As I’ve mentioned before, one of my long-term goals is to run a foundation to support arts education, specifically music education. To do this effectively, I would require a significant amount of start-up capital, and I’m not quite there yet. I’m not quite sure that I will ever have the opportunity to succeed, but if I do, it’s likely to take decades to approach that point.
In the mean time, I’m doing what I can to have a smaller effect on some organizations whose missions are important to me. While I didn’t reach my admittedly aggressive goal for charitable giving this year — the lagging economy has convinced me to hold onto more than I would have otherwise — I increased my charity this year over last year. I have given over 10% of my salary this year, some of which was eligible for matching contributions from my employer.
For privacy reasons, I won’t release all of the names of the organizations that I contributed to this year, but they include a health-related organization, a collegiate music program, a performing arts organization, and a public radio station. The performing arts organization is the same group with which I previously severed ties, but I’ve gotten over those issues to concentrate on the people who will benefit from the contribution.
I also added funds to my charitable gift fund, a “donor-advised fund.” The fund allows me to provide money to be held in an account and invested while I recommend grants to be distributed from the fund as I see fit. The main benefit is the donor receives a tax deduction up front while the money theoretically grows. In the best case scenario, the money in the account earns returns from interest or appreciation and the grants can come from this income. Unfortunately, contributions to a donor-advised fund are not eligible for matching contributions from my employer.
Last year, I made the mistake of choosing to invest the entire amount in a total stock market index fund. The quick downturn of the market after the investment convinced me not to touch the money in this account. Rather than assign grants this year, I donated from my own cash. This month, when funding the charitable gift fund, I chose to invest half in a money market fund and the other half in the total stock market index. This way, I can tap the money in the money market fund without concern about the stock market while allowing the rest of the investment to grow for long-term charitable giving.
When the economy is ailing, charitable organizations struggle as people like me are more protective of their earnings, at least in the short-term. As I usually do, I also donated my time by volunteering with organizations this year. I’ve worked for a non-profit, and I know first-hand that the time contributed by those who believe in the mission is often appreciated beyond financial contributions. Did you contribute less money to charitable causes than you planned this year? It’s okay if you did.
Published or updated December 23, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.