Your stocks are back to 1998 levels, your spouse just got laid off, and now you're starting to worry about the value of your house. None of this means your favorite charities have downsized their yearend requests. With foundations scaling back and with corporate profits--and therefore corporate giving--in question, philanthropy may need you more than ever. The trick is to make your scarcer dollars do the most good.
After rising 7.4% a year during the '90s, charitable giving went up a measly 0.5% last year. Leo Arnoult, chairman of the American Association of Fundraising Counsel, which tracks giving, says this year's best hope is for individual givers to compensate for any declines in foundation and corporate largesse.
One trick to make parting with your dollars less painful is to turn on its head the age-old advice about donating appreciated stock. Instead, dump your losers, and send the cash. That way, you get a deduction for both the capital loss and the charitable contribution.
Or, double the impact of your greenbacks by focusing on charities that qualify for a match from your employer or from a philanthropist or government agency offering a challenge grant. Hartford Financial Services Group, for instance, matches employee gifts to educational institutions dollar for dollar, up to a $2,000 maximum. New York's Metropolitan Opera has a well-heeled donor willing to match up to $1 million for a program to preserve the opera's aging radio broadcast tapes.
Make sure any charity you support is a good steward. See if the Internal Revenue Service's Web site (www.irs. gov/charities/index.html) lists it as a tax-exempt 501(c)(3). Guidestar.org lets you look at the 990 reports that charities file each year with the IRS--detailing how much money they raised and what it cost them. Avoid charities that gobble up more than 25% of the money given with fund-raising and administration costs, says Chas Miller, president of Forward Foundations, which advises wealthy donors. Sites such as charitynavigator.org, charitywatch.org, and give.org offer charity evaluations (BW--Nov. 11).
There are also sophisticated giving vehicles that let you maximize your charitable efforts. A donor-advised fund, set up through a community foundation or investment firm, will let you take a tax write-off this year but dole out the cash over time, says Frank Minton, president of Planned Giving Services, a Seattle gift-planning consulting firm. It comes with a more generous tax deduction than big donors would get by establishing a private foundation. Alternatively, you could name a charity the beneficiary of your individual retirement account, should you have any of it left when you die. A family member who got it instead would have to pay taxes on the gains inside.
Finally, keep the deadlines in mind if you want a deduction for this year. With checks, it's the postmark on your envelope that counts, says Anita Williams, a wealth adviser at J.P. Morgan Private Bank. For credit-card contributions, the gift takes effect when it is charged to your card.
Stocks can be stickier. If held by your broker, the giving date is the day the shares enter the charity's account. When you're transferring a stock certificate, the important date is when it is re-registered to the charity. Executives planning to donate restricted stock should allow a couple of weeks to complete the process.
For many, parting with the money will be especially wrenching this year. But abandoning an old friend in need would be difficult, too.
By Carol Marie Cropper