alma mater but believe that the current administration is wasting money on foolishness while neglecting something you support.  Most universities will allow you to direct your donation to a pet project or to scholarship, or will allow you to donate equipment.

On the other hand, the United Way will allow you to direct donations but that is a paperwork exercise.  The United Way accepts requests from member organizations, and creates a budget directing  a certain amount of money to each organization.  If I direct my donation to the Girl Scouts, it means they use my money to fill the Girl Scout's allocation.  It does not mean that the Girl Scouts get more, unless so many people direct their donations to the Girl Scouts that it overfills the budget.  The United Way allows me to opt out of supporting a particular group, but if I opt out of supporting XYZ, they will simply use your money to support XYZ and send mine to another group. The only way XYZ gets less money is if so many people opt out of supporting XYZ that there isn't enough money available to fill it's budget.  

How do I get information on an organization's spending?

Most non-profits will mail you some sort of financial disclosure upon request.  Guidestar has tax filings and other data.  I now know that the CEO of Girl Scouts Louisiana East makes over $100,000 per year and that the average employee makes $18,000 per year (hopefully because there are a lot of camp counselors who are paid low wages for a short time during the summer who skew the average). 

So, should I give?

Yes, you should.  To what?  To organizations that effectively work for causes you support, to those who make wise use of your money and to those that do those things in  your community.  If you generally support the mission of the organization, do a little research and make sure that the organization is effective and efficient.  

For where your treasure is, there will your heart be: Gift Annuities

I am a proud alumna of Mississippi University for Women, a/k/a "The W", which has the distinction of being the first and last state-supported institution of higher learning exclusively for women.  The W has been admitting men since 1983.

Last week there was an alumni gathering here in the New Orleans area, and a delegation from The W's Alumni Office and Foundation attended and of course, made their pitch for funds. One pitch that I thought worth mentioning here was for a gift annuity.  

What is a Gift Annuity?

A gift annuity is a contract you enter into with a qualified charity whereby you transfer assets to them now, and they agree to pay a return to you and/or your spouse until you die.

Why might I want to invest in a Gift Annuity?

Gift annuities allow you to receive current tax benefits for a donation to a cause or entity you support, while still receiving income from those assets. 

What are the disadvantages of a Gift Annuity?

The primary disadvantage is that you give up ownership of your assets now, so that you cannot improve on the return if financial conditions change, nor can you leave the assets to your heirs.

Who should consider a Gift Annuity?

Anyone who has a charity to whom you want to leave substantial assets.  Note, I am not a financial advisor and the question is who should consider a gift annuity.  Basically, under the right circumstances, based on your income, the type of assets being converted and other factors too numerous to list here, a gift annuity can save money on taxes; it can avoid claims by heirs that you did not intend to give so much to the charity and it can provide current income during your life.  I suppose one of the right size could get you accolades from the charity as well.  This is one of those decisions that should be discussed with a tax advisor before you make it.  

Where can I learn more?

Most charities that accept Gift Annuities have information about them and about how they work.  MUW's information is here.  Girl Scouts Louisiana East's page is here.  Catholic Foundation Archdiocese of New Orleans

Also, check out my other posts this week:  Loyal3 Lunch and From My Kickfurther Store.

For Where Your Treasure is....

Used with permission

One thing many of us would like to do in retirement is to give money to charity, including our churches.  Another thing many of us would like to do is to avoid paying taxes.  IRA Qualified Charitable Distributions can help you do both.  

One you reach 70.5 years of age, the law requires you to take (and pay taxes on) a certain portion of your IRA accounts.  One way around that requirement is to have the distribution sent directly to a qualified charity.  By way of example, if your goal was to donate $2400 this year to your church, and your minimum required distribution was that amount or more, you would tell the custodian of the IRA to send the $2400 directly to the church.  If you itemize your deductions, there may or may not be an advantage to this, since charitable donations are deductible,  but if you take the standard deduction, this technique allows you to not add this money to your income.  Unfortunately, this technique cannot be used by younger people who have inherited IRAs from which they are taking minimum required distributions.   Ask your tax advisor if this is a good idea for you, or run the numbers yourself.  The IRS rules are here. While it says it is only valid through 2014, to me it has the looks of something that is haggled over and then renewed yearly.  

For Where Your Treasure Is, There Will Your Heart Be

One thing I treasure is children.  They are precious because they are made in the image and likeness of God.  They are the future of our society and one thing  you realize as you grow older is how soon these little ones grow up.  Another thing you learn as a adult is how schools serving the poor are often schools with high needs and limited budgets.  Teachers have good ideas about how to reach the students but there are no funds available in the local budget to implement these ideas.   School systems are starting to hire grant writers who put together packages to compete for corporate or chartiable grants worth tens of thousands of dollars to cover large-scale implementation of programs or technology upgrades.  Still, many of the things teachers want to implement do not cost thousands of dollars; only hundreds--a sum most teachers are  unwilling to cover out of their own pockets (and I'm certainly not suggesting that they SHOULD) but not enough to make most grant programs worthwhile.

That is where Donorschoose.com comes in.  It is an on-line crowd-funding source for public school teachers.  Teachers tell potential donors what they want for their classrooms and what it will cost.  Donors can choose projects to support and how much to give.  While my daughter is not in public school I have given small donations to a couple of projects from local schools that caught my eye.  Like most other people, I have questioned how well local schools spend money.  The beauty of Donors Choose is that I can decide whether I think the project is worthwhile before supporting it.  If I think it is a waste of money, I move on to the next request.  Join me in supporting worthwhile projects to help the next generation.

For where your treasure is, there also will your heart be.

He is risen, He is risen indeed. Alleluia!  These words, or a close facsimile thereof are being said in Christian churches around the world today.  But what difference does it make?  And why am I discussing this on a blog titled "Racing Towards Retirement".  Well, to begin with, those of us who are people of faith believe we are all headed for a final retirment home unlike any we've seen here on earth.  While most of us are hoping for accomdations in the temperate zone, we keep in mind that the ultra-topics are a possibility.

I'm not a theologian, I don't play one on TV and I claim no special expertise in the subject.  I've often wondered why God chose to do it the way He did.  Why couldn't He do with Adam and Eve what we do with our children--admonish, perhaps punish, then forgive and forget?  Why did He choose to send His son to die (and not only die, but die horribly) for us and for our sins?  I think it was to give us a concrete example of how to live selflessly, and by doing so, to create a new life for ourselves and for others.  There are a lot of very good people throughout the world who do not believe in Jesus or the resurrection.  However, if you look at cultures as a whole, the ones that have adopted the Christian ethos of self-giving for the good of other humans are the ones, that as a whole, have become the most advanced, the most prosperous and the most peaceful.  Is that because God blesses us in a special way, or because self-giving ultimately helps all of us?  

I became interested in financial blogging while doing research on a new financial product I ran across on the internet--peer to peer lending.  I wrote about it on my general (mostly books) blog and then decided to move over here.  In short, with peer to peer lending, investors buy small portions of loans, and when the loans are repaid, earn interest.  In my experience so far (8 months), it has been a good investment.  But you ask, what does that have to do with self-giving?  There is another lending platform out there to which I'd like to introduce you:  Kiva Loans.  Kiva works with various anti-poverty, economic development NGOs to provide loans to help the less fortunate better their lives.  Much like the Lending Club platform, the lenders get to review borrow profiles and decide whether they want to invest their money in that particular loan.  While those investing with Lending Club gain economically, those who invest with Kiva get the satisfaction of knowing their loans have made life better for someone.  Unlike a straight charitable donation, there is a chance that your investment in Kiva will be repaid, so you can then re-invest, helping someone else (or  take your money out, if desired).  How good is that chance?  Honestly, I don't know.  I made a loan; I hope it is paid back; if it is not, oh well, it is a donation.  I hope my borrower is able to make a better life for herself and her family.  If she pays me back, I can help someone else with the same money.

Do you invest with Kiva?