THE CHARITABLE CHOICE: A Philanthropist’s Guide to Holiday Giving

’Tis the season for giving, and in the spirit of the holidays, many people are looking beyond their shopping lists for ways to impact the lives of others. Opportunities abound this time of year, with cheerful representatives of various social causes popping up in shopping malls, vying for their piece of the holiday savings. Some of us give freely, optimistically placing our money into the hands of those we believe will diligently spend it as the cause requires. But there are those of us who eye requests for donations with suspicion—and with good reason. In our Internet age, we can easily be swayed with moving stories on well-designed websites, and it can be difficult to determine which organizations use our hard-earned contributions most effectively. Fear not, there are measures you can take before hastily pushing that ten-dollar bill into the bell ringer’s red bucket and walking away wondering what difference it will ultimately make.

Warm Fuzzies For Sale

People donate for a variety of reasons. For many of us, those reasons are primarily emotional, but they can also be politically or financially driven. As donors, we are often more likely to give when we feel a personal connection to a cause. We contribute to organizations trying to cure diseases that affect our loved ones, or we support social programs that address needs we have either witnessed or experienced. Research indicates that we are more likely to donate to a single, identifiable person in need than to a group of people with exactly the same requirements—it’s the reason that personal testimonies of success or advertisements focusing on one specific child in the Third World are so often used to drive fundraising efforts.

Registered charities enjoy financial benefits as well. They are free from paying income tax and can provide tax-deductible receipts to donors, who then qualify for federal and provincial tax credits at the end of the year. Many donors enjoy the prestige and recognition that often accompanies the act, yet even the most altruistic of us are prone to the “warm-glow” effect when we’ve shared a portion of our wealth. The warm-glow theory suggests that we experience a discernible sensation of calm, joy or energy when we help others. It’s the same sensation that many of us get when we share an online petition or social movement, an act that has some worried about the role of social media in the life of the modern philanthropist.

#Slacktivist

Slacktivism is a term coined sometime in the 90s that describes the type of lax activism prevalent in our modern age. It is defined as actions performed via the Internet in support of a political or social cause but regarded as requiring little time or involvement. Signing online petitions, tweeting supportive comments and hashtagging phrases (e.g. #BringBackOurGirls) all are examples of the ubiquitous act, which is criticized for rewarding our most narcissist tendencies without translating into real-world benefits. Some critics suggest that slacktivism hinders true activism by rewarding us for doing nothing. We feel good about “participating” in raising awareness about a cause and are, therefore, exempt from contributing any further resources.

The critics make a good point but dismiss the benefits of the slacktivist movement. Slacktivism, however lackadaisical, plays an important role in increasing social awareness. Recent research indicates that people are actually more likely to donate to a cause if they’ve signed an online petition. Some viral movements, such as the ALS ice bucket challenge, have also been extremely successful. Though it was criticized for a number of reasons, the challenge raised over one hundred million dollars in a matter of weeks, enabling the ALS foundation to triple the amount it regularly spends on research. Slacktivism supporters and opponents alike do agree on one thing: in order for those online -petitions and Facebook support groups to be truly effective, they need to be paired with real social action. So, the next time you’re moved to share a cause on your profile page, consider also volunteering your time, writing a letter to an appropriate organizational representative or donating to an associated charity. Even the smallest gesture can ultimately make your public show of support much more meaningful.

The Donor Dilemma

There are times when we are successfully moved to support specific causes and yet remain unsure about how to proceed. Our initial resolve can quickly become overshadowed by our skepticism; we wonder how the contribution will be distributed and question who the true beneficiaries will be. Complicating matters, anyone with basic computer skills can register a website and ask for credit card information. In the wake of the last decade’s major natural disasters—Hurricane Katrina, the Haiti earthquake, Japan’s tsunami—thousands of fraudulent charities emerged online. With photos of the disasters spread across their pages and plausible names like www.japanrelieffund.org, the websites succeeded in duping many well-meaning citizens of their donation dollars, particularly since they often appeared to link to established sites like that of the Red Cross.

This fear of charity fraud has some people seeking out evaluation websites like www.charitynavigator.org. While these sites can provide some useful information, experts warn that they may not accurately portray the organizations being reviewed. Donors generally believe that as much money as possible should be placed towards direct services; therefore, many evaluation websites award higher ratings for non-profits that have lower organizational costs, like those going towards overhead, advertising, fundraising efforts and employee salaries. The approach is a flawed one—research indicates that organizations who invest in developing solid infrastructure are more effective than those who scrimp on these costs. Likewise, organizations that spend enough on advertising and marketing are able to attract more donations to serve their causes. Those who pay their executives higher salaries are better able to retain effective leaders. In his renowned Ted Talk, humanitarian activist and entrepreneur Dan Pallotta challenges the way people view non-profits. “We have a visceral reaction to the idea that anyone would make very much money helping other people,” says Pallotta.
“You want to make fifty million dollars selling violent video games to kids? Go for it. You want to make half a million dollars trying to cure kids of malaria and you’re considered a parasite.” This isn’t to say that we should never question non-profits who offer bloated employee salaries, but rather that we as potential donors should consider a variety of factors before making our own proactive decision.

Do Your Homework

A better method for determining the authenticity and efficiency of an organization may be that of good old-fashioned research. Potential donors should be wary of any charity that pops up immediately after a disaster, particularly if it is trying to solicit funds through email or telemarketers. The most trustworthy non-profits will have a documented history and verifiable financial information. Take the St. Albert Food Bank, for example. In the 31 years since the organization was initiated, it has flourished from a service providing meals to needy locals into what is now referred to as a “community village.” The organization offers over a dozen programs to nearly 700 St. Albert families. Executive Director Suzan Krecsy explains how the role of the food bank in St. Albert has changed in recent years. “It’s not just giving out food anymore—that’s the crisis intervention part of things, then we roll it into prevention programming and getting people back on their feet.” The goal, she explains, is to address the underlying root causes that are bringing people to the food bank in the first place. Newcomers have access to a social worker through the community liaison program. There is a community kitchen, a financial literacy program and healing and wellness services. “We don’t do things for people; we do them with people,” says Krecsy, “We’re giving them the tools that they can use when they leave here so that they can be as independent as possible. When your dollar comes into this organization, what it can do is phenomenal, and you can see it.”

She isn’t exaggerating. The food bank stresses the importance of accountability and transparency. Krecsy encourages people to go to the Canada Revenue Agency website and look up details about the organization’s spending. Fundraising estimates and costs are publicly posted on the company website. Measurable results are assessed to determine the effectiveness of the programs being offered, and there are people in place who are available to answer questions about the public services provided. These are all examples of indicators that donors can look for when researching responsible organizations.

Another flexible option for donors is to contribute through a community foundation. Organizations like the St. Albert Community Foundation manage endowment funds, where the principal amount is invested and a percentage of the capital is returned through grants to locally registered charities every year. Donors can contribute to a general fund, or they can support more specific interests as they prefer. President Kent Davidson explains the unique benefits of the Foundation: “Community foundations are a vehicle through which citizens can contribute to their community in a perpetual way,” he says. “The tag line of the Foundation is ‘…for generations to come,’ and the Foundation is set up so that it’s very unlikely that the principal pool will ever become exhausted.” Since the invested capital continues to grow each year, charities are able to benefit from a fund time and time again. In this way, donors are able to leave a legacy behind for the communities that have served them so well throughout their lives. Some leave contributions in their wills, while others start funds as part of their tax-planning process.

As is the case with registered charities and other non-profit organizations, foundations can be left cash, securities, bonds, real estate trusts or any other transferable asset. An additional benefit to these types of foundations is the availability of experts who examine and assess the specific needs of the local population. Their input helps direct grants based on the changes they observe from year to year, which helps ensure relevant and meaningful progress as communities grow.

A Call to Action

Both Krecsy and Davidson are quick to recognize the benevolence of St. Albert residents, those many donors who are personally invested in helping others around them succeed. While they are impressed by the ongoing philanthropic activities of local citizens, they are also privy to the types of services that continue to be sought after by other members of the public. “There are many, many needs in our community,” says Davidson, “many (organizations) require our direct, ongoing support on a year-to-year basis.” This includes non-profits like the food bank, which distributes 32,000 pounds of food every month to local families, as well as any one of the many other charitable initiatives in the area. It’s important to remember that these needs remain consistent throughout the calendar year. “Everyone remembers not for profits at Christmas time,” says Krecsy, “but over the summer donations can really take a nose dive.” Similarly, certain causes are often favoured over others: children’s hospitals take the lead for charitable donations, while seniors’ services often remain underfunded. As responsible donors, we can speak with the members of our community, establish relationships with organizations we want to support and seek out those areas where we can affect the most change. We can donate not only our money but also our time or other goods and services. This holiday season, whatever your charitable inclinations may be, take a closer look around your community. Chances are, you’ll find an outlet that’s a perfect fit. t8n

Did You Know?

The Canada Revenue Agency (CRA) website has a charitable donation tax calculator you can use to determine eligible tax credits at the end of the year. Simply enter your province and the total value of charitable donations made, and your provincial and federal tax credits are determined. To use the calculator, visit www.cra-arc.gc.ca/chrts-gvng/dnrs/svngs/clmng1b2-eng.html

Overhead Defined

Overhead includes all of the expenses required for the continued operation of a business. Rent, utilities, telephones, office supplies, computers, websites and furnishings are included in over-head. Administrative costs include employee salaries, human resources, accounting tools, information technology and training.

Image © yossarian6 / Dollar Photo Club