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Your giving need not wrap up today

Updated: May 3, 2013 12:14PM



Originally published: December 25, 2003

What could be more appropriate for a Christmas Day column than the subject of giving? And although you’ve finished shopping and giving to your own family and friends, there are certainly others who could still use your help. So as you toss the wrappings and struggle to find a place to stash all your gifts, this is a good time to clean out your closet -- and what’s left of your wallet -- for a good cause of your choice. In the process, you can get not only satisfaction, but some tax benefits as well. And you can be part of the $212 billion that Americans gave in the past year, proving it is part of our heritage to give as well as get.

Start with the gift of goods -- items that may be in your closet or drawers that you never use. You can be sure that food pantries and community chests are empty this week, having distributed their merchandise in advance of Christmas. But there will still be plenty of cold and hungry people in our city next week. What better way to spend the weekend than rounding up all those items and taking them to a nearby church or community center where a days-late Santa is far better than none at all.

Don’t forget the receipt

Be sure to get an itemized receipt. Then you can take the current value of your donations (not the original cost, but the discounted present-day value) as a deduction on your tax return if you itemize.

You’ve probably heard those radio advertisements offering to pick up your old car or boat as a donation for a charity. Then you get the tax write-off, while the charity gets the cash value, even if it’s just scrap metal. Be warned that the IRS has announced it’s looking into overvalued donations of this type.

And make sure you check out the charity to see how much money goes to the fund-raisers, and how much to the people you’re hoping to help. At www.GuideStar.org you can search out any charity to see how efficiently it raises money and distributes it. You’ll see a complete financial report, including the federal Form 990, which all charities must file, giving information on their costs and distributions.

The gift of money or time. It’s easier to write a check, and in many cases the cash can go further than an in-kind donation.

Certain charities get big discounts on late-dated food supplies or new but unsold clothing. To get your tax deduction, write your check before year-end, and request that the charity send you a receipt as of the date the check was postmarked. Your cancelled check is not your receipt. You must have a separate letter from the registered charity to take the deduction.

You can’t ordinarily deduct gifts of time or talent, although volunteers can deduct mileage based on IRS tables. Your good feeling is your only reward.

But when you volunteer yourself to help someone less fortunate, you get an immediate and very personal sense of contribution.

So what are you doing after dinner tonight? There must be some very lonely elderly people in your neighborhood, or in a nearby senior citizen’s home or hospital. And your children might like to pick out one toy and take it to a children’s hospital to make a visit. Call first, to make sure your visit is welcome. It doesn’t have to be a big production, but you’ll start a habit of giving that is its own reward.

Start a foundation. You can think big -- and you don’t have to be as wealthy as Warren Buffett or Bill Gates -- to start your own charitable foundation.

In fact, investment companies such as Fidelity, Vanguard, Charles Schwab and T. Rowe Price have done all the work for you. By opening an account in one of their charitable gift funds, you get an immediate deduction for your donation. But your money can be distributed over future years, growing in investments you select in the meantime.

The 10K foundation

Most have a minimum of $10,000 to open an account, with minimum distributions of $250 to registered charities of your choice. The distributions can be made anonymously or in the name of your foundation. You can start your foundation by contributing cash (up to 50 percent of your adjusted gross income) or appreciated securities (up to 30 percent of your adjusted gross income).

The cost is minimal, since they’ve already done the legal work for anyone who opens an account in a charitable gift fund.

Yes, it’s better to give than to receive. And today’s a great day to demonstrate that point. That’s The Savage Truth.

Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange and McDonald’s Corp. She appears weekly on WMAQ-Channel 5’s 4:30 p.m. newscast, and can be reached at her Web site, www.terrysavage.com.



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