Free Money Finance

Is Giving Part of Your Life Strategy?

Here's an interesting question from US News:

Is giving part of your life strategy?

They go on to state the following:

If it’s not, it should be. I don’t say that from a finger-wagging, “Thou Shalt Give” perspective. I say it from a personal benefit point of view. Study after study on altruism has shown that giving in its many forms can strengthen both physical and psychological health, contributing to your happiness, health, positive relationships, and more.

What studies, you might ask, show a link between giving and happiness? This one, for example (with a link to another one in the post.)

But back to the original question -- is giving part of your financial life? Do you budget for giving? Do you give both money and time or just one of them?

Here's what we do:

• We budget for our annual giving -- both tithes and offerings.

• We also volunteer with a few charities -- my wife and I serve on the board for a non-profit and we both have additional commitments at our church.

How about you? How do you plan for your giving? During these tough times, many people need extra help. If you're in a position to lend assistance, please consider giving both your time and money in 2009 to whatever charity you feel is appropriate. You'll not only feel better (happier?) for doing so, but you might actually be helping yourself get rich in the process. :-)

FMF Giving Report for 2008

As many of you know, I give away all the proceeds from Free Money Finance to charity each year. Everything from every sponsor, every affiliate, every sale, every everything. Every single penny goes to charity. We're now closing in on $200,000 donated since this blog started (we'll pass $200k sometime in 2009). It's pretty cool that by simply writing (me) and reading (you) a personal finance blog that we all can help so many people from around the world.

As I do each year, I give a list of many of the organizations FMF has supported the previous year. Here's the list for 2008 in alphabetical order:

• American Cancer Society
• Crown Financial Ministries
• House of Mercy
• James Fund
• Leukemia and Lymphoma Society
• Make-a-Wish Foundation
• Meijer Gardens
• Russian Children's Welfare Society
• Samaritan's Purse
• Shaohannah's Hope
• Union Gospel Mission

I just want to say thank you to all the sponsors of Free Money Finance who have made this possible. It's an amazing list and I'm honored to help these charities. But most of all, a huge THANK YOU goes to you, the readers of FMF. You're the ones that make this site what it is and because you come back day after day, we're all able to help those less fortunate around the world. Thanks!

And here's to helping even more people in 2009!

Top 10 Gifts of 2008

Thought this post was interesting. It lists the top 10 gifts and pledges announced by individuals in 2008. Wow, those are some big numbers!

Ever "Buy" a Book on Sign Language from a Deaf Guy?

Any of you ever have this happen to you:

We were in Walmart the other day when I heard my wife a couple aisles over talking to someone. Since the kids were with me, I knew it wasn't them, so I went over to see who she was talking to. Turns out there was a deaf gentleman there who had handed her a card saying 1) he was deaf and 2) would she "buy" a small book from him on sign language to help him out financially?

I've seen this "fundraising technique" a few times in the past (I can't remember if they've come to my house or if it's always been in a public place), but the situation is always the same: deaf person, card explaining what they are doing, "selling" a small booklet, so they can get financial help/support themselves.

So here were the thoughts I had immediately upon being confronted with this latest situation:

• What is this guy doing in Walmart asking for money? Yeah, Walmart allows people outside to do fundraisers, but this was in the housewares section and he was obviously trying to be inconspicuous.
• Is he even deaf? Is this legit or some sort of scam?
• Is he really needy? Or is he one of those "beggars" that earns $70k per year or so?

Anyway, I told him "no" and he took his book and was off to the next victim in no time. We don't give to spur-of-the-moment emotional appeals where the need and motives of the person/charity are questionable, and he clearly fit into this classification, so it was easy to say no.

Then again, it was difficult afterwards as I thought about the situation. Was he really needy? Maybe he was. But maybe he was just a fake, playing on the emotions people have about the deaf (helping someone with a need.) I'm convinced that I did the right thing, but the situation still has me second-guessing myself a bit. After all, let's say I gave him a dollar. Is that really any big deal -- even if he was a fraud?

Anyway, I'm very interested in your thoughts. Has anyone ever had this happen to them? What did you do? Or what would you do if presented with this situation?

Do You Give to Your College?

This post made me want to ask all of you:

Do you give to your college (your alma mater)?

Every year I get calls from both my undergraduate and graduate schools asking me for money. I never give to them. Here's why:

1. I paid/worked to go to school, didn't I? So to ask me to now give is like asking me to donate to Walmart after I just purchased something there, isn't it? Ok, so it's not exactly the same, but you get the idea. Yes, I did get scholarships to attend these schools, but these certainly weren't given to be repaid were they?

2. Aren't I already giving by supporting schools in my state? Don't public universities get money from the state government? Part of that is my money, FYI.

3. Don't colleges ask current students to pay tuition? Of course they do. So why do they need money from me?

4. Aren't there lots of other/better/more needy charities out there? Sure, this is subjective, but I think the answer to this question is certainly "yes." That's why my giving (including all the proceeds from this blog) goes elsewhere.

5. Aren't many colleges simply building up bigger and bigger endowments with the funds donated? Do I really want to give so a college can have a bigger nest egg?

I'm sure I'll hear it in the comments for my thoughts on this issue, but I'm up for it. Maybe there are even some good arguments as to why I should give to my schools. But for now, I'm refusing to do so and have asked them to take me off their call list. 

Now they are sending me mail. :-(

Target Makes Good for the Salvation Army

In my review of Target earlier this year, I took them to task for their bah-humbug banning of Salvation Army red kettle bell ringers at their stores. This issue came to my mind again earlier this season when we stopped by a Target (something we don't do very often) and, as I expected, there were no ringers -- which took away from the "feel" of the season for me, but that's for a different post. Anyway, I've tried to correct mis-statements, opinions, thoughts, etc. on this blog when conditions change or new information is brought to light, and now I need to revise my thinking in Target and the Salvation Army. Why? It appears they recently gave $1 million to the charity. The details:

MINNEAPOLIS (November 12, 2008) –Target today announces a $1 million donation to The Salvation Army to revitalize the organization’s libraries, media centers and educational facilities across the country. The retailer announces its commitment, which includes $25,000 grants to all forty divisions, at the unveiling of The Salvation Army Bushwick Community Center’s newly transformed library. The introduction of the Center’s updated library will serve as the kick-off of forty more library, educational and after-school facility renovations to take place throughout next year.

Now what I don't know is what Target is currently giving versus what the Salvation Army used to get by having bell ringers in front of Target stores (maybe this is way more, maybe it's way less, maybe it's the same), but I felt obliged to point out that Target isn't the Salvation Army-hating store I accused it of being.

I stand corrected.

Spotlights on Charities

NCN has just posted the first round of his "spotlight on charities" series for this year -- and has included my post on Samaritan's Purse.

If you're a blogger and want to be included in his series, drop him an email.

And for the rest of you -- a question. Do you have a "special charity" that you make it a point to give to at this time of year?

Salvation Army Gets Creative

Check this out -- the Salvation Army is moving into the 21st century:

This season, five bell-ringers in El Paso County, Colo., will be the first to accept debit and credit cards along with spare change and bills. Salvation Army officials say the kettle tradition needs to be tweaked as consumers increasingly carry only plastic.

I was talking to a leader of a local charity the other day and he was telling me that they were seeing more and more people who could/would not give with cash or check -- they pay everything either online or with a credit/debit card. He and his organization were looking at ways to address this growing trend.

Personally, I'm enough from the old school that I use checks for most of my giving, though I do use credit cards sometimes as well. Any of you exclusively use either online or credit cards to give to charity?

Giving Down

Just as I thought, it appears that the tough economic times are taking their toll on charities. The details:

While the rest of us, or many of us, are still in a holding pattern with regard to our own finances (how bad is it going to get?), the fallout from the financial crisis is striking nonprofit groups and charities fast and hard. As much as people might like to sit still until their own finances feel stable again, many nonprofit agencies need additional support now.

Donations to charities grew about 4.5 percent in the 2007 fiscal year (which ended in July for most groups), to what sounds like a reassuring $72.5 billion. But that number doesn’t reflect the sudden downturn in donations these last few months, as large financial institutions (and historically generous donors) have collapsed, dozens of states have announced huge budget deficits, many municipalities are cutting their support of social service agencies — and some nonprofit agencies are facing a drop in individual contributions.

And all of this is occurring as demand for many groups’ services is growing sharply.

Because the end of the year is when nonprofit groups typically expect a jump in contributions — and because that surge is so suddenly and completely in question — program administrators say they are scrambling to keep up.

We did much of our annual giving in the first half of the year, but we're looking to give more over the last few months of the year (for example.) As I've said before, almost all of the people reading this blog would be classified as rich according to world standards, and there are many, many poor people in need of our help. So during this time of the year, I'd like to ask you to think a bit about others and consider giving generously (even though times are tough) to the charity of your choice.

Seven Ways to Stretch Charitable Gifts

Smart Money lists seven ways to stretch charitable gifts as follows:

• Give to the neediest organizations. Charities helping people get by in this tough economy, such as food banks, homeless shelters and utility assistance programs, are getting hit the hardest by a double whammy of fewer donations and rising demand.
• Go beyond cash. Donating your time or unwanted belongings can help charities a lot -- and it won't bust your budget.
• Use sites that offer matching donations.
• Check financial records. With fewer charitable dollars in play, make sure you're giving to a nonprofit that puts more into its programs than its administrative costs.
• Seek reputable outfits. A reputable charity should offer hard numbers regarding the amount of aid distributed as well as, say, number of homes built or winter coats handed out.
• Skip the middlemen. To make sure your entire donation goes where you want it, send money directly to the charity.
• Stay focused. To maximize the impact of your contributions, focus on just one or two charities.

I do work with several non-profits and most of them are saying the same thing: contributions are way down but the demand for their services is way up. We've made a few extra contributions in the past month to help those we see as the neediest, but the need is over-whelming.

If you can afford it, I ask you to consider giving to the charity of your choice this holiday season. If you're reading this, the odds are that you're among the wealthiest people in the world (even if you're "poor" by U.S. standards) and there are a lot of hurting people out there who would appreciate your donation.

Give Generously During Hard Times

The following is a guest post from Marotta Asset Management.

As a response to the recent market correction, you can enrich your life in three healthy ways: Cut back your spending, increase your savings, and give more generously to charities of your choice.

The first two recommendations are obvious. If your retirement account is down, reducing your spending and increasing your savings are the best ways to get it back on track. If you are still appreciating assets, this strategy will help you meet your retirement goals. And if you are retired, it will help you stay within your safe spending rates. Even trimming your expenditures by $100 a month during retirement can add an extra quarter of a million dollars to your estate over a 30-year retirement.

But just as critical during an economic downturn is increasing your charitable giving.

Charities are hit especially hard during rough economic times. They face reduced giving and often greater needs. They must find supporters who give more in order to offset those who give less.

Charity freely given is a virtue distinctly more valuable than any government program could be. For charity to be a virtue, it must be freely given. But government entitlement programs are funded from taxes. When you pay your taxes, it is no more virtuous if they are used to buy cruise missiles than to fund school lunch programs. The only virtue here is meeting your legal obligations.

Taxes are not freely given. They are coerced through the threat of imprisonment. Taxes are an obligation and a duty, not a virtue. Charitable begins only after you meet the financial obligation of paying your taxes.

The virtue of charity is an important one to understand and appreciate. True virtue and morality cannot be legislated. Government cannot make people virtuous; it can only make certain actions illegal. Coerced charity ceases to be charity. Politicians from both parties need to understand this principle.

Furthermore, only when you give of your resources is it true charity. Government has no resources of its own. It can only take the production of others and redistribute it, which certainly is not charity.

Those who seek to be charitable must first produce more than they consume to have something to share. As much as it may make you feel good to support laws that take from the productive and give to others, it is not charity on your part. Voting to spend tax dollars isn't charity. Only individuals who give from their own resources can be charitable. Voting for government entitlement programs is like being generous with your neighbor's credit card.

But doing good while doing well is an American tradition. We are a nation of generous people who generally don't want to pay taxes.

No matter what worthy organizations you support, you can donate up to 15% more if you give them appreciated stock instead of cash. For example, if you sell $1,000 worth of appreciated stock, you must pay the capital gains tax of 15%. If most of the stock's value is appreciation, the tax approaches $150, leaving only $850 for charitable giving.

This is the usual time of year to gift investments with gains to reduce your taxes. But that assumes you still have holdings with significant appreciation. Because of the market downturn, fewer people have appreciated stock, and nonprofit organizations as a result are feeling the pinch.

Fortunately another tax-savings opportunity is available for the charitably minded. The bailout plan includes one add-on that actually extended a good idea, at least for another year.

If you are age 70 1/2 or older and taking the required minimum distribution from your IRA account, you can give to charity directly from your IRA. Your gift will count as your required distribution. The gift will count as a distribution, but it won't be considered taxable income.

Normally you would be obliged to take the distribution, increase your adjusted gross income (AGI), and then gift to charity as a charitable deduction. The difference may not be obvious, but it's there. Many calculations in the tax code are tied to your AGI. Increase your AGI and you increase your phaseouts and other additional taxes. Take $5,000 out of your IRA and give it to charity, and you owe a significant additional tax on your generosity.

This provision in the bailout allows you to gift directly from your IRA. Although you won't get a deduction, it doesn't matter because it won't count as AGI in the first place. But here's the downside: This provision was only passed recently, and thus you can only use it on distributions you haven't taken yet. For many people, that might only mean their December distribution, but others take their entire distribution at the end of the year.

The details are complex, so contact your tax professional or financial planner to make sure you are complying with the IRS rules. And give purposefully what you have decided to give, not grudgingly or under compulsion.

Do You Write off Your Charitable Contributions on Your Taxes?

I recently received this comment while discussing what politicians give to charitable organizations (as seen on the public tax forms they have to release):

Lots of people I know don't list their tithe for taxes, since they don't want to receive an earthly reward for their giving. Paul made it pretty clear that we shouldn't be giving our money to the church for earthly status - something that a politician can't do if they are reporting their giving. It’s also something people should keep in mind when examining the records public officials.

I've heard this argument before, especially from Christians. They say they don't deduct their giving from their taxes because "they want a heavenly reward, not an earthly one." My response has always been to suggest that if they feel that way and they want to be the best stewards possible, why don't they claim the deductions on their taxes, get some money back, and give that money away too? Seems like a good way to maximize their giving, doesn't it?

Politicians have a different issue -- they may want to hide the fact that they're giving to a specific organization. So maybe they just don't claim it on their taxes. If it's not on their taxes, then no one knows, right?

As for me, I write off everything that's permitted to be written off. My thoughts are that I'm playing by the rules of the US government, and if they allow us to get credit for certain actions, then I'm going to get credit for them. Then again, no one is looking at my records either.

How about you? Anyone out there not deduct their giving on their taxes for one reason or another (other than you don’t give enough to claim)?

Campaign Donations

Here's an interesting election day question:

Did you donate to any of the candidates in the presidential race this year (either in the primaries or the final race itself)?

Please do NOT tell us who it was if you did (that will likely start a back-and-forth flame war that none of us wants), but I am interested in knowing if you donated to any candidates. In addition, I'm interested in knowing why or why not. In particular, donating to a campaign is NOT tax deductible like giving to a charity would be. Did this cause anyone not to give?

Samaritan's Purse Gift Catalog "Purchases" Made

One of the things that's become a Christmas tradition for our family is giving to the Samaritan's Purse gift catalog. The catalog contains 40 different ways you can help people from around the world -- by "purchasing" (really donating the money for) food, clothing, shelter, transportation, medical supplies, etc.

Each year, we give our kids a set amount of money and allow ourselves the same amount. Then each person goes through the catalog, "spends" the money, and then we talk about why we gave to a certain cause, what we liked about it and so on. It's a good way to start the season -- focused on other people and their needs versus what each of us are going to receive this year.

We got our catalog about a week ago and we all picked out our various items. In all, we gave to 19 different categories of the 40, but most of our money was spent in the following four:

• Give an orphan a month of loving care
• Clothing for those in need
• Hot meals
• Dairy animals

We've given to Samaritan's Purse for years and I can highly recommend it in case you're looking for a way to bless others this holiday season. And don't just take my word for it, Charity Navigator gives it the highest rating possible (four stars).

One final thought: I know that the economy has been tough on many of you out there (it has on me too!) But compared to 99.9% of the people in the world, anyone reading this is much better off. If you don't believe me, just look at some of the pictures in the Samaritan's Purse website and you'll see what true poverty is. You certainly don't have to give to this charity or any other I recommend, but I am asking you to take time out this holiday season, think about those less fortunate, and give to the charity of your choice to help them.

What's Going to Happen to Giving?

I am on the board for a non-profit charity and, as you might expect, a good deal of our time is spent on fundraising (we raise the funds so the people running the charity can do their work.) Anyway, all the fear and uncertainty in the market and economy has me wondering: will giving drop off the last few months of this year and into 2009? After all, most people see giving as an "add-on" expense that only happens if they have anything left over. And with people taking big hits on their investments, worried about their jobs, and wondering what the economy in general has for them, I can see them cutting back on giving in a big way -- or maybe even cutting it completely.

And it's not just the "average" givers who are of concern. What about more wealthy donors who used to give 20% of their income and now decide to be a bit more conservative -- so they "only" give 17%? Those are HUGE dollars that are no longer going to charities -- which will be a major problem for them, of course.

So I'm asking you -- are you thinking about/planning to give less over the next few months? Or maybe the question never even occurred to you. If not, think about it now and let me know what your take is -- I'm very interested to know your thoughts.

Poverty: How You Can Help

Today is Blog Action Day and the topic is poverty. Here is my contribution to the effort.

Obviously, "poverty" is a huge topic and could be covered from many different angles. I decided to take the angle of how we can all help the poorer people of the world and list organizations I support in doing so. I'll list them below with a brief description (either their mission statement or something else from their websites) as well as a link to their ratings at Charity Navigator. Here goes:

• Samaritan's Purse -- Mission Statement: Samaritan's Purse is a nondenominational evangelical Christian organization providing spiritual and physical aid to hurting people around the world. Since 1970, Samaritan's Purse has helped meet needs of people who are victims of war, poverty, natural disasters, disease, and famine with the purpose of sharing God's love through His Son, Jesus Christ. Charity Navigator rating: 4 stars (out of four).

• World Vision -- Vision Statement: Our vision for every child, life in all its fullness; Our prayer for every heart, the will to make it so. World Vision is a Christian relief, development and advocacy organization dedicated to working with children, families and communities to overcome poverty and injustice. Inspired by our Christian values, we are dedicated to working with the world’s most vulnerable people. We serve all people regardless of religion, race, ethnicity, or gender. Charity Navigator rating: 4 stars (out of four).

• Compassion International -- From their website: Sponsoring children in need is breaking the cycle of poverty. Compassion International exists as a Christian child advocacy ministry that releases children from spiritual, economic, social and physical poverty and enables them to become responsible, fulfilled Christian adults. Founded by the Rev. Everett Swanson in 1952, Compassion began providing Korean War orphans with food, shelter, education and health care, as well as Christian training. Today, Compassion helps more than 1 million children in 24 countries. Charity Navigator rating: 4 stars (out of four).

• Mel Trotter -- From their site: Throughout the year, Mel Trotter Ministries provides shelter, food, clothing, education, Biblical teaching, computer-based learning, and work training and experience to meet people at the physical and spiritual points of need. Charity Navigator rating: 2 stars (out of four) (Note: This is a local Michigan charity that's well-known in my city.)

These are the organizations I support to help stamp out poverty. How about you? If you have a favorite charity that works to meet the needs of the poor, feel free to post a link to it in the comments and tell us why you support it.

Are "Taxes" and "Giving" the Same Thing?

On my post titled What Politicians Give, one reader left a particularly interesting comment. Here's the part of it I'd like to focus on:

The top 5% of wage earners pay 57% of taxes. (IRS 2004) Old info, but I'm running with it. I use this information because I feel that those mentioned in your post are in or close to the top 5%, if not, then they're probably in the top 10% and paid 68% of taxes.

Now, the last time I checked there are numerous organizations that receive this money with the sole purpose of giving and taking care of those that are less fortunate. There are food stamps, education funding, money to fight world poverty through the U.N., AIDS, environmental crisis, employment help, Medicare, Medicaid, just to name a few. There are additional grants for non-profit organizations that help more focused groups of people. By this information, doesn't paying taxes make you a charitable giver? Not to mention more so for the high earners you mention since they pay more taxes than the rest. Why should they have to give another 10% of their income to be considered a "good person.”

The issue I'd like us to discuss is whether or not paying taxes is the same as giving. I've had several people comment along the lines of "I pay X% in taxes to help out others -- that's my giving."

In part, I can see their point. If a huge chunk of their income is taken away to help others, why should they add more to it? Don't they already give by default?

Here's my take on the situation:

1. Personally it doesn't matter to me whether you give or not. I do think it's our responsibility to help others, I do advocate giving both time and money, and I do so personally. That said, I don't think you're a "bad" person for not giving.

2. Paying taxes and giving are not the same thing. The key difference -- one is voluntary and the other isn't. Dictionary.com defines "giving" as follows: to present voluntarily and without expecting compensation. When was the last time taxes were voluntary?

3. Now, combining thoughts #1 and #2, while I don't think the non-giver is "bad", I do think they are not generous. Trying to hide behind the "I'm a generous person because I 'give' taxes" is a huge cop-out to me. Why not just say "I don't want to give?" That's the truth, isn't it? Why try to pretend to be generous when you're giving nothing? (again, taxes are taken/paid, not given)

So, what's your take on the issue? Is paying taxes a substitute for giving or is there a difference? I'm interested in hearing your thoughts.

Palin Gives Less Than I Thought; I was Wrong

In my post titled Palin's and Biden's Finances, I said that I guessed that and her husband gave away a good amount of their income because Palin comes from a Christian denomination known for its giving. I now stand corrected. Her records were released today and here's their income:

The Palins paid income taxes of $24,738 in 2007 based on gross income of $166,080 -- 14.9 percent of their income. In 2006, they earned a total of $127,869 in income and paid $11,944 in taxes, or 9.3 percent of their income.

And their giving:

The Palins gave $3,325 in charitable contributions in 2007, money donated to local churches and the Salvation Army, and $4,250 in charity in 2006 given to similar organizations.

2% to 3% per year. It's about what the average American gives and waaaaay more than what Biden donates, but it's waaaaay under what I estimated.

Just wanted to own up to my mistake.

Paul Newman's Great Legacy

As most of you probably know, actor Paul Newman passed away a few days ago. He left behind a legacy for giving that will continue despite his death:

Newman and his food company have given more than $250 million to charity over the years. Last year, $28 million from the sale of pasta sauces, salad dressings, popcorn and other products was distributed to a variety of social causes, including the Safe Water Network, which Newman helped start to provide safe drinking water to impoverished communities in places like India and Africa.

Until two years ago, Newman had the task of personally distributing the company's profits. But he and Forrester set up a private, independent foundation, known as Newman's Own Foundation, to carry on the work without Newman.

Well done, Mr. Newman. Well done.

What Politicians Give

I've already railed on some celebrities for not giving to help others, now it's the politicians' turn. Check out what USA Today has to say about giving from the current President/VP candidates as well as some other politicians -- and my comments on each. Just to be fair, I'll list them in alphabetical order (the current candidates, that is):

Biden -- The Bidens reported earning $319,853 last year, including $71,000 in royalties for his memoir, Promises to Keep: On Life and Politics. The Bidens reported giving $995 in charitable donations last year — about 0.3% of their income and the highest amount in the past decade. The low was $120 in 1999, about 0.1% of yearly income. Over the decade, the Bidens reported a total of $3,690 in charitable donations, or 0.2% of their income. Biden spokesman David Wade said in an e-mail that the Bidens "also contribute to their favorite causes with their time as well as their checkbooks."

This is the most shocking (and frankly disgusting) finding in the whole group. You'd think that someone making over $300k could fork over a bit more to help those less fortunate. For someone who seems to be for helping others and the "little guy" (my impression of him -- maybe this is incorrect), Biden isn't practicing what he preaches. Oh, that's right, he wants the government to take money from one class and give it to another class. Too bad he doesn't practice charity himself. I guess that's the reason he wants to tax Americans with higher incomes -- he assumes that since he's making a bundle and not giving much, no one else is either. I don't know how Obama picked someone like this, someone with so little willingness to give to others. Seems like this philosophy is so contrary to what Obama (seems to -- you can never be sure with politicians) stands for.

BTW, I'm probably going to get slammed in the comments for these thoughts on Biden but I don't care. This guy's giving disgusts me. My comments are not a partisan attack (read my past posts -- I'm willing to bash each side equally), they are simply a review of the facts. The guy makes a bundle, he gives barely anything, and yet he portrays himself as a crusader for the down-trodden. This is completely hypocritical in my opinion.

McCain -- John McCain reported giving more than $202,000 — a quarter of his income — to charity in 2006 and 2007, the only years for which his campaign released his tax returns. His campaign didn't release information about his wife's charitable contributions, however. In 2006, her total itemized tax deductions, a category which includes charitable contributions and other deductible items such as mortgage interest, was $569,737, or 9.3% of her income.

Ok, I'll give McCain two reviews on this one. The first is "well done." Anyone that gives 25% or 9% of their income to charity is pretty generous in my book. But the second is more reserved. Is this really generous given that his wife's net worth is probably in the stratosphere? It's hard to tell. Overall though, he seems to be the most generous of the bunch.

Obama -- The Obamas gave more than $240,000 to charity last year, about 5.7% of their income, their tax return shows. Their charitable giving has risen with their income; in 2000, when the couple made $240,726, they gave $2,350 to charity, about 1% of their income.

5.7% is a good amount -- well above what the average American gives. Then again, when you make millions, $240k isn't that hard to give. Still, I give them credit for giving so much. I hope the spike in their giving that we've seen this past year keeps up.

Palin -- Hasn't released her records yet.

My bet is that her giving percentage is higher than all the others. Why? Well, first of all, she earns much less than most of them (about what Biden earns but way lower than McCain and Obama.) Second, she has been part of a church denomination in the past that strongly teaches tithing and giving offerings. So I'd expect her giving to be over 10%. But you never know -- I would have guessed that Biden was a generous giver too.

Average American -- Nationally, more than two-thirds of U.S. households reported giving to charity in 2004, with average contributions of $2,047 that year, according to a study released in January by the Center on Philanthropy at Indiana University. Those households who gave to charity averaged donations of about 3% of their income, says Patrick Rooney, the center's interim executive director.

I included this just for reference -- so you can see where the above people fall compared to the average American.

Wealthy Americans -- Another study of wealthy households in 2005 found average yearly donations of $40,746 from people with incomes from $200,000 per year to $500,000 per year, Rooney says. But like most statistics on giving, those numbers are skewed upwards by a small number of people who give large amounts to charity, says Rooney, formerly the center's research director.

Again, for reference. Probably a better comparison since all the candidates make decent salaries compared to the rest of us.

Gore -- Then-Vice President Al Gore came under fire when his 1997 tax return showed only $353 in donations to charity; he and his wife, Tipper, gave $15,000 to charity, or nearly 7% of their income, in each of the following two years.

Another converted giver. 7% is very good in my book -- over twice the average.

Cheney -- When Vice President Dick Cheney was campaigning in 2000, he defended his family's charitable donations of $209,832, or about 1%, of the $20.6 million he earned from 1989 to 1999. "It's a private matter … a matter of private choice," Cheney said in 2000. Last year, Cheney and his wife, Lynne Cheney, donated more than $166,000 to charity, or about 5.5% of their income, according to the Chronicle of Philanthropy.

Don't get me started on Cheney. The man's got more money than most third world countries -- he should be a big giver. So he squeaks out a measly 1% until people start to notice and now it's 5.5%? I'll give him credit for making a change, but I hope it sticks. Still, I'd say he's not really a willing giver (maybe the same as Gore?) since he wasn't that generous until it was brought up as an issue.

I know I can be a stickler when it comes to giving, but to me, how someone gives is an indication of their heart -- what they really think and believe in, how generous they really are. All of these people make good incomes and all of them want to "serve our country", so shouldn't part of their service be a personal commitment to charitable giving?

Maybe it's just me. Maybe I expect too high of a standard from our leaders. Then again, maybe I'm just cranky as I write this. After all, most of them currently seem to be decent givers.

What's your take on the issue? Should our leaders at least as good a giver as the average? Or does it matter? Is it even any of our business?

More on Donor-Advised Funds

Here's more to add to our discussion last week about donor-advised funds.

The bottomline: just like you wouldn't invest money in stocks if you need the money in the short term, don't put money into a donor-advised stock fund if you're going to select the charity any time soon. Otherwise, your gift might shrink in value by 20%.

The Most Generous Celebrities?

Parade magazine recently named what they called the most generous celebrities. The top 10:

1. Oprah Winfrey - $50.2 million
2. Herb Alpert - $13 million
3. Barbara Streisand - $11 million
4. Paul Newman - $10 million
5. Mel Gibson - $9.9 million
6. Angelina Jolie and Brad Pitt - $8.4 million
7. Michael Jordan - $5 million
8. Eric Lindros - $5 million
9. Lance Armstrong - $5 million
10. Rush Limbaugh - $4.2 million

But this is simply a list of who gave the most -- not are who the most generous. If we really wanted to see who the most generous celebrities were, we'd need to look at giving as a percentage of income and/or net worth.

I tried to find the net worths/incomes for each of the people on the list above to see which was the most generous, but that information was harder to find than you might imagine. I did find a few, but not very many, so I took a different route -- I decided to see who SHOULD have been on the list of the celebrities that gave the most.

According to Forbes, this should be the list of the most generous celebrities because they made the most money:

1. Oprah Winfrey
2. Tiger Woods
3. Angelina Jolie
4. Beyonce Knowles
5. David Beckham
6. Johnny Depp
7. Jay-Z
8. The Police
9. J.K. Rowling
10. Brad Pitt

Let's look this information over a bit. Not to pick on Oprah (she does give away a TON of money), but she should give a lot away based on how much she makes and how much she's worth. She made $275 million last year and has a net worth of $2.5 billion. So for her to give $50 million is really not THAT big of a deal. Same goes for Pitt and Jolie -- they're among the top earners, so they should be among the top givers.

As for the rest of the people on the Parade list, it's hard to tell who's the most generous, but none of them are in the top 10 earners, though they're in the top 10 givers.

My only issue is this -- is the giving list really right? Or maybe it's only what can be documented publicly. For instance, Tiger Woods is not on the list. Are you telling me that he gave less than $4.2 million last year? Just doesn't seem to fit his public image as a very generous person (he has a foundation and from what I've seen gives a ton to it.)

In the end, I'm splitting hairs a bit. Even if people give a small part of their income/net worth, they're still to be commended. I believe the average American gives something like 3% of his income to charity, so most (if not all) of these people do better than that. I know, I know, if we all had $20 million a year we all would probably give more (and it's easier to give more on a higher income.) But the giving levels of these people are still to be admired, don't you think?

Why Use Donor-Advised Funds?

Anyone use donor-advised funds?

For those of you who don't know, here's what Wikipedia says about donor-advised funds:

A donor-advised fund is a charitable giving vehicle administered by a third party and created for the purpose of managing charitable donations on behalf of an organization, family, or individual. A donor-advised fund offers the opportunity to create an easy-to-establish, low cost, flexible vehicle for charitable giving as an alternative to direct giving or creating a private foundation. Donors enjoy administrative convenience, cost savings and tax advantages by conducting their grantmaking through the fund.

Because the fund is housed in a public charity, donors receive the maximum tax deduction available, while avoiding excise taxes and other restrictions imposed on private foundations. Further, donors do not incur the cost of establishing and administering a private foundation, including staffing and legal fees. Since the maximum tax deduction is received by the donor at the time of the gift, the foundation administering the fund gains full control over the contribution, granting the donor advisory status. As such, they are not legally bound to the donor, but make grants to other public charities upon the donor's recommendation. Most foundations that offer donor advised funds will only make grants from these funds to other public charities, and will usually perform due diligence to verify the grantee's tax-exempt status.

And for a different (though similar) perspective on them, here's a recent Wall Street Journal piece on donor-advised funds:

Ok, so let me get this straight:

• Let's say I have shares in some mutual funds that I want to give away.
• I give them to a donor-advised fund.
• I get the tax break now.
• I get to recommend a charity to the donor-advised fund to give to. They may or may not give to the charity I recommend.

There are a couple things I don't understand about this system:

• Why would I want to give shares to a fund that MIGHT finally give them to the charity I want to donate to? Isn't controlling where the money goes a very important part of giving? Why would I want to give up control? My sense is that the donor-advised funds do go with the recommendations often -- as long as the charity is well-known, such as the American Cancer Society, MDA, etc. But what if I want to give the money to my church? Is Fidelity or whoever has the donor-advised fund going to give it to the church? I don't know. So why would I give it to a donor-advised fund and give up control?

• Why don't I just give the shares to the organization directly? Seems like it would cut out the middleman.

Maybe donor-advised funds are useful when someone wants to give and isn't exactly sure (or doesn't care) who the money should go to? In that case, they can give, get the tax deduction, then decide later to award the money. Is that the advantage here? If so, then donor-advised funds aren't for me.

Anyone out there use donor-advised funds? If so, I'd appreciate your thoughts on why you do so.

What are the Best Fundraisers You've Ever Seen?

I serve on the board of a non-profit organization. In addition, I do a fair amount of giving. Put these two together, and I end up seeing a lot of fundraising (either I'm doing it or I'm asked for funds.) Within the past year, I've seen all of the following:

• Change Wars - Four of the youth leaders in our church had a "war". The person with the most change in their bucket after a month had to dye his hair pink. Don't laugh -- they raised $10k!

• Golf tournament - Play 18 holes to benefit a charity.

• Nice dinner - One charity held a free, high-end dinner and told their story. They asked for donations at the end.

• Clothing sale - A HUGE kids' clothing sale with part of the earnings going to sellers and part to charity.

• Dinner with personalities - I went to a "special" (30 people or so) dinner with a well-known personality. An appeal for a donation was made.

• Walk-a-thon - People get sponsors who pay them for every mile they walk.

Now these are big fundraisers -- projects that take a ton of time and effort to pull off, but they raise big money. As for smaller fundraisers, I've seen kids/organizations selling all sorts of things: cookie dough, candy, coffee, magazines, and so on. You name it, and I've probably seen someone seeing it to try and raise money.

Anyway, I had lunch with a friend the other day and he asked me to name the best fundraisers I've ever seen. I told him, but I thought his question would be a great question to ask all of you. So, what are the best fundraisers you've ever seen?

Amex Giving $2.5 Million to Charity Based on Votes

I saw this on TV this weekend and checked it out this morning. American Express is giving away $2.5 million to five top charities based on votes from Amex cardholders (here's the main charity they supported last year). As many of you know, my favorite card is the Blue Cash from American Express card, so I'll certainly be voting (FYI, the top 25 charities are named tomorrow.)

Charity at Home or Abroad -- Is One Better than The Other?

Here's a topic that's sure to get people riled up. It's a question posed to Kiplinger's:

My best friend donates only to charities that support health, education and microcredit in the world's poorest nations. She argues that her donations have more impact there than in the U.S. and that America's poor are much better off -- in material comfort and opportunity for advancement -- than the poor of other nations.

But I believe that my first (and maybe my only) obligation is to my community and my country, especially with growing inequality of wealth in the U.S. Which is the more ethical position?

Their answer is basically "do both" but that seems to side-step the issue without giving much reason for their suggestion.

Here's my take:

1. I do agree that even the poorest in America are much better off than many (most?) in the rest of the world.

2. A person is a person to me, so if I'm looking to feed a person (for example), I want to give to an organization that can feed the most people for the least cost (this way I can help more people.) Often, the best return on your giving dollar in this area is outside the U.S.

3. When I give for a reason like fighting a disease (cancer, MS, etc.), I go for the organization I feel can best get the job done -- even if they may be a bit more "expensive" than other options.

4. All this said, my giving is all over the place -- to various organizations in the U.S. and abroad. The main point for me is to find something I can believe in and give towards that cause/to that organization.

What about you? Do you focus all your giving in your country or do you spread it out all over the world?

A Solid Alternative to a Free House

On my post titled Two More Extreme Makeover Home Edition Homes in Trouble I detailed several instances from the popular ABC TV show where people who had received massive, sometimes free, homes got into one financial difficulty or another. In the comments, many people thought the issues leading to these difficulties included:

• The size of the homes -- they are massive and expensive to own and maintain
• How the homes are given -- They require no work and usually little commitment from the eventual owners
• Lack of knowledge -- Many of the recipients had gotten into financial trouble and appeared to know little about managing money (so no wonder they got into trouble again when given a new start)

One commenter contrasted these downfalls with another "program" that builds homes for people:

A group that actually does well giving away more-or-less free houses is Habitat. I worked a little with our local Habitat, and the application process is BRUTAL. It is like a job interview, a mortgage application, and a security clearance in one. The people who get Habitat houses are exactly the people who will be grateful and work to maintain them. The ABC recipients, maybe not so much.

I was intrigued, so I went to the Habitat for Humanity website. Here's some information on the charity from their fact sheet as well as my thoughts interspersed:

Through volunteer labor and donations of money and materials, Habitat builds and rehabilitates simple, decent houses with the help of the homeowner (partner) families. Habitat houses are sold to partner families at no profit and financed with affordable loans. The homeowners’ monthly mortgage payments are used to build still more Habitat houses.

Note the differences versus Extreme Makeover:

• Rehabilitates homes -- doesn't tear down old structures to build a mansion
• Simple, decent houses -- not over-the-top homes
• With the help of the homeowner (partner) families -- the final owners have a lot of sweat equity invested in the place by the time it's done
• Habitat houses are sold to partner families at no profit and financed with affordable loans -- there's a purchase and a mortgage involved -- responsibility but not one that's overwhelming
• The homeowners’ monthly mortgage payments are used to build still more Habitat houses -- nice way of using funds from those helped to help even more people

Habitat is not a giveaway program. In addition to a down payment and the monthly mortgage payments, homeowners invest hundreds of hours of their own labor — sweat equity — into building their Habitat house and the houses of others.

Again, a big difference versus the ABC option. The final owners not only have lots of hard work invested in the home by the time it's done, but helping build it also fosters pride in the home and a responsibility for it. I'm guessing Habitat owners treat their homes with more respect as a result (BTW, though I'm sure there are plenty of examples of Habitat homes being trashed, foreclosed on, etc., I bet these are way lower as a percentage than the ABC homes.)

Families in need of decent shelter apply to local Habitat affiliates (local chapters). The affiliate’s family selection committee chooses homeowners based on their level of need, their willingness to become partners in the program and their ability to repay the loan. Every affiliate follows a nondiscriminatory policy of family selection. Neither race nor religion is a factor in choosing the families who receive Habitat houses.

Speaks in part to the process the commenter talked about.

A bit about the charity:

Donations, whether to a local Habitat affiliate or to HFHI, are used as designated by the donor. Gifts received by HFHI that are designated to a specific affiliate or building project are forwarded to that affiliate or project. Undesignated gifts are used where most needed and for administrative expenses. HFHI’s most recent audited financial statement is available online.

Seems like they do a good job of this too -- they get four stars (this highest rating given) from Charity Navigator.

I've talked about Habitat before, suggesting it's a great, cheap way to learn building skills. Furthermore, it seems like a very effective charity (Jimmy Carter aside) and one I should probably consider being a part of. But at the least, it seems to be a viable alternative compared to the "get a free mansion" that Extreme Makeover Home Edition offers.

What are your thoughts on this issue?

When is Enough Enough?

Check out this piece from CNN about a family selling their home and giving away half of the proceeds:

One day while driving with her father, Hannah Salwen noticed a Mercedes stopped next to a homeless man sitting on the curb. "I said to my dad, 'If that guy didn't have such a nice car, then that guy could have a nice meal,' " the 15-year-old from Atlanta, Georgia, recalled.

And so began the tale of what the Salwen family calls "Hannah's Lunchbox." It started as family discussions about what they needed versus what was enough. Hannah's father Kevin, an entrepreneur, is on the board of the Atlanta Habitat for Humanity and is no stranger to community work, but he said this family conversation was life-changing.

"We stopped and paused and thought about what are the things in the world that could really make a difference, a little bit of difference in the world," he said.

They talked about selling their cars or other things, but it was Hannah's mother, Joan, who came up with selling their 6,500-square-foot house, donating half the proceeds and then moving into a house half the size.

My wife and I have had the same conversation many, many times. We're doing so well financially and others are doing poorly. In contrast to the suffering going on around the world, it often seems selfish to accumulate so much wealth and material possessions (though we live well below our means.) We give a good amount of our income away to charity, but we could do more. Then again, aren't we allowed to enjoy the fruits of our labor? But how much should we enjoy and how much should we use to help others? The basic question is:

When is enough (wealth, possessions, etc.) enough?

Anyone out there grappling with the same question? I'd appreciate your thoughts and insights on the issue.

Good and Bad News Concerning Giving

There's good news and bad news concerning giving. The good news:

Americans gave a record amount to charity in 2007, topping $300 billion for the first time, despite mounting economic worries.

The bads news:

Still, there are indications that slowing growth is taking a toll on giving. The 3.9% increase in donations last year was far less than spikes of roughly 10% and 13% in 2004 and 2005, respectively. In addition, researchers revised 2006's giving increase downward to a meager 0.4% from 4.2%.

Americans donated $306.39 billion last year, according to the closely watched annual report from the Giving USA Foundation, a nonprofit educational organization in Glenview, Ill. After adjusting for inflation, donations rose only 1% from the roughly $295 billion donated in 2006.

The relative slowdown in giving is attributable to increasing economic uncertainty that pervaded much of the back-end of 2007. Economic woes intensified last summer amid high gasoline prices, real-estate market turmoil and a burgeoning credit crunch.

How about you? Did your giving go up or down last year?

Do You Give to Panhandlers?

Very interesting post and video at Blueprint for Financial Prosperity. The summary:

"Most people who are panhandling are doing it to support a lifestyle they've grown accustomed to or to support a drug/alcohol habit."

What's your take on the issue?

Three Things to Know about Political Donations

Here's a list from CNN Money of three things to know about political donations and my thoughts on each:

• You can give only so much - Directly that is. 527's allow you to side-step this rule.

• Your info will go public - Yep. You can search on the web easily and find out who gave what to whom.

• You won't get any thanks from Uncle Sam - No federal tax deduction. What a rip.

By the way, I track tax deductible versus non-tax deductible gifts in Quicken by using two different categories. Tax deductible gifts go into the "offerings" category while non-tax deductible gifts are simply labeled "donations." Makes it easier at tax time to sort through which is which.

The Gospel of Wealth

Here's a summary of chapter 10 from 50 Prosperity Classics: Attract It, Create It, Manage It, Share It (50 Classics). This chapter is written by Andrew Carnegie, author of The Gospel of Wealth.

Key Quote

"This, then, is held to be the duty of the man of Wealth: First, to set an example of modest, unostentatious living, shunning display or arrogance; to provide moderately for the legitimate wants of those dependent upon him; and after doing so to consider all the surplus revenues which come to him simply as trust funds, which he is called upon to administer...in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community...doing for them better than they would or could do for themselves."

Summary of the Chapter

The wealth creator has a moral obligation to enrich the lives of others in whatever way they can.

My Thoughts on This Subject

1. Again we see a connection between giving and wealth.

2. Supposedly, this writing by Carnegie inspired Bill Gates and Warren Buffett (among others) to give away large portions of their fortunes. Pretty impressive for something written in 1889.

3. Is there really a "moral obligation to enrich the lives of others in whatever way we can"? It's an interesting concept/thought.

Giving Thought: Agree or Disagree?

I had a friend say the following to me the other day:

"Giving is the only proof that you've conquered greed."

I've been thinking about this a lot since then and wanted to get your perspectives on it. True? False? Why do you think so?

Big Gift on Small Earnings

Check out this gift to Truman State University:

Truman State University has announced receipt of a $2.87 million cash gift, the second-largest ever in the University’s 141-year history. The gift is from the family of Squire Paul and Meeda (Daniel) Holman, a family with a deep history with Truman.

But here's the really interesting part. Check out the details on the givers:

The late Squire Paul and Meeda (Daniel) Holman each spent their childhood and young-adult years in Green Castle, Mo. Paul served in the U.S. Armed Forces during World War I, and Meeda attended Missouri Wesleyan College in Cameron, Mo. They were married in 1923 and moved to Kirksville, Mo., in 1937. Paul became a member of the staff at Truman State University, then known as Northeast Missouri State Teachers College, serving as the building custodian for Science Hall for 17 years. Both Paul and Meeda took an active role in the lives of the young scholars attending the university, and over the years, many students lived in their home, which was located across the street from the Blanton, Nason, and Brewer residence halls.

So the man was in the service and then a custodian, neither of which are known as high-paying jobs. And yet he amassed a great deal of money. Guess he knew the "secret" to getting rich.

Thanks, Kevin, for forwarding this piece.

What I Do with Charities that Call for a Donation

JLP complains that he gets too many calls from charities asking him to donate. We do too. It seems like there are a ga-zillion charitable organizations out there and we're on the list for all of them -- many of which we've never heard of.

So how do we handle the calls? Here's what I do:

• First of all, I NEVER answer our home phone. I know this will annoy some people reading this, but I always let the answering machine get it and if it's someone I want to talk to, I pick up. If it's a charity asking for a donation, I don't answer and delete the message.

• But if my wife is home, she almost always answers the phone. When she gets a charity on the line, she tells them that we never give to someone soliciting over the ph