Giving frugally: Charitable giving in lean times
AP Personal Finance Writer
NEW YORK ” The holiday season is looking lean this year, and your wallet may be thinner than your generosity.
Even if you can’t afford to write a check, remember there are plenty of ways to help out a good cause. Donating property such as art or volunteering professional services are just a few options to consider. In fact, more people are realizing their job skills may be of great use to nonprofit groups.
“You’re seeing this culture where volunteerism is spreading,” said Mark Schickman, chair of the Standing Committee on Pro Bono and Public Service for the American Bar Association.
Any assistance will likely go a long way in today’s climate, with demand for charitable services sharpening as people struggle to make ends meet. That means your donations may count more than ever this holiday season. Contrary to popular belief, an American Express survey last year found donors are only slightly more generous during the holidays; only 14 percent said they boosted donations at year-end.
So if your budget is tight but you still want to give, here are a few ideas.
GIVE STOCKS OR PROPERTY
Review your portfolio or home for assets you can donate. But before giving anything away, a few points to remember.
If you’re looking to give a stock, the preferred method for donation will depend on whether it grew in value.
“If it appreciated, the key is to donate it as a security rather than cashing it out first,” said Kim Wright-Violich, president of Schwab Charitable.
This will let you avoid paying capital gains taxes on the stock’s appreciation. The donation can be written off at its fair market value.
Conversely, stocks that have lost value should be liquidated first, with a cash donation going to the charity. This will create a capital loss for tax purposes which can offset any gains.
To give away property such as art or a car, either you or the charity will need to pay for a third-party appraisal, Wright-Violich said.
The rules are complex, but generally you can deduct the property’s fair market value as a charitable donation so long as the charity is not selling the property for cash. Otherwise, you may only get to deduct what you originally paid for the property.
Real estate can be donated without restriction and the write-off is based on the appraised value. As with a stock, transfer the property to the charity if it appreciated in value to avoid paying capital gains taxes.
DO PRO BONO WORK
The term “pro bono” is widely associated with legal services, but professionals in a range of fields have come to embrace its spirit.
“If you have a monopoly on a service, we think there’s a duty to help people who can’t afford it,” said Schickman of the ABA’s Standing Committee on Pro Bono and Public Service.
It’s a sentiment that’s caught on in other professions.
The Taproot Foundation partners with numerous trade and alumni associations to provide free marketing, human resources, IT and consulting work to nonprofits. The California Society of CPAs estimates about 25 percent of its 33,000 members provide free financial services every year, mostly to the poor.
Professional associations are a good starting point to learn about pro bono opportunities. The ABA’s Web site, for instance, lets lawyers find volunteering opportunities in their area. Next year, the ABA is organizing its first weeklong National Pro Bono Celebration to encourage participation across all fields.
There are ways to help even if you don’t have any special professional training. Your fluency in English or other languages may be of use to an immigrant advocacy group. If you’re tech savvy, smaller groups may appreciate help setting up or enhancing a Web site so they can accept online donations.
BUY PRODUCTS THAT GIVE
Charitable giving can be a part of your everyday buying habits.
Susan G. Komen for the Cure partners with dozens of companies, including Lean Cuisine, Pepperidge Farm and Breyers Ice Cream, to raise money for breast cancer awareness.
In addition to benefiting all involved parties ” shoppers, businesses and Komen ” the promotions raise awareness about an important cause, said Karen White, a spokeswoman for the organization.
Consumers can go on Komen’s Web site to learn more about the group’s marketing partnerships, which last year raised $58.3 million.
Several other groups, including The Global Fund and the American Heart Association, partner with companies to raise money, particularly during the holidays.
If there’s a specific cause you want to help, you might want to check out GoodShop.com. The site partners with hundreds of retailers to let users pick the group that benefits from their purchases. The amount donated varies depending on the retailer: Amazon.com gives 1.5 percent, Barnes & Noble gives 3 percent and Zappos.com gives 6 percent.
INCLUDE A CHARITY IN ESTATE PLANS
Consider leaving assets to charities in your will. This will let you deduct the value of the donation from your estate, which is subject to taxes above a certain point.
If your loved ones are set financially, you might even want to make your favorite charity the beneficiary of your life insurance policy.
“The payout of the policy (after your death) will be much greater than the premiums you pay,” said Wright-Violich of Schwab Charitable. Policies donated before your death can be liquidated by charities, typically for however much you’ve paid in premiums to date, she said.
If you’re trying to reduce the value of your estate for tax purposes, your IRA account might make for a good donation, Wright-Violich said. If left to your children, they could end up paying multiple taxes and penalties for distributions.
“They could lose up to 75 percent of what’s left to them,” Wright-Violich said.