Monday, December 18, 2006

Thoughtful Gift Guide: Charitable Gifts

2006 has been quite a year for philanthropy. Earlier this year, Warren Buffett announced his plan to donate over $30 billion of his fortune in shares of Berkshire Hathaway to the Bill and Melinda Gates Foundation, breaking the record for the largest charitable donation in history. This summer, the Live 8 benefit concerts successfully pressured G8 leaders to double their planned levels of aid to Africa from $25 to $50 billion by the year 2010. And I'm sure you've seen the celebrity-fueled commercials for (Product) Red, in which consumers are encouraged to buy special products from top brands that donate a proceed of the profits to a charity founded by Bono to raise money to fight AIDS, tuberculosis and malaria. Also, yesterday's New York Times Magazine featured a cover story by ethicist Peter Singer which made the case for increasing charitable donations by individuals.

The question of how much one is obligated to donate (in both time and money) is debatable, but I think that everyone can agree that we have a duty to give back and help society in some way. And during the holidays, a time of such crass consumerism, it's especially important to step back and be grateful for what you have, and consider whether your values match up with your actions. One way to address this is by donating to organizations that address issues that matter to you.

In addition to donating time and money directly, giving charitable donations in another person's name is a fantastic gift option. So often, people give and receive gifts they don't really want or need. Gift-giving becomes a chore, and people end up with a lot of stuff they don't even know what to do with. But by making a donation to a charity that you and the recipient support, you can be sure that people will be grateful. You'll both feel good about helping others and they'll admire you for your generosity and thoughtfulness.

Your best bet is finding out what organizations the other person already supports, and contacting the group about making a donation in your friend's name. Another option is deciding among your family or friends that you'll make charitable donations instead of exchanging gifts this year. And if someone asks you what you want for the holidays, responding with a request for a donation to your favorite charity is sure to please the gift giver.

One thing to remember is to be sensitive about asking others to donate to organizations that may come in conflict with their own religious or political views. If it's someone you know well, you probably already know where they stand on various issues, so this shouldn't be a problem. But you may offend a pro-life acquaintance by making a donation to Planned Parenthood, or an atheist with a gift to the National Christian Foundation.

Another issue that comes up when you're making a donation in another person's name is how much to give. With most gifts, the person only has a vague idea of how much you spent on them. With a donation, they'll know the exact amount. I think you shouldn't feel compelled to spend any more than you would have on a traditional gift. Of course, knowing that your money is going to help others might motivate you to spend more, but this is certainly not expected of you.

Before you give, be sure to do research on the organization you're interested in. One of the best sites for this is Charity Navigator, which independently evaluates thousands of charities in order to "advance a more efficient and responsive philanthropic marketplace." If you don't have any idea where you'd like your money to go, check out this reference guide to the highest and lowest rated charities, organized by type. You might be surprised at how certain charities spend their donations.

Based on my own experience, making charitable donations in other people's names is one of the most thoughtful and appreciated gifts you can give someone. Whether you're motivated by an ethical duty to give back or simply want to impress a friend with your generosity and selflessness, giving and requesting charitable gifts is a great idea for the holidays.

Also, as an additional bonus, your own charitable gifts are deductible if you itemize their tax deductions. The tax savings will vary depending on your income, but can be a sizable benefit in many cases. Here is an excellent article about the tax rules for charitable giving.

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