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Even during these tough economic times, many people still want to make charitable contributions. But they may want some advice about how to do it in ways that acknowledge the challenges they – and the community – face.
1. Focus on immediate needs.
Many nonprofits that provide basic services, such as food, shelter, and healthcare, are seeing reduced funding from public as well as private sources. These nonprofits are experiencing large increases in demand for their services. Therefore this might be a time to focus contributions, even if they are less than in previous years, on organizations that support those most affected by the economic downturn.
2. Give more strategically.
This is also a time think about being more strategic—for example, focusing on organizations that serve the most people or are the most efficient. It could also mean giving larger gifts to fewer organizations in order to make a bigger impact, or not making end-of-year contributions to organizations with large reserves or endowments, since they may not need contributions now as much as others with tight budgets and increased demands.
3. Give different assets.
In place of appreciated securities, which people often give at year-end, you might consider giving unneeded life insurance policies or an interest in a privately held company.
4. Take advantage of the IRA Rollover.
President Bush recently signed into law a two-year extension of the IRA charitable rollover. This enables people 70 ½ or older to transfer up to $100,000 annually from an IRA directly to a charity without taking the distribution into taxable income before making the gift.
5. Turn holiday gifts into charitable donations.
Think about making donations to charities instead of giving holiday gifts. The donations can be made in the name of the person who would have received a traditional gift.
6. Take the long view.
If you are giving less—or not at all—this year, consider revising your long-term philanthropic strategy and setting five-year goals.
7. Think about leaving a legacy.
Estate planning discussions occur throughout the economic cycle. If you are doing estate planning, you may want to plan bequests and therefore want to become more knowledgeable about specific tax-advantaged strategies to address the charitable legacy you will leave.
8. Assess financial realities & charitable motivations.
Given the dramatic changes in the economy, your charitable motivations may have changed. Can you “afford” to be more charitable this year? If so, you may want to practice what’s called “countercyclical philanthropy”—giving more when the needs are greatest.
9. Think about other ways to give.
Instead of, or in addition to, financial contributions, you might consider other ways to help those in need. You could volunteer (there are lots of special opportunities around the holidays, and volunteer centers in every community); and many congregations and community organizations are aware of people with economic challenges, so if you can offer a job or provide temporary housing, these are great ways to help. Think of it as sharing “time and talent” in addition to “treasure.”
10. Ask for help.
The Minneapolis Foundation is always available to offer advice on how to make charitable contributions that meet both charitable and financial goals. In good times and bad, we’re here to help people be as effective as possible in their giving, and to make a difference in the community.
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