Here’s Where the Rich Are Donating Their Money

Some charities or causes seem to get more financial attention than others in terms of where wealthy people donate their money.

And now we have a bit more insight into where that is, thanks to this sneak peek of an extensive report from the U.S. Trust and the Indiana University Lilly Family School of Philanthropy called the 2016 U.S. Trust Study of High Net Worth Philanthropy, due out in full on Oct. 25.

The Method

The study was administered nationally, through a 70-question survey, to high net worth individuals (households with incomes $200,000 and/or net worth of more than $1,000,000 — excluding the monetary value of their homes) between May 2016 and September 2016. More than 1,500 responding households met the income and/or wealth criteria for this study. There was no reported margin of error for the full study.

“For the last decade, [the study] has been an important barometer for charitable engagement and perspectives. The latest study will once again offer valuable insights that help inform the strategies of nonprofit professionals, wealthy donors and charitable advisors alike,” Claire Costello, managing director and National Philanthropic Specialist for U.S. Trust, told Credit.com.

The Winner Is …

The biggest category wealthy donors gave to last year was to Basic Needs organizations, with 63% of the rich group giving to organizations that provide food and shelter and the basic necessities for human survival. Donations for religious causes came in second (50%), followed by education (45%), the environment (42%) and health (40%).

The Age Spread

Age also impacted how many groups benefit from their donations. For example, donors over 70 were more likely to spread out donations to 11 different organizations, baby boomers gave to an average of seven and donors age 50 and younger gave to five, on average. The total average of all age groups was eight different organizations.

Political Giving 

Politics was a good cause for the well-heeled set: One out of four (24%) wealthy donors gave financially to a political candidate, campaign or committee last year or said they plan to do so during the 2016 election season. The most generous of this category were donors over the age of 70 (40%) and LGBT individuals (38%), who were more likely to give to a political candidate or campaign. If you were to compare benefactors by political party: Democrats (36%) were more likely to give than Republicans (22%). By ideology: Liberals (43%) were more likely to vote with their dollars and give donations than conservatives (24%) and moderates (17%).

The main reasons those with deep pockets reported they decided to buoy a candidate or campaign with their dollars was to exercise their voice (56%); help the outcome of elections (49%; this category was owned by men more than women and donors over the age of 50); and because they believe the candidate can make a difference (46%).

Those who held back their donations did so because they reportedly felt their political contributions would have little to no impact when compared to corporate contributions (47%) and contributions from Political Action Committees (PACs) (26%). About a third (31%) believed their contributions wouldn’t make a difference, and more than a quarter (26%) didn’t have a particular candidate they would endorse (26%).

Creating a Positive Impact on Society

When asked what they believe has the greatest potential for positive impact on society, wealthy donors cited charitable giving (45%) and volunteering (31%) above all else. And many believe the giving is more effective if it comes from the masses. Twice as many wealthy donors believe that smaller donations from many donors have a greater likelihood of changing the world than do larger donations from the wealthiest Americans (35% compared to 18%); however, most respondents are unsure which will have a greater impact (47%), according to the study.

When giving to charity, it’s important to be careful with sharing your personal information. One way you can do this is to keep an eye on your credit scores, because any changes can tip you off if someone has stolen your personal information in the process. You can pull copies of your credit reports for free each year at AnnualCreditReport.com and view two of your credit scores, updated every 14 days, for free on Credit.com.

Image: ViewApart

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How to Make Charitable Contributions That Count (and are Tax Deductible)

Tax return check

You may have noticed December is a very popular time of year for making charitable donations. The reason is twofold. First, this time of year (the end of the year) is when many major holidays take place, and the season is often known as a time of giving. For this reason, people are more generous and often looking to make more donations.

The second reason that this time of year promotes more giving is that people are tax planning. Charitable donations are a great way to pay less in taxes because these contributions are tax deductible. You may not have to file until April 15, but December 31 is the deadline to make a charitable contribution that counts as a deduction the current tax year.

How Taxes Influence Charitable Donations

Taxes are based on the calendar year; so financial planners and accountants can advise their clients as to the potential tax savings for the year through making more charitable donations in the year.

For example, assume Amy and Bob go to their accountant for a tax planning meeting. Their accountant shows Amy and Bob a tax projection that puts them in the 33% tax bracket. Because Amy and Bob use itemized deductions (not the standard deduction), their accountant tells Amy and Bob that for every additional dollar they donate through a charitable contribution, they will save 33% in taxes because charitable contributions are tax deductible. If Amy and Bob decide to make an additional $10,000 charitable contribution by the end of 2015, then they will save $3,300 in taxes.

What Makes a Charitable Contribution a Tax Deduction

Charitable contributions are only deductible if you itemize your tax deductions. If you take a standard deduction on your tax return, then making a charitable donation will not affect your taxes.

For a charitable donation to be deductible, it must be made to a qualifying organization. You can never deduct a charitable gift made to an individual. For an organization to qualify, the IRS must consider it as a tax-exempt organization. Often, referred to as

“501(c)(3)” organizations because this is the section of the IRS Code that the definition of qualifying organizations is defined.

Before making a charitable donation, you should ask the charity about its tax status and whether it is a tax-exempt organization.

Most public charities are known as “50% charities,” which means that you can deduct up to 50% of your adjusted gross income through donations made to the charity (but not more). This is usually not an issue for most people, but it is something to be aware of.

Be sure to also keep confirmation of your charitable contribution on file. Many charities will automatically provide you with a letter confirming your tax-deductible donation – but if you don’t receive such proof it’s important to secure it before taking the deduction on your taxes. You want to be able to prove you made the donation in case you ever get audited. There are also particular forms you may need to fill out if you are claiming noncash contributions in excess of $500 like clothing or property.

Learn more about charitable deductions on the IRS website.

How to Determine Where to Donate

If you plan on making a charitable donation, you have many options from which to choose. Most people pick charities that have a personal connection to them, but if you don’t have a charity in mind, there are a couple of places you can look to get some ideas.

Guidestar is a website that provides information about IRS-registered non-profit organizations. Guidestar provides information regarding each non-profit’s mission, legitimacy, impact, reputation, finances, programs, transparency, governance, etc. Guidestar’s mission is to provide information so that you can make the best decision about which charity to give to.

Charity Navigator is another website to use if you’re looking for charities to give to. Charity Navigator calls itself the “nation’s largest and most-utilized evaluator of charities”. Charity Navigator uses a system to evaluate each charity’s Financial Health and their Accountability & Transparency and then gives the charity a rating. Charity Navigator is not affiliated with any charities and does not receive funding from them either – it prides itself on remaining objective to help the consumer.

If you are interested in making a charitable donation, using either Guidestar or Charity Navigator is a great place to start to know where to donate.

Top 5 Charitable Gift Recipients

People tend to donate most to the bigger charities that are very well known. For example, Forbes has a list of the top 50 charities that people donate to from this time last year. Topping the list were the following 5 charities:

  1. United Way
  2. Salvation Army
  3. Feeding America
  4. Task Force for Global Health
  5. American National Red Cross

 

These are all charities that I have heard of, and it’s likely that you have heard of, too. Using sites like Guidestar and Charity Navigator, you can determine if these big time charities are what you are looking for, or whether you would rather donate to a smaller charity.

 

For more information about the top charities that people donate to, see the full Forbes article here.

 

It’s Okay to Benefit from Giving

 

The holidays promote a season of giving. Charities are more eager than ever to receive gifts, and people are more generous than other times throughout the year.

 

This generosity may also have tax benefits for big donors, too. If you itemize your tax deductions on your tax return, then you have the opportunity to benefit from charitable donations because they are tax deductible. This only applies for qualifying charities, however, and it does not apply to gifts made to individuals. Do your research to determine where to give before you commit to donating any money. You want to make sure that you maximize your tax deductions and give to a charity that you truly believe in.

 

The end of the year is a time for giving, and you can benefit by shaving off your tax bill by participating.

The post How to Make Charitable Contributions That Count (and are Tax Deductible) appeared first on MagnifyMoney.

Modest Needs: Legitimate Help for Those in Need

Depressed man slumped on the desk with his hands holding credit card and currency

Getting a grant to help pay your bills from perfect strangers sounds too good to be true. Could having someone else handle your unexpected medical bill or car repair costs really be as easy as submitting an application that explains why, even though you’re employed and making money, you don’t have the cash to pay for your bill yourself? Could a charitable donation made online to a stranger really be put to its intended use and skimmed off the top by a bloated company?

With Modest Needs, it seems receiving help or donating to those in need is just that simple. The organization makes grants to people who genuinely need a helping hand during hard financial times. It ensures money from donors goes toward empowering those in need.

What Is Modest Needs?

Modest Needs, also known as modestneeds.org, is a nonprofit organization founded in 2002. The charity aims to provide financial assistance to low-income individuals and families, with the goal of preventing these people from slipping into poverty.

Everything began as the personal project of Nashville, Tennessee resident Keith Taylor. Taylor made his charitable work very personal; he saved part of his own salary each month to give away to those in need. After launching the site to connect with people who needed help – and people who wanted to financially contribute to others – the project snowballed.

Today, Modest Needs assists “low-income workers who are struggling to shoulder the burden of a short-term emergency expense.” The main type of assistance they provide is called a Self-Sufficiency Grant. These funds are given as grants, not loans, meaning the money does not need to be repaid by recipients.

Self-Sufficiency Grants are intended to help people who work and earn an income, but live just above the poverty level and are therefore unable to take advantage of any social assistance programs. These people may be just one paycheck away from financial disaster, and that’s where a grant can help.

Grants are generally made to people who are facing a financial emergency that they cannot afford, or who cannot afford to pay a monthly bill because of a legitimate extenuating circumstance.

How Grants Are Made

Modest Needs requires an application if you hope to receive one of their grants. Applicants must provide proof of income (to ensure they actually need financial assistance) and need to explain the crisis they’re facing that prompted them to ask for help. The organization advises setting aside a half hour to 45 minutes to complete the full application.

Some of the group’s other requirements include having at least one employed adult in the household. In addition, the main source of income for household must come from earnings via employment, child support payments, Veteran’s Benefits, or retirement income. The size of the grant depends on the applicant’s income.

Finally, applications that receive funding are required to write a thank you note to Modest Needs. Donors may opt in to receiving a copy of that note from applicants, as well.

By law, Modest Needs cannot grant funds for expenses including taxes, past-due child support, or fines and fees associated with civil or criminal offenses. As a matter of policy, the group will not provide grants for things like credit card debt or “luxury” goods or services.

If you’re interested in applying for a grant with Modest Needs, then you can find out more information here.

One Catch

Once an application goes live on the site, donors are then given the ability to vote on which grants should be funded. Donors get a vote by making a contribution to Modest Needs. A donor gets a vote (referred to as a point) for each dollar contributed. If you decided to donate $50, then you could put all 50 points towards one cause or spread them around. The points are reflected with a progress bar the following statement: “$ [total voted] has already been given to Modest Needs by donors who’ve recommended this application for funding.” 

However, there is actually one catch. A request needs to be fully funded in order for the recipient to get the money. Modest Needs does not provide partial payment on grants.

For example, Sally needs $1,200 to get her roof repaired but donors only received $800 by the due date, she would not receive the $800.

Information for Donors

Modest Needs is a registered 501(c)(3) (tax exempt) organization (Federal ID #47-0863430). Contribution you make, if you’re a U.S. donor, is tax deductible.

Note that when you do make a donation, you’re not directly and immediately funding the application you entered a dollar amount for. Your donation goes to Modest Needs itself, along with a recommendation of which application you want to see funded. The organization has the final say-so in what applicants receive grants.

Modest Needs requires an application be “fully funded” before executing any grants. If the application you recommended for funding does not reach 100%, your donation is returned to your account and you have the option to recommend (vote for) another applicant with the money you contributed.

Find more information out here.

Legitimate Help for Those in Need

Donors should be able to rest assured that they’re giving to legitimate causes when they fund an applicant on the platform, and donations are tax-deductible. There are no minimum contributions.

When it comes to the applicants on the website, Modest Needs screens individuals to make sure requests are real and legitimate. They also have staff that perform the necessary due diligence and research into each application. Grants are never made in cash; instead, payments are remitted directly to a vendor or creditor on behalf of the applicant.

Modest Needs is a registered nonprofit with the IRS and with the state of New York. Watchdog site Charity Navigator gives the organization a 3 out of 4 star rating and garnered high praise in reviews on GuideStar. The nonprofit also meets the standards set by Give.org.

You can view financial reports from 2005 to 2012, and you can request hardcopies of this information through the website as well. Finding information from frequently asked questions to mailing and email addresses is easy, and it seems the group strives for transparency.

Giving More than a Handout

With the proliferation of personal pleas for assistance on crowdfunding sites like GoFundMe, Modest Needs stands out as a refreshing alternative. Anyone can go on crowdfunding platforms and ask for handouts, with the onus of responsible giving placed on the general public. People asking for funding are under no obligation to use the cash in a particular way; there are no requirements for funded projects after they’ve received money.

Modest Needs, on the other hand, was started and designed as a charity and giving responsibly is ingrained in its stated missions. The organization specifically focuses on helping those who are working and just above poverty level – meaning they’re often making enough to disqualify them from government assistance programs, but making too little to handle a financial emergency.

Some current applications for grants include a Wisconsin woman who lives independently and maintains a job as a housekeeping and laundry attendant, and needs to repair her car* so she can continue commuting to work. Another is from an elderly vet who needs new tires on his car to drive safely through the Colorado winter, while a teacher in Texas needs help to pay an unexpected medical bill.

The requests range in size from large to small – one woman works two jobs to pay all her expenses, but cannot afford to repair her broken washing machine – but all are similar in the fact that they come from working individuals who can cover their regular monthly expenses, but live paycheck to paycheck and struggle to come up with funds for unexpected or emergency costs. You can browse other requests here.

Modest Needs uses donations to fund these types of grants so lower-income, employed individuals can continue on with their lives and avoid having one random, unexpected expense push them into a cycle of poverty that they cannot break.

*Kali Hawlk decided to personally donate to this cause after writing this review.

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