In my last blog I took a lot of flack for citing a study showing a correlation between obesity and Coke or Pepsi consumption. At the risk of losing my last shred of credibility as someone able to critically interpret a research finding, here's another study to chew on. And like the aged, marbled steaks at Peter Luger's in Brooklyn or Jar in Los Angeles this is one you can really sink your teeth into.
According to a recent Boston Consulting Group (BCG) report the number of millionaire households around the world fell from around 11 million in 2007 to only 9 million last year. If my math is correct, that's an approximate 18% decline; not including the poor fellas at Goldman Sachs (which expects to pay record bonuses in 2009). The report also cited the only region of the world going the other way -- Latin America, where wealth actually increased in 2008 by 3 percent. Ahhh, to be a general contractor on the Rio Olympic bid or a GM dealer in Sao Paulo...
So, what's my point? Being rich, or simply earning more than you need to live on, has its obligations. These include giving back, and not only because it may make sense tax wise. The fact is, even with the Great Recession, the world is still full of lots of folks who have more money than they know what to do with. And the thing about money is, as even those who slept through Capitalism, a Love Story can tell you, the rich really do keep getting richer. Hey, who doesn't want to be a millionaire?
Whether you made your fortune the old fashion way or inherited a bunch of dough through the lucky sperm club or when you chose to come out of the right birth canal, you still need to ask yourself what you've done lately for the less fortunate around you. And then you need to figure out how to give it away.
Unfortunately, ahem, not all of us are lucky enough to live in Kansas City where the Greater Kansas City Community Foundation has created an enviable giving resource. The Foundation's free searchable database of charities includes hundreds of organizations it has already professionally vetted. These detailed reviews include critical financial information from the charity's IRS filings (990s), mission and background statements, summaries of the staffing and management team, organization governance, and other supporting documentation. As with all "investments," notes the Foundation, donors should look for programs that adhere to two key values: transparency and accountability. Leadership is also essential.
Since I have a feeling that most of us are not in Kansas anymore and since giving effectively is not as easy as it looks, I've put together a little primer with some easy rules to follow in making your own charitable contributions. These suggestions draw heavily on the wisdom of Los Angeles-based charitable giving professional Laura Borsecnik and the American Institute of Philanthropy (AIP), as well as on my own experience.
Rule Number One (and Two), answer the question, "why do I want to give and what is the purpose of my giving?"
Change your address, disconnect your phones, decide on some clear giving objectives, and stick with them.
Know your charity and never forget where you came from. Research online or request written documentation with the charity's latest annual report figures including a list of the board of directors, a mission statement, and the most recent audited financial statements with accompanying notes.
Understand what you are paying to support. In most cases the charity should be spending at least 60 percent of its revenue on programming and less than 40 percent on general administration and fundraising. Don't be pressured into giving on the spot and always follow the sage advice of Nelson Algren.
Keep records of your donations, never give cash, and never give your credit card number to a telephone solicitor or website you don't know. Get a receipt of your donation for tax purposes.
For contributions under $250 a bank record, cancelled check, or letter from the charity will do, but for all tax-deductible contributions of $250 or more, the IRS requires you to get a receipt from the charity.
Recognize that "Tax exempt" means the organization does not have to pay taxes. "Tax deductible" means the donor can deduct contributions to the charity on his or her federal tax return. If the charity can't provide a letter from the IRS indicating its tax exempt status, you cannot claim your contribution as a tax deduction.
Think, "What's in a Name?" Some questionable charities use names that closely parallel respected organizations. Do your homework and don't be lured in by depressing tales of woe.
Nearly all non-church charities must file financial information annually with the IRS. If the charity is not registered move on to one that is.
Beware of charities bearing gifts. Don't feel that you have to make a contribution to keep this stuff. It's against the law for a charity to demand payment for unordered merchandise. Remember that money spent sending you junk could have been spent providing services.
Skip the quid pro quo thing. No, you don't need to support every charity your friends are working for or being honored by. Get a backbone!
Finally, be a Slumdog Millionaire. Take your time, do this right and whatever you decide; give, and get involved in some small or larger way in your community. It makes a difference and who knows, maybe if you do someone will mistake you for one of those people who made their money the old fashion way.