After shopping-centric Black Friday and Cyber Monday, it’s refreshing to know that today is Giving Tuesday.
Giving Tuesday is actually a relatively new effort – the first one was in 2012 and it is actually part of November’s nonprofit awareness month.
But giving in the US is not new at all. In fact, the US is one of the most generous countries on earth. Here are some of the facts according to data from the National Philanthropic Trust:
- More than 95 percent of American households give to charity and the average household contribution is $2,974.
- Collectively, Americans gave $335.2 billion in 2013, which accounted for two percent of Gross Domestic Product (GDP).
- More than 64.5 million adults volunteered 7.9 billion hours of their time and talent along with their treasure.
Last year, I wrote about donor-advised funds, which are convenient vehicles for charitable giving. You make contributions to the donor-advised fund and then request grants to your favorite charities from the fund.
Compared to direct giving, donor-advised funds are convenient because you can just make one or two contributions (of cash or securities) to the fund and then conveniently make as many individual gifts to charities as you like.
Compared to a private foundation, donor-advised funds are much simpler and less expensive to manage since there are no specific tax forms and the fund takes care of the due diligence, grant distribution and record-keeping.
This isn’t to say that donor-advised funds are free – they definitely have costs. Schwab, for example, charges 0.60 percent on the first $500,000 and gets cheaper from there, and there is a minimum fee of $100. Different firms also have different contribution and grant minimums; Schwab requires $5,000 initially and requires grants be at least $50.
I don’t mean for this to be a commercial for Schwab, but after writing about donor-advised funds last year, I decided to open one for me and my family.
For me, it was definitely worth $100 a year to reduce the volume of paperwork related to charitable gifts, when you make a lot of $100 gifts, it’s a lot of paperwork to keep track of and now I will just get one form from Schwab for my taxes. I also like that the funds remain invested in cheap index funds while we figure out where we want to give.
Plus, it turns out that the reporting is really nice. When I log in, I see a complete history of my gifts along with a breakdown by organization, and the type of charity: education, arts, science, religious, etc.
In the past, charities would send multiple letters asking for money and I couldn’t remember whether I had given, but the amounts were small enough that I would just give again rather than look it up. Now, the records are easy to access and I can make a more informed decision when I get the second (or third or fourth) request for money.
If you’re interested in a donor-advised fund for this year, there are some important deadlines coming up (and some have already gone by if you wanted to donate restricted stock, complex assets or mutual funds from other organizations).
If you don’t have and don’t want a donor-advised fund, but still want to give appreciated mutual funds or stock, the deadlines are December 5th and 12th respectively.
All of these deadlines are surely a hassle, but in the words of the great American author, Henry David Thoreau: ‘Goodness is the only investment that never fails.’
Happy Giving Tuesday!