Rescuing Charities

This is a tough year. It’s a tough year for me and it’s probably a tough year for you. But it’s an even tougher year for charities.

Let’s face it; the economy is having a bit of trouble. Stocks are down, the economy is down; about the only things up are fear and unemployment. Charities are getting hit with a double whammy. Their contributions are down at the same time that the needs of those they serve are up.

Charities need to be doing more, but have less money to do it with. Now, it is true that the charities should have been prepared for this. They should have kept money set aside to get through tough economic times. They should have budgeted in some flexibility and have short-term and one-time projects that can be cut when the going gets tough.

But before we wag a finger at them, realize that they almost always have more true needs than money, and that their donors generally want them to spend what is given them, not hoard it. One other thing: Why are they supposed to be better at this than the rest of us?

So why did the money drop off? Let’s look at the many possibilities:

• When people are unemployed, their hours or pay are cut, or they are afraid of losing their job, they are not likely to give.
• Foundations typically distribute 5% of their portfolio each year. Like everyone else, their portfolio has lost money. Five percent of less money is, well, less money.
• Folks who have kept their job, are already retired, or who are financially well off have seen their portfolios go down. They have less money as a base to give from, and are hesitant to take out money from a hurting portfolio.
• The end-of-year contribution of appreciated stocks to charities is a time-honored way to avoid some taxes and help a worthy cause. The only problem is that there aren’t that many stocks that have any appreciation left in them.
• Business owners are trying to protect their employees’ jobs and the business itself. Money is tight and the owner’s take-home has been slashed. Neither they nor the business have an excess that can be contributed.
• And finally, we feel a lot poorer.

If you are one of the people who are struggling or who anticipate struggling to make ends meet, I understand. If you are the conscientious business owner who is pulling out every stop to keep yourself, your employees, and your business afloat, I understand. If your family members are the ones hurting and you need to pull in and conserve in order to take care of them, I understand.

I also understand that there are people and organizations out there that are not affected by this recession. I know some of you are having a pretty good business year. I’m willing to bet that many reading this column not only have their income taken care of, but have a pretty good bit of savings they don’t think they’ll ever need to dip into.

If that applies to you, please consider stretching a bit this year and increase your charitable contributions. The need is there and your gift will be appreciated.

Gary Silverman, CFP® is the owner of Personal Money Planning, a financial planning and investment management firm located in Wichita Falls. You may e-mail him at Gary@PersonalMoneyPlanning.com.