Lexington, KY - Giving USA reports that $307.65 billion was given to charities in 2008. This represents a 2 percent decline from 2007. This is the first decline since 1987, when there was a tax law change. The present decline is attributable to economic factors, the first reported due to these factors since this annual report has been compiled.
Of that amount, individuals gave $229 billion plus an additional $23 billion in bequests. Foundations gave $41 billion, followed by corporate giving at $15 billion.
Religion remains the largest single recipient of charitable dollars, capturing 35 percent of total giving. Next comes education at 13 percent, then foundations at 11 percent and human services at 9 percent.
There are some 1.4 million nonprofits registered with the Internal Revenue Service.
Let's think about this. A 2007 study by Johns Hopkins University found that the civil society sector accounts for some 7 percent of the GDP in the United States and several other countries. This is more than the construction and financial industries - and twice as much as the utility industry.
Reading these statistics reminds us just how large and how vital the nonprofit sector is. And, how important our donations are.
In light of these staggering figures, how does your giving stack up? Do you give as much thought to your giving as you do a remodeling job at your home or when you pick stocks? When you give, how do you know if the donation is making a difference?
There are some basic rules to follow as you plan your personal giving.
First, give from your heart. Take some time to consider what it is that you want to accomplish with your giving. What moves you? What is your passion? If your heart aches when you hear of an abused puppy or kitten, give to your local shelter. If you cringe every time you pass by another razed farm that once harbored stately trees and native flowers, look into national and local conservation groups. If you stay up at night worrying over devastating global poverty, donate to one of the many effective global relief organizations. Why not support micro-lending in third world nations? For pennies a day, you can be a venture capitalist and support a budding entrepreneur.
Second, do your research. Look up Web sites of organizations. Read them. Order annual reports and read those too. Check Better Business Bureau or Charity Navigator to learn more about the groups and check their ratings. Be sure to check how much of your dollar goes to programs and services rather than administrative and fundraising costs. This is a key factor in gauging effectiveness. Call the toll-free number and ask lots of questions. How are you treated on the phone? When I worked for a global environmental group, I once took a call from a donor who had been shrugged off by another group. She didn't feel like her gift mattered. We valued her commitment to the environment, and a long-standing relationship blossomed.
Find out how long the organization has been in business. Read the mission statement. Take a look at the listing of the Board of Directors. Even better, ask for a copy of the IRS Form 990. This form provides you with a full look at the finances and operational costs. The IRS has made this form even more powerful for fact finding about the business of a nonprofit.
Third, consider how you wish to give, and how much. Do you want to start small and then build up to a larger gift? Would you rather give now, or through your estate plans? Gifts can be made by check, credit card or even through appreciated stock or real estate. Personal property can also be given. There are IRS guidelines on all of these gifts. IRS Publication 526 is a great source for donors. It is readable and even gives examples of gifts and deductions. Find it at www.irs.gov. Before considering a large gift or a gift of assets, definitely check in with your accountant or lawyer. You want to make sure all rules are followed and that your gift is tax wise.
Fourth, talk to your chosen charity. Tell them your objectives. Listen to their needs. Together, you can decide upon a gift that is mutually beneficial. Giving effectively is a partnership. When your goals and the organization's goals match up, then it is better for all.
If this all sounds like too much, then partner with one of the many umbrella organizations that vet charities and provide support in designated subject areas. Examples locally include the United Way of the Bluegrass, Blue Grass Community Foundation and LexArts. Online giving services do similar work nationally and globally. Philanthropic advisors help you sort out and select charitable priorities just as business and fitness coaches help you with other areas of your life.
Bottom line is that charitable giving is big business. But, you can make sure that each gift you make will make a difference. Brad Pitt named his foundation that builds houses in post-Katrina New Orleans, the Make It Right Foundation. Use your giving to make things right.
Anne E. Nash, a Lexington attorney, is the former CEO of Blue Grass Community Foundation, former director of complex gifts for The Nature Conservancy, and now runs MyGivingAdvisor, LLC, a national philanthropic consulting firm. Send philanthropic news to anne.nash@bizlex.com.