A tax deduction is not the only reason to give

By Stew

charity

I have a great fascination for the great philanthropists in our history and the great spirit of philanthropy that permeates our culture. Did you know that Americans give more money voluntarily than the citizens of any other country? We give seven times more money to charity than the citizens of Germany for instance. Another example is the absolute tsunami of cash given to the Asian Tsunami relief effort in 2004. Americans privately gave over $2 billion and our government chipped in another $900 million. The generosity of our country is absolutely astounding. If you would like to learn more about this subject I highly recommend Albert Brooks’ book about charitable giving entitled Who Really Cares?

Why do Americans give so much?

The first reason is fairly obvious: we have been financially blessed beyond any other culture or country in history. Therefore it is incumbent upon us to share those blessings with those who need it as much as we can. Another reason is that our government reduces our tax burden in the form of IRS tax deductions when we give to non-profit organizations. The gift deduction incentives generosity.

Don’t be motivated by just the tax deduction.

It is important to remember that a tax deduction is not a right, we are not necessarily entitled to a charitable tax deduction in our country’s founding documents, but it is a wise benefit that our leaders have given to us. The result is the huge number of charitable organizations and non-profits that have sprung up in our country. Tax deduction or not, we all need to take some time to consider what we can do to use our financial blessings to help our fellow man.

Your gifts are needed now more than ever.

Thomas Paine once famously wrote, “These are times that try men’s souls.” If you happen to be an administrator at a charitable organization these days, you are certainly under pressure. The need for service to humanity is greater than ever, but the funding is drying up.

Most charities depend on major donor gifts and many of those gifts are usually tied to some kind of investment. Some charities have the luxury of a foundation behind them, but the assets of those foundations are almost always invested in the stock market in one form or another – the same market that has lost almost 40% over the last year.

Major gifts to charities are down because of the economy and the dependence of major gifts on the market. While you and I might not be able to give a major gift of stock or annuities or bequeath an inheritance, we can all find a way to give a small gifts. Imagine the blessing for charities who were formerly dependent on large gifts were to suddenly find an upsurge of small gifts from people without great wealth.

Don’t have a favorite non-profit?

They are not hard to find. There is probably a charity within walking distance of your house that needs some help. Ask your friends and family about charities that they like. When I am considering a gift to a non-profit, I always check out my chosen charity at Charity Navigator. The list of charities on this site is almost exhaustive. You can find almost every charitable organization in the United States and they are all rated on several different levels. You can see what percentage of your money actually helps the recipients. You can find out CEO compensation and even leave a comment of your own about a particular charity.

Let me suggest some charities to you that I have impressed me. Part of the reason that I hope to gather my money “little by little” over my lifetime is so that I am someday in a position to help one or more organizations like St. Jude’s Children’s Hospital which exists “to find cures for children with cancer and other catastrophic diseases through research and treatment”. Another organization that I support is Samaritan’s Purse, one of the foremost disaster relief organizations in the world.

So how about you? What organizations do you like? Is there a local charity that you admire? Maybe you work in a non-profit and you could share some information about giving levels over the past few months.

Photo by: HowardLake


12 Responses (including trackbacks) to “A tax deduction is not the only reason to give”

  1. Miranda Says:

    I agree that a tax deduction is not the only reason to give. And you are right that now is the time to keep giving when we can. I like giving to the local food bank in addition to my church. We also give to the March of Dimes, and occasionally to St. Jude’s.

  2. Ben C Says:

    I do pretty much the same as Miranda. A little under the 10% tithe to our church on an ongoing basis and more recently we started giving regularly to our local food bank. Nothing gets to me more than seeing kids in our own country going hungry. I just get to thinking that sometimes the only good meal a kid might get is the one during school. And when school is out, they go hungry. With the way the economy is, more and more kids are going without food because their parents just can’t afford it.
    Also with my kids having been born prematurely, we give some to the March of Dimes and to the children’s hospital here. I wish I made more money so I could give more of it away.

  3. Erika Says:

    My favorite charities are The Salvation Army and The Ronald McDonald House. Both personally helped my family when I was a teenager, following a house fire where we lost everything (and didn’t have rental insurance) and during my baby sister’s extensive medical care due to being a preemie.

  4. tom Says:

    I think people are still trying to adjust to the shock of the economy state and are fighting their own financial problems. Some are loosing homes, their jobs, getting their credit limits cut.

    So is they can’t even help themselves, how can donating money be any good for them, from a financial standpoint?

  5. Jeff@StretchyDollar Says:

    You’re right – now is a critical time to give. Our church has conducted multiple food drives over the past 6 months to try and stave off some of the hardest times.

    In response to tom’s comment – giving doesn’t always help you financially, and it shouldn’t. Sometimes giving is about making a sacrifice for someone else – making their comfort a higher priority than your own. Giving irresponsibly is definitely not wise, but even a little bit will help someone else.

  6. The Almost Millionaire Says:

    Great article! I’m glad to have found your blog from a link over at doyoudaveramsey.com

    You make a great case for giving, simply because you are blessed, and it is the right thing to do. Tax benefits are just a bonus.
    Looking forward to reading more of you work.
    Best,
    Brandon@TAM

  7. Bri Says:

    @tom – As Christians my husband and I have always tithed. We do this by giving to a christian radio station that has been so beneficial to us since we moved to another state (we’ve yet to find a church in our new state). We have given continually to this station through many difficult times because we feel led to give – we feel that God called us to give to this cause for a reason and we don’t doubt that. We have given through my husbands layoff and pay cuts at my job. There have been months that we have struggled to be able to continue our gift, but God has always provided for us in ways we woulnd’t have been able to to on our own even it we hadn’t given.

    It doesn’t make sense for everyone, but if you feel led to give…then you should give. You will be taken care of. My husband and I actually don’t take the tax deductions for our gifts either. We believe that we are blessed enough to give and God has called us to do so. Taking a deduction on taxes for something we were called to do seems to us like we are trying to benefit personally by following God’s call. But that’s just us.

  8. MyJourney Says:

    “It is important to remember that a tax deduction is not a right, we are not necessarily entitled to a charitable tax deduction in our country’s founding documents, but it is a wise benefit that our leaders have given to us.”

    Just to be a pain I should point out that there was no income taxes (ignoring the civil war) until the early 20th century, so big George W couldn’t have offered the deduction – there was nothing to deduct from!

    On a serious note, my office sets up A LOT of advanced and LARGE charitable planning (think CRATs, CLUTs, etc.) and the first thing we always tell the person you need to want to HELP the org.

  9. Stew Says:

    MyJourney, you are correct about the income tax/deduction situation . . . but don’t get me started on taxes. :)

  10. DDFD at DivorcedDadFrugalDad.com Says:

    Interesting point of view . . . people often lose sight of the proverbial forest through the trees.

  11. Miss T Says:

    We tithe 10% every month – it’s automatic and it is non-negotiable, even when the budget is tight. And God blesses us for it. Period. When we started to tithe we became more aware of our income and where it was going. We actually began to save more! How does that work?!? We hear this all the time. On those months where we wondered “Maybe we should not tithe since this bill is due,” we simply were obedient and the money would always come through.

    God is good…all the time!!!

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