“Although African Americans tend to associate the concept of philanthropy with the very rich, our community has historically been a generous and giving one, whether it be time or money,” stated Marc Morial, president and CEO of the National Urban League in his “Opinion” column in the New York Beacon, July 27.

The concept of giving runs deep in our community, whether it is to religious, civic or social causes. Passing the plate, basket or hat is a long-held tradition. However, with the exception of responding to an immediate crisis, is such spontaneous giving the most effective way to further causes that are near and dear to our heart?

I am reminded of a distinguished member of my church, with which I shared the same pew. During Sunday service when the collection plate was presented, he always just passed it along and only on special occasions placed an envelope in the plate. At the same time, everyone else, including myself, was dutifully writing out checks or stuffing cash into an envelope and ceremoniously placing it in the plate. By way of the church grapevine, I knew that this gentleman was one of the church’s major givers.


Finally, after several years, I had the courage to ask him how he makes his contribution to the church. He said, “Years ago, I set up a donor advised fund with some appreciated stock. Every quarter, the fund sends a check to the church. All I have to do is tell them how much to contribute each year.” As a postscript to the story, at the gentleman’s death, he made a significant bequest to the church through his will.

Effective giving

Effective charitable giving mutually satisfies the goals of the donor and the charity; it is consistent with the donor’s overall financial plan and provides legitimate income tax and estate planning opportunities. The simplest gift is cash.

However, from the donor’s perspective, this is the most expensive way to make a charitable gift, because the fair market value is the same as the donor’s cost. For example, if a donor gives $1,000 to charity, the fair market value of the gift is $1,000 and the donor’s cost is $1,000. The donor is allowed to deduct the $1,000 from his federal income taxes.

However, if a donor gives appreciated securities with a fair market value of $1,000, but the donor’s cost basis was $500, the donor gets the same tax deduction of $1,000; however his cost was only $500. There are numerous methods of making tax-advantaged gifts. Please consult with your tax advisor for recommendations that fit your situation. A few common gifting examples are Stocks and other capital assets; Personal property such as clothing, appliances, automobiles; Real Estate; Insurance Policies; Charitable Trusts; Charitable Gift Annuities; Bequests by Will and Donor Advised Funds.

To make your giving more effective, consider performing the following exercise with your family:

-What are the major causes that your family would like to fund over the next 12 months? Consider religious, educational, medical research, civic, social, etc.

-What percent of your total contributions would you like to give to each?

-In addition to financial contributions, will you provide volunteer services to these organizations? Consider organization boards, volunteer time, event participation, etc.

-Look at your 2005 Tax Return. What was your total charitable contribution amount and what were the top five charities? How focused was your giving? How were the gifts made: cash, appreciated securities, non-cash donations? Did you consider a deduction for mileage while undertaking charitable work?

-How much as a percentage of your family gross income do you want to contribute to charity over the next 12 months?

-Do you have appreciated capital assets that you could substitute for a cash donation?

-Have you considered planned giving activities such as charitable trusts, bequests by will or trust, gift annuities, donor advised funds, etc.?

-Are your charitable gifts matched by your employer?

Charitable giving is a part of our community’s DNA. Instead of “giving until it hurts,” make your charitable giving as effective as possible, by not only giving of your treasury, but also your time and talent.

(Michael Shinn is a registered representative of Financial Network Investment Corporation. Visit www.shinnfinancial.com for more information. Questions and comments may be sent via email to [email protected]. Neither Michael Shinn nor Financial Network provides tax advice. Please consult a tax professional before implementing any strategy.)