BY AL SEYMOUR, ChFC®, CLU®, CRPC®, CASL®, AEP®, CAP®
Most of us give because we feel we have been blessed or we are motivated to give because of the needs of others. Some people give solely because there is a tax benefit. Regardless of why you give, charitable organizations have benefitted from that generosity, and those gifts usually come in one of three ways: annual gifts, major gifts and planned gifts. I would like to explain what each of these three types of gifts means.
Annual gifts are just as they sound. They are given on an annual basis to support charities. Major gifts are often designated by those who have given yearly and want to enlarge that gift to support a particular larger need. Finally, planned giving incorporates the use of one’s estate, through a will or other legal documents, to leave monies to charity after one passes away.
Before donors decide to give gifts, they often want to know how the dollars will be used. What percentage will go to overhead, most often called administration and fund-raising costs and how much will actually go to the needs of the people or organizations the charity claims to benefit? Overhead is essential, but shouldn’t be excessive. There are several ways to check on the charity’s stewardship. One is by word of mouth, by talking to others who given to or who have volunteered for a particular charity. Those that have been involved may have some insight. Analyze how effectively the charity is making an impact. Are they reaching their goals? There are also several rating agencies you can use to look into charities. Charity Navigator, GuideStar and the Better Business Bureau’s Wise Giving Alliance are a few. Each of these companies provide information including financial management, financial sustainability, accountability, leadership, strategy, impact, and even website functionality.
Because of changes in the tax code in 2018, some donors may not give as they have in the past. Standard deductions have increased, perhaps leading to less contributions by those usually motivated by a tax deduction for their generosity. However, remember that the needs exist whether we receive a tax benefit or not. Giving USA Foundation has stated that charitable giving was at $390 billion for 2016. The fear that less will be given in 2018 because of the new tax act is a concern for many charities. Making sure charities are good stewards is very important but so are the needs of those charities in the communities in which they serve. Continue to do your homework and continue to help those who can’t help themselves.