The basic necessities

Something about Gail Vaz-Oxlade’s blog post yesterday, Our Love Affair with Stuff, prompted me to share something that’s been on my mind for a while now.

I’ve been volunteering at a local AIDS Service Organization (ASO), interviewing clients (recipients of care) and writing their stories. All of the clients, who are PLHAs (people living with HIV/AIDS) have contracted the disease in different ways, shattering the myths that unfortunately still proliferate about how the virus is transmitted.  One of the clients I met had been raped. One was infected by her abusive, cheating husband. Others had been chronically homeless and addicted to crack cocaine, which put them in precarious positions. Others suffered terrible tragedies and loss, and temporarily lost the will to protect themselves.  

But the client who had the biggest impact on me goes by the name Alex*. Alex has suffered through a very traumatic upbringing, and he was diagnosed with HIV when he was just 17 years old.  Although he is only 31 - just a few years older than I - he looks about 10 or 15 years his senior.  He was homeless for years and addicted to drugs. But thanks to the ASO, his life has changed dramatically - primarily because he now has a roof over his head.  The Executive Director helped him find subsidized housing, which is something that has impacted every area of his life. The ASO has also provided him with some clothing, food, and counseling, and helped him to learn how to make his doctor’s appointments. (Meeting appointments is not something that comes naturally to someone who has lived on the street for many years.)  With the assistance of the ASO, Alex has been drug-free for over 1 year.  When I asked Alex if he is happy, he looked at me as though the answer was obvious:

“Well I have a roof over my head and food in my belly, so hell yeah, I’m happy!”

What a difference the basic necessities in life can make.

*name has been changed.

Give monthly & save

Now that the holiday season has passed, it’s easy to forget about others and focus on our own troubles.  But with the economic recession in full swing, it’s important that we make charitable giving a priority.

A great way to do this is by making monthly donations instead of giving a lump sum at year end.  Giving this way has multiple benefits for you and the organization.  

Here are the top six reasons to give monthly donations.

1. It helps the charity to budget.  Imagine you are drafting your own budget: would it be easier to have a monthly salary, or simply hope for a bonus in December?

2. It is easier for most of us to part with $10 or $20 every month than give a lump sum of $120 or $240 at one time. 

3. If you don’t give monthly, it’s easy to forget to do it completely. If you don’t give monthly but have a philanthropic goal in mind, you will need to put the month away in a savings account each month or simply cross your fingers and hope you will have something left over.  The reality is, you might dip in to those savings or simply forget to give.  Monthly giving will ensure you will reach your charitable goals.

4. You can easily set-up automatic payments so that you don’t need to think about it.

5. You can cancel any time, so if you just can’t afford to give anymore, a quick email is all it takes.

And my personal favourite…

6. Pay less tax throughout the year! On Gail Vaz-Oxlade’s post, “Tax refunds are not your friends” she explains that by filling out a government form (Form T1213) and giving it to your employer, you can reduce the amount of income tax off your paycheque every month, instead of waiting all year for your refund.  Squawkfox gives step-by-step instructions on how to use this form (it’s easy) and also shows just how fast those savings add up when you throw compound interest into the mix. So put those savings in a high yield interest account or add it to your TFSA and you’ll be earning interest on that refund all year round. 

Do you give to charity monthly? Why or why not?

The Saver Queen Shopping Challenge: And the winner is…

I’d like to thank everyone who participated in the Saver Queen Shopping Challenge to support their local food bank.  Your generosity during this time of hardship for many and despite your own need for frugality was truly inspiring.

I’m sorry that it took me so long to announce the results. However I am pleased to announce that after a random draw, Catherine is the winner!

You will receive a $10 gift card for Tim Hortons to give yourself a little winter pick-me-up.  Please email me with your mailing addresses and I will ship it out to you right away.

Thank you for participating and inspiring others with your goodwill this season.

Saver Queen Shopping Challenge - update

There is still time to join Saver Queen Shopping Challenge to donate food and personal items to your local food bank! Deadline for participation is December 24, so there is still time to enter to win a prize.

I filled two big boxes with food and I will be dropping them off tomorrow at the fire station, which is a dedicated drop-off zone for the Daily Bread Food bank.

If you want to participate, simply let me know what you bought, or take a picture and send it to me, or link back with a blog post that shows what you bought!

I’ve heard this year has been particularly tough on the food banks.  So let’s be as generous as possible!  Remember you can contribute more by combining great sales with coupons!

So far Kate, Nancy, Annie, Money Minder and Erran have expressed interest in participating.  Annie has already made her donation.  For everyone else, please update me with your progress by December 24th in order to be eligible for the draw!

Giving back wisely

With the holidays upon us and tax-season looming, you’re probably considering which charities will top your yearly donation list. 

I have posted before about cashless alternatives to philanthropy. (I love those kitten blankets!) But unrestricted cash donations are also mutually beneficial gifts; cash is desperately needed by nonprofit organizations, because it allows those who run the organization to direct the funds where they are most needed. 

There are some terrific vehicles out there for giving beyond straight donations.  Here are the most popular:

Stocks/securities: You can transfer stocks or securities to the organization.  Thanks to changes to tax laws in 2006, the charity pays ZERO capital gains and you get a tax-receipt for the full-amount of the gift!  

Residual bequests: A residual bequest is another excellent option for those who are living on a fixed income or tight budget. Even if you do not have much cash, you may have assets which have some value, such as your home. Through a residual bequest, (a percentage in your will) you can guarantee that you will look after your loved ones AND make a difference.  For example, you can request that the remaining 10% of funds in your will, after your family has been given their share, be distributed to your favourite charity.  You’re simultaneously alleviating some of the tax burden on your loved ones by reducing or even eliminating the capital gains they will have to pay.

Charitable giving helps you to reduce the tax you pay at the end of the year, but that’s not usually why most people give.  Instead, making a donation is about feeling good about giving back, knowing that you’re making a difference in the world and contributing to a better future.  It’s an investment in a better world. 

Most donors are concerned about administrative and fundraising costs.  And when you’re on a tight budget, with little to spare, you want to make sure that your money is going to the right place. Here are some questions to ask when comparing charities:

1. “Can I see your financial pie?” - ask to see how the funds are distributed but don’t stop there - many charities hide administrative and fundraising costs under misleading categories.

2. “What are all the costs included under each section of this pie?” In particular, “which staff salaries are listed under administration and fundraising and which are not?” At the very least, the Executive Director and staff directly involved in fundraising will be named as a fundraising cost.  Others, like those in communications, may not be. 

3.“What activities does the organization included under fundraising?” Make sure your values align with their spending.

“What is the return on your investment on each of your fundraising expenses (like direct mail and special events) and what portion of your fundraising budget is spent on each of these activities?” - This will show you what portion of your funds are spent on heavy income generating activities and what portion are spent on less fruitful ones.  This will help you identify their efficiency.  

Note: A good charity should not have admin/fundraising costs higher than around 35%.  

These questions are not to intimidate you or to suggest that most charities are mismanaged, rather it is to empower you to seek out and reach out to those nonprofits you really trust.  By investing in a charity you truly believe in, you will end up with more than a tax-receipt - you will have faith that your money is truly making a difference.

Cashless Philanthropy(Charitable Series, Pt.1)

On Gail Vaz-Oxlade’s blog today, she posted a very interesting article on tithing, called “Giving a Part of What You Have.” In the article, Gail argues that even if tithing is important to your religious beliefs, you should put it aside temporarily if you are drowning in debt.  Gail’s point is that when you make charitable contributions on credit, the money is not really yours to give.  Instead, she encourages financial responsibility to begin with.  If giving is important to you, make sacrifices; don’t just rely on credit.

To give with real spirit, as opposed to by rote or by rule, is to take what you HAVE and give a little to someone else. It is about prioritizing the needs of others over our own wants. It requires thinking about how you will spend your money so that you can also afford to give some of that money in support of your beliefs.

If you can’t afford to live within your means, you aren’t demonstrating responsible living, and you don’t have to right to salve your conscience by tithing. The fact is, only solvent people have the right to tithe, and if you don’t have your crap together yet, you shouldn’t be doing it.

In response, I thought I would post a few suggestions of how to continue to give philanthropically while on a budget, through cashless gifts.  If you are on a strict debt diet but still want to give back, here are some suggestions on how to make an impact.

1. Volunteer - but be creative! You may have more skills than you realize! Charities will appreciate it if you go to them with something specific in mind, especially if it requires minimal supervision on their part. For example, my sister and I once put together an original workshop for an at-risk youth group, encouraging the children to dream of a world without drugs, by building a collage.  Using symbolic representation through words and pictures in old cut-up magazines, the kids put together an outstanding, inspirational piece of art.  Volunteering does double duty - it helps you remember what you have.

2. Give away your “stuff.”  Do you own anything that you’re no longer using but might be useful to someone else? You can give to a thrift store, but you can also directly contact an organization you wish to serve, such as The Redwood,  St.Christopher House or St. Joseph’s Residence, where your item can go directly towards helping someone. 

Kitten blankets for the THS

3. Give homemade gifts. For example, some women recently knitted warm blankets for cats at the Toronto Humane Society. If your gift has a cash value - for example, you are a professional quilter or artist - then you may get a tax-receipt for the cash value of your “in kind” gift.

4. Make a Planned Gift (such as a Residual Gift in your Will). This might seem irrelevant and too far away to have an impact, but it will give you the time to accumulate assets and it will make a big difference to the charity when the gift is finally made. These gifts are the lifeblood of many charities.  Most people don’t realize that even if they are liquid poor, they may have assets that can make a big difference to a charity after they pass away.  In my line of work, I see the impact of these gifts every single day.

5. Life insurance and Securities - two other tax-efficient ways of giving that don’t delete your cash flow.  I will post more on these options soon in a post dedicated to tax-efficient giving in my Charitable Series.