In researching historical and religious views on charitable giving, I came across Maimonides’ hierarchy. He believed that there are 8 degrees of charity. These deal primarily with providing for the poor. Here are his 8 levels, from the highest to lowest. Do you agree with this assessment? How high are you on the list?

1. Investing in a poor person in a manner that they can become self-sufficient.
2. Giving to the poor without knowledge of the recipient and without allowing the recipient to know your identity.
3. Giving to the poor with knowledge of the recipient but without allowing the recipient to know your identity (anonymous giving).
4. Giving to the poor without knowledge of the recipient but allowing the recipient to know your identity.
5. Giving to the poor without or before being asked.
6. Giving to the poor after being asked.
7. Giving to the poor happily but inadequately.
8. Giving to the poor unwillingly.

What do you think?

Doodle Day is more than just a day, it is the set of all days between May 8 and May 18 inclusive. The purpose of naming this period of time is to draw attention to neurofibromatosis (NF), a common neural disorder. May is NF Awareness month, and to participate in Doodle Day, some celebrities are offering drawings and photographs for auction on eBay. All the proceeds go towards NF, Inc. for research for a cure and education about this disorder.

You can browse some of the celebrity offerings here, and I have to say I’m not familiar with all of the artists. If you’re interested in art by Candice Bergen, Jim Davis, Jeff Bridges, or Mickey Dolenz, you can purchase their doodles and support this particular charity. As of last night, the works of art going for the highest prices were created by Seth Green, Neil Gaiman, Gillian Anderson, and Ellen DeGeneres.

Have you ever participated in a charity auction?

At the end of 2007, I contributed $5,000 to a Fidelity Charitable Gift Fund that I created for myself to distribute to non-profit organizations later, once I selected a cause to support. This was a case of really bad timing; since then my account’s value has dropped 6%. Suddenly, I have $300 less to donate to charity. While I am receiving the tax deduction for the full $5,000, unless my account increases at least 6.4%, organizations won’t benefit from the full amount I donated.

I think I need to examine my allocation strategy in the Charitable Gift Fund. Perhaps I should keep the amount I intend to distribute in the coming year in a money market fund within the account, while everything else should be invested for the longer term in a broad stock index fund.

I’ve had charity on my mind lately, and it seems to be affecting what I write about. During my normal reading, I came across a Washington Post article about what is apparently an increase in philanthropy among teenagers and younger children.

Young children and teenagers across the nation are getting involved in philanthropy more than ever, according to research and nonprofit experts, who credit new technologies with the rise of the trend. As young people increasingly become exposed to and connected with the problems of the world via the Internet and television, experts said, parents are finding new ways to instill in their children the value of giving. At the same time, technology is democratizing philanthropy so giving is not only easier for people of all ages and means, but also trendier. And children are starting to organize at the grass-roots level to give…

The scale of money children are raising through new technologies or giving away through charities is “mind-boggling,” said Lucy Bernholz, founder and president of Blueprint Research and Design, a leading consulting firm for nonprofit organizations. “It used to be the pennies we raised through UNICEF boxes, and now you’re talking about 15- and 17-year-old children who are savvy enough and committed enough to raise tens of thousands of dollars and sending it halfway around the world,” Bernholz said.

The article contains many examples of teenagers and children who are outpacing my own giving. According to the research, much of this increase in giving is driven by affluent families who include children in their charity decisions. Philanthropy isn’t just for the affluent, as I’ve discovered lately. In just the Fidelity Charitable Gift Fund, the pool of donors recommended over $1 billion in grants to charities last year. As I’ve written about recently, this type of fund gives smaller-time investors and “thousandaires” like me access to some of the benefits that millionaires have when they create and administer foundations.

I don’t remember knowing much about philanthropy when I was a pre-teenager. I was certainly aware of global issues; Live Aid was a major force back then. I didn’t see myself in a position to support the causes other than buying memorabilia for which proceeds went to support various charities. Thanks to technology, more opportunities for giving are available to more people.

image credit: zugaldia
For Modern Kids, ‘Philanthropy’ Is No Grown-Up Word [Washington Post]
Gift Fund Donors Set Record for Giving in 2007 [Fidelity]

There’s been some discussion on this site recently regarding disclosure of charitable donations. I can understand why some might wish to keep this information private but I’m not at all shy about telling you which organizations I choose to support.

This year, I made donations to the following charities:

• Oceana – The largest international ocean environmental advocacy group dedicated to protecting and restoring the world’s oceans and its sea turtles, sharks, dolphins, whales, endangered species, and marine ecosystems.
• Union of Concerned Scientists – The leading science-based nonprofit working for a healthy environment and a safer world. UCS combines independent scientific research and citizen action to develop innovative, practical solutions and to secure responsible changes in government policy, corporate practices, and consumer choices.
• Conservation International – Applies innovations in science, economics, policy, and community participation to protect the Earth’s richest regions of plant and animal diversity and demonstrate that human societies can live harmoniously with nature. Works in more than 40 countries on four continents to help people find economic alternatives without harming their natural environments.
• The National Multiple Sclerosis Society – Provides advocacy, professional education, research funding and support for those living with Multiple Sclerosis.
• The Raptor Trust – Provides care and assistance for injured wild birds and aims to educate the public about conservation issues related to birds, especially birds of prey.

  I also made material donations to the Military Order of the Purple Heart Service Foundation, which benefits wounded, disabled, and handicapped veterans.

  But there are a number of other types of donations I’ve made which may not count for tax purposes but count in myriad ways to me:

  I’m an avid Freecycler, and donated over 35 items this year to those who needed them, including a giant standing freezer I gave to a local school for underprivileged children. Apparently this donation will be keeping them in ice cream parties for a long time to come.

  I also save all my egg cartons for a local independent chicken farmer, and have brought over at least 100 cartons this year (I do a lot of baking). Since farmers in my area have a lot to contend with, this bit of recycling helps to keep at least one of the expenses down for a farm which appears to be barely breaking even.

  And then, as always, there’s the active practice of channeling my spending towards organizations and businesses I believe in, using my purchasing power to support their continued growth. For instance, in 2007, 71 percent of my total grocery budget went to support local agriculture and small businesses. I hope to grow this percentage even further in 2008.

  Today’s the last day to donate for the 2007 tax year; did you reach your giving goals?

Last week, I mentioned I met my goal for charitable giving for 2007. The modest goal, which I set for myself at the end of last year, was to provide $1,000 in support of an organization meaningful to me. This year, I decided to separate myself further from the organization I normally support, which also happens to be a former employer. It’s not that I don’t believe in what they do, but I have some issues with their methods.

I want to make sure my money helps an organization reach its stated goal, and I will only give to an organization whose goals, mission statement, and vision match my own values. In addition, it helps to have a strong knowledge of the inner workings of the organization. Unfortunately, it’s this strong knowledge that has turned away from the group I formerly supported.

This past year, I’ve had difficulty coming up with a replacement besides the pfblogs.org Financial Literacy Challenge. This has been a frustration for me, particularly because I wouldn’t mind managing an arts education foundation of some sort. While researching methods for starting a foundation—an endeavor better attempted by someone with millions of dollars ready to be dedicated and willingness to spend a lot of money just to run the foundation—I came across the idea of the charitable gift fund.

The charitable gift fund allows me to make a contribution to a general fund now without specifying a direct recipient. That also allows me to take a tax deduction for the contribution this year while taking my time to decide where the money should go. In the mean time, the funds are invested and presumably appreciated along with the rest of the stock market.

Charitable gift funds, or more specifically donor-advised funds, are organized by several brokerages and public charities. I chose the Fidelity Charitable Gift Fund thanks to its low barrier of entry (only $5,000 to open an account and subsequent investments must be at least $1,000) and its relatively low fees (0.6% including the underlying expense ratios, with a minimum of $100).

In return for the ability to take the tax deduction now, I give up my ability to manage and distribute the funds directly. However, I can recommend grants to charities as long as they are registered under regulation 401©3, and therefore legal non-profit entities. It would be very rare for Fidelity or any other custodian to reject a donee suggested by the donor as long as the organizations are not-for-profit and the donor doesn’t directly benefit from the organization’s receipt of the funds.

When I sent in my $5,000 to establish my donor-advised fund, I selected to invest the money in Fidelity’s Spartan 500 Index Fund (FSMKX), which carries an expense ratio of 0.1%. I could have transferred securities or other assets to the fund, but I opted to send cash. Unfortunately, they don’t support ACH transfers, so I had to write a check. A wire would have cost extra money.

Now that the fund is established, I can suggest grants at any time in amounts of $100 or more. The $5,000 I sent to the Fidelity Charitable Gift Fund is irrevocable, so it can only be used for charity. I’ve surpassed my “stretch goal” of $2,000 for 2007. In the process of establishing the fund, I sort of circumvented the most important part, getting that money into the hands of organizations for their use towards their missions. However, I’ve ensured that once I select recipients I will be contributing more than I would have otherwise.

If you’re interested in starting your own philanthropic endeavors through a charitable gift fund, here are some resources to get you started.

• Fidelity Charitable Gift Fund (minimum of $5,000 to establish an account)
• Vangard Charitable Endowment Program: Donor-Advised Funds (minimum of $25,000 to establish an account)
• National Philanthropic Trust: Independent Charitable Gift Fund (minimum of $25,000 to establish an account)
• Charitable Gift Trusts at The Motley Fool

• You Can Be Your Own Charitable Foundation at MSN Money

  photo credit: johntrainor

‘Tis the season to think about charitable giving, and there are some wonderful opportunities to do this while giving to your friends and loved ones. Whether it’s one of your favorite causes or one which aligns with the interests of the recipient, there are three simple ways to make a doubly-impactful gift this holiday season.

1. Buy Christmas/holiday cards which support your charity of choice

If you’re going to buy cards this year anyway, why not see if your favorite charity has anything to offer? Not only do you show your support, but you may find interesting, unique cards which stand out to their recipients.

• The Audubon Society has a stunning array, and 10% of each box goes to serve their cause.
• The Make-A-Wish Foundation will actually personalize and mail your cards for you if you wish to make a gift on someone else’s behalf. Or you can order blank cards and send them yourself.
• The American Diabetes Association offers cards which you can personalize regardless of whether you are making a gift donation as well.
• Defenders of Wildlife offers free personalization of up to 4 lines when you order 3 or more boxes of cards, plus the cards are really wonderful for animal lovers.
• Sierra Club has an array of cards ranging from adorable polar bears frolicking in the snow to stunning National Park landscapes.

  2. Buy gifts which provide a percentage to charity

• Know someone who loves the water? Oceana has some really cool t-shirts and apparel, and as much as 25% of the proceeds benefit their charity.
• Sierra Club offers two gorgeous gift-boxed calendars, note card sets (the owl set is my favorite) and even books for the nature/scenery lover in your life.
• The American Red Cross Store offers a number of smart gifts for the practical people in your life who always like to be prepared. Start with the $5 emergency kit as a stocking stuffer or spring for an emergency radio or more extensive kit. They’ve even got a line of vintage-style and baby clothing and some cute wrapping paper to package it all up.
• UNICEF has a store full of interesting, international gifts, including candles, journals, and books.
• A cancer survivor or supporter might enjoy jewelry, clothing or a tote bag from the American Cancer Society Gift Shop.

  3. Donate to charity as a gift

• Oceana is offering a holiday adopt-a-creature program. For $35, you can adopt a dolphin, seahorse, or one of 16 other sea creatures and receive a cookie cutter in the shape of that creature and a special sugar cookie recipe. For $75, you can choose a set of 4 creatures, or for more, you can get the full set with an oven mitt or two included. It’s a nice way to donate while still having a fun gift for the recipient to open and enjoy.

  

• Oxfam America offers you the unique opportunity to present your friends and family with a sheep, a can of worms, or other amusing gift. You are donating your funds to purchase items needed by growing communities worldwide, but you get a very charming personalized card announcing your gift in any of a number of categories relevant to the recipient, from gardener to student. How else could you possibly gift wrap a camel?

  

• Heifer International also donates livestock to countries in need. You can choose from a variety of animals, including a llama for $150.
• American Forests lets you plant trees in the name of a loved one for $1 a tree.
• Alternative Gifts International offers truly impactful gifts of of food, shelter, trees, gardens and medicines around the world.
• Not sure what charity would be most fitting? JustGive.org sells gift certificates which can be redeemed for any of 1,000,000 charities and nonprofit organizations.

  There are so many more charities out there offering personal, interesting and impactful holiday gifts. What are your favorites?

This is a guest post from Steve, who writes about finance and life at Brip Blap.

As the holiday season approaches, calls for donating to charity begin to multiply. Americans donate over $240 billion per year to various charities, and that’s simply in terms of money; the contributions in goods and services add even more to that number. This is a brief guide to the biggest questions about charitable giving in the US.

Decide what’s right for you. First of all, you need to come up with an idea of the type of charity you want to support. The list is almost endless. There are small local charities that benefit a very specific area, and there are gigantic global charities that help around the world. There are charities that try to offer direct help, and those that try to raise awareness. A few things you should consider before deciding on a charity:

1. Is it a “good” charity?
2. How will you contribute?

1. Will you receive a tax deduction?

   Is it a “good” charity? Make sure you agree with the charity’s stated aims. Try to understand what percentage of your contributions will go where you think they need to go. The IRS has a Form 990, “Return of Organization Exempt From Income Tax.” This form is probably your single best piece of information about a charity, because it’s the way the government prevents abuse of tax-exempt status.

   There are almost 2 million American charities; specifically you should seek out “qualified organizations.” A qualified organization is called that because it qualifies for a tax deduction. These organizations include religious groups, public schools, not-for-profit hospitals, parks and a variety of other groups. If the organization is not qualified there is no barrier to giving to that group, but your donation will not be deductible.

   You can view a charitable organization’s Form 990 to find out more about that organization’s mission and programs. The IRS Form 990, “Return of Organization Exempt From Income Tax,” can be thought of as the financial statements of a nonprofit organization. The form gives information about the organization’s finances and how money collected is spent. Keep in mind that although some groups may spend more on overhead than others, that does not necessarily disqualify a group from your consideration. Larger nonprofits may have more expenses for outreach or large, multi-year projects. If you have any concerns about how the money is being spent, you should contact the organization and ask them for more information; if they won’t provide it, that’s a good indicator!

   Resources:

   • Guidestar
   • Charity Navigator

• IRS Form 990 [pdf]

  How will you contribute? There are three basic ways to contribute to charity: money, goods and time. All three have value, and you should never let yourself feel badly because you can give one way and not another. A busy traveling salesman may not have the time to work hands-on with a charity group, but he can donate money or goods. A college student may not have extra cash or goods but can certainly contribute time. Everyone can give something:

• Give money. Obviously this is the simplest way to contribute, and usually it can be done quickly by going to a web site or mailing a letter. Many charities struggle to raise money, and every little bit counts.
• Give goods. You may think that old, gently worn coat will never been worn again, but there are plenty of organizations who would be thrilled to give that coat to someone who needs it. Clothes, books, almost anything that is in decent condition can be given to worthwhile organizations like the Salvation Army.

• Give time. A lot of people give money and goods to charitable organizations, but many of them need the gift of your time more than anything. From answering phones to building houses, many organizations deeply appreciate the time you can give them to help them spread their message or even complete their core missions. You can even under certain circumstances donate your professional services to an organization.

  Will you receive a tax deduction? Some people may think that it’s improper to discuss tax writeoffs when talking about giving. The US government has chosen to create an incentive to giving, though, and there’s no reason not to take advantage of it. Of course, if you can only really receive the benefit of these deductions if you itemize. If you give money or other gifts (stocks, goods, etc.) and the charity has the proper Internal Revenue Service (IRS) status, you may be eligible to deduct some or all of your contributions. The rules have been significantly tightened in 2007, however. A few basic pointers:

• Starting in 2007, you need a receipt for ANY donation. The old limit of $250 has been eliminated, so even a $10 bill in the collection plate requires a receipt if you want to deduct it.
• You may deduct up to 50% of your adjusted gross income in one year for charitable donations (certain contributions, though, may have lower limits).
• If you give more than 50%, you can carry the excess forward for up to five years.
• If you donate goods to an organization, it must be in good condition or better in order to be deductible – and if it’s worth more than $500 you have to get a professional appraisal to prove its value.

• If you receive something in return for your donation, you can only deduct the excess of your donation over what you received; so if you paid $100 for a charity dinner with a value of $30, you can only deduct $70.

  Your best resource for figuring out the rules? Go to the source: Publication 526 from the IRS website. (This is the 2006 version; 2007 is not yet available.) If you have any concerns, make sure you talk to a tax professional about your specific situation.

  While there are a lot of rules surrounding the deductibility of donations and a lot of suspicion over some recent charity scandals, it is important to remember that the great majority of charitable organizations exist for one reason: to help. As the holidays come, it’s important to remember those less fortunate, and extend what help you can. You can even be a little selfish, because one of the biggest benefits of giving is that you’ll feel great about doing it!

  Read more from Steve at his blog, Brip Blap.