I made a mistake, and I should have known better.

Last year, I struggled with coming up with a needy non-profit organization that I felt I should support through charitable giving. The indecision stems from the desire to contribute to an organization with a mission that reflected one of my passions and the lack of quality non-profits that fill that niche. By the end of the year, I decided to provide money to the Fidelity Charitable Gift Fund, which would allow me to distribute or grant my funds to the recipients I choose at a later date.

I invested these funds like I normally do. With the $5,000 I provided to fund my “mini-foundation” in December 2007, I invested in a broad market index fund. Considering I intended to use these funds, or at least a portion of these funds, throughout 2008, I shouldn’t have chosen to invest in the stock market. I should have left the money in a money market account within the Charitable Gift Fund. The account would have grown to about $5,200 by the end of December 2008 if left alone.

At this time, the account’s value is a little over $4,000, having lost about 20% so far this year. That’s $1,000 less that I have to donate to a worthy organization because I couldn’t find the right match—possibly a procrastination—and because I invested without considering my time horizon for these particular funds.

Now I feel as if I need to leave the money in there until the market recovers its losses from the last year, but it could be a long time before the index fund increases 25% from today. My goal before the end of the year is to finally select an organization worthy of my continued support and pay them directly from my available cash rather than from the Charitable Gift Fund. I’ll also continue to contribute to the Fund but I’ll set some funds aside for short-term charitable giving in addition to continuing to invest in the stock market index fund for longer-term growth.

Kiva is an international non-profit organization that facilitates “microlending” for the purpose of its mission, alleviating poverty across the world. The organization allows those who wish to contribute to lend money in small amounts to entrepreneurs in the developing world. Kiva’s website lets you browse entrepreneurs’ profiles to select the recipient of your micro-loan and allows you to make that loan. The terms of the loan are generally 6 to 12 months. Kiva claims that repayment rates are 99.7%, so there is very little risk of default.

Even with the potential for earning interest as a lender, I’d be careful about including microlending as an important part of an investment portfolio. It might be best to lend money only with amounts you don’t mind losing. Despite success stories—Endless Gibberish is “addicted” to Kiva and has lent over $20,000—there is always a risk.

For anyone who finds Kiva to be a valuable resource, the Kiva BusinessCard, a credit card offered by Advanta, is an excellent choice. This is the only credit card I’ve encountered that is geared towards philanthropy. The Kiva BusinessCard matches your Kiva contribution (when placed on the credit card) dollar for dollar, up to $200 each month. Your contribution has twice the power. This match is considered a grant, however, and not part of your microloan. When the loan is repaid, you will only receive the amount of your contribution, not including the match. The matching portion will be paid back to Advanta.

Additionally, the card offers an 5% cash back rebate in the form of a statement credit for grants to Kiva, charitable donations, and some expense categories, up to $1,200 in charges to the card. Beyond that $1,200 limit, and in other expense categories, the program offers a cash back rebate of up to 1% on all other purchases. The total cash back you receive is unlimited. The cash back incentive for charitable donations is an excellent idea; to loan $100 to Kiva or donate $100 to your favorite non-profit, it will only cost you $95 (after you receive your credit).

That same $95 you spent on a $100 microloan provides the recipient with $200, thanks to Advanta’s matching grant.

Like other business credit cards, you don’t have to be a business in order to apply and be approved for this credit card.

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]