Money and Values: December 2008

Monday, December 29, 2008

How you can save money by giving more to charity in this time of great need

For people who are unlikely to itemize deductions on their taxes every year, bunching your deductions into a single year is often a very effective strategy. The general idea is that you try to combine as many tax-deductible expenses into a single year as possible in order to get maximum benefit from itemizing, and then the following year you can go back to the standard deduction. This can work with all sorts of deductions, but it's especially effective for charitable donations because there's so much flexibility in when you choose to give.

And now more than ever is a good time to give a double dose of donations to your favorite charities. Donations are down, thanks to the economy's effect on the individuals and businesses who usually do the giving. Charities are also getting fewer foundation grants, because foundations' giving is usually a percent of the total assets in the foundations' endowment (a minimum of 5% a year) and most foundations have seen their assets shrink significantly as a result of stock market declines-- even the huge Bill and Melinda Gates Foundation is cutting back its planned grant-making for 2009. Charities are also having a harder time borrowing money, like everyone else. Yet simultaneously, many charities are dealing with higher demand, particularly
if they're serving the needy-- for example, food pantries nationwide are seeing an average of 30 percent higher demand, up to 60 percent or more in some places. Times are really tough for many of these charities; making bigger donations can make a very big difference.

(And there are other benefits to doubling up on charitable donations, too, especially if you like recognition and thank-you gifts... bunching can turn your usual $50 donation into a $100 donation or a $500 donation into a $1000 donation, which can snag you extra goodies or VIP treatment!)

If you're concerned about your own finances and don't feel able to give much more in cash to charities right now, donating goods (like clothes, toys, books, cars, computers, and more) increases your deductions too, so now could be a good time to gather the things you've been meaning to give away and drop them off before it becomes 2009. (Here's the details from the IRS on what receipts you need and how to figure the tax-deductible value.) If you're driving to volunteer or drop off goods, you can deduct 14 cents per mile. (And of course, regardless of the tax implications, these organizations will appreciate your volunteer hours and donated goods even if you can't afford to give much in cash.)

(You can also donate appreciated stock and deduct the full value without paying taxes on the capital gains-- yes, stocks that're worth more than when you bought them are harder to find these days, but if you have them it can be a very good deal to donate the stock rather than selling it and making donations in cash. The Motley Fool has some suggestions of stocks with positive 5-year returns.)

As for me, I'll be itemizing my 2008 taxes for the first time-- it never made sense when I lived in Illinois, with no mortgage and a 3% state income tax, but now my DC taxes are high enough that combining those with my annual giving budget gives me a total right around the standard deduction. If I gave my budgeted amount in both 2008 and 2009, I wouldn't gain much from itemizing and would probably just take the standard deduction. But if I accelerate my 2009 giving and do it all before the end of 2008, I'll end up significantly higher than the standard deduction, which means I save hundreds of dollars on my taxes in 2008 (and can still take the standard deduction in 2009, so that tax situation stays exactly the same.)

This has been my plan for months-- since well before the economic downturn accelerated-- but it's especially satisfying to know that my larger-than-usual gifts come at a time when they're especially needed. Now here's hoping that by the end of next year, when I'm giving little or nothing because I did it all in 2008, things have recovered enough that non-profits are on the upswing...

Saturday, December 20, 2008

Charitable holiday gifts: a great solution for those awkward gifting situations

We all occasionally (or more than occasionally!) have those gift-giving situations we can't figure out how to handle-- do we give this person a gift or not? Often the biggest part of the awkwardness is not wanting the other person to feel obligated to reciprocate. Sometimes this translates into no gift at all, even if you really want the person to know you're thinking of them; sometimes it means you give a small gift so as not to overwhelm, which often leads to a cycle of exchanging little trinkets that neither of you really want or will use. But this year in just such a situation, I think I've hit upon a great solution-- charity-related gifting!

There are some big benefits:

Shows you're thinking of them. Giving a gift to a charitable organization in someone's name definitely shows them that you care and that you took the time to think about them during the holiday season. And if you can find an organization that's a good fit for their interests, it's especially thoughtful.
Less likely to make them feel awkward or obligated about giving back to you. Because you're not sending them an actual gift, but instead making a donation in their name, there's less of a sense of "Oh, so we're gift-exchangers now." At worst, it creates a cycle of charitable giving, which is the best kind of giving cycle!
Keeps the "stuff" to a minimum. These gifts typically do come with some kind of tangible recognition, often a certificate and/or nice photograph. To me that seems just about right-- often you want the person to have something to hold in their hands, but "a little something" is less wasteful than the kind of stuff that you might otherwise buy in this situation.
Giving to a good cause. And then there's the fact that your money is going to a worthy cause. That's wonderful in and of itself, and it also could mean that if you consider it part of your "giving budget" then you have little or no extra expense. (Or if you don't have a giving budget and it is an extra expense, at least it's a tax-deductible one.)

As for me, I'd been struggling with how to approach giving gifts to my boyfriend's family. I haven't spent the holidays with them in person yet, so we haven't exchanged gifts so far, but after getting to know them better this year I wanted to show them I was thinking of them. Yet I also didn't want them to feel obligated to reciprocate (or embarrassed that they hadn't.) But once I started to think along the lines of charitable gifts, it all fell into place. I adopted half an acre in the Northern Rockies for his father, who really enjoys nature in general and that area of the country in particular, and I sponsored an animal for his sister, who's a real animal-lover. (There are a lot of other great choices, too; Oxfam America Unwrapped is one of my personal favorites, but there's a ton of options of all sorts listed at Changing the Present.) I think everyone wins-- I get to show them I'm thinking of them, they feel cared for, and more money goes towards conserving nature and protecting animals.

What's your take on giving to charity as a gift to others? And how else do you approach these awkward "do I or don't I?" gift-giving situations?

Friday, December 12, 2008

Tips and links for holiday gifting that's cheaper, saner, and greener

The holiday gifting season is upon us again... time to take a deep breath and figure out how to think outside the box to make your holidays cheaper, greener, and saner.

I had a whole post on this last year-- Holiday Gifting: 14 Ways to Give More Meaning and Less Stuff-- with tips in categories like "give to fewer people," "give to a good cause," "give non-'stuff' gifts," and "give non-purchased gifts." I'm trying to do all of those things this year! I'm particularly excited about one gift which falls into two of those categories, as both a non-"stuff" experience-based gift and a gift to a good cause-- I'm taking my Mom to Taste of the Nation, an event held in many U.S. cities in which you can sample great food from top-tier chefs and 100% of the ticket proceeds go to fighting childhood hunger. I think she'll really enjoy experiencing it with me (and vice versa!), and it's win-win for me because the ticket costs can come right out of my giving budget. (The ticket cost is partially but not entirely tax-deductible-- it goes 100% to charity but when you get something of value in return you can't deduct the full amount.) And there's absolutely no clutter or wasteful plastic packaging involved!

I'm also buying fair trade products for my cousins, who at 5 and 9 are still very much in the "we want presents we can unwrap and hold in our hands" stage, so I'm taking advantage of some of the sites and discounts I posted earlier this month (December discounts on socially/eco-conscious gifts.)

There've been a ton of great posts lately along similar lines:

At Get Rich Slowly, JD compiles a ton of terrific ideas for do-it-yourself gifts in A Do-It-Yourself Christmas: 34 Great Gifts You Can Make Yourself.

Other do it yourself options: Holiday Gifts: 8 Homemade Gifts in a Jar (with free printable gift tags) from Squawkfox and Veggie Might: Gifts to Give Unless You Eat Them First - DIY Holidays Part One from Leigh at Cheap Healthy Good.

The M-Network bloggers have a PDF with a compilation of articles called Money Saving Tips for the Holidays [PDF]-- check out the article called Going Green and Saving Money During the Holidays from David of My Two Dollars.
Trent of The Simple Dollar looks at what's made it into the National Toy Hall of Fame and thinks about the simple toys and gifts that really make kids happy (and stimulate their imaginations, and cost less too) in Christmas Inspiration from a Stick and a Cardboard Box.
And if you're ready to think outside the box, please check out No Impact Man's post Christmas with no presents, or read his full article. Key quote: "Without stress or presents, it's not Christmas, right? But of course it was. It was the best of Christmas, the part that, research shows, makes people happiest. It was all the upside without the downside."

How are you making your holiday gifting cheaper, saner, and/or greener?

Wednesday, December 03, 2008

December discounts on socially/eco-conscious gifts

You all know that I'm a big proponent of giving more meaning and less stuff for the holidays. But if you are buying gifts, I encourage you to look at the types of places that are in Co-op America's National Green Pages-- companies that are screened and verified as socially and environmentally responsible and values-driven. You can use their search engine to find bricks-and-mortar stores in your community, and here are some online sales currently being offered by National Green Pages companies: