Wed, October 15, 2008
Blog Action Day 2008 - Helping Alleviate Poverty
Today, the FFS Blog is participating in Blog Action Day 2008. Along with over eight thousand 9,700 other bloggers, my topic today is poverty.
Poverty might seem a bit off-topic for a blog that’s primarily about financial planning issues, but it’s actually quite relevant to planning for charitable giving. One goal that people often have when they think about their finances is the ability to support causes that interest them.
I have to confess that when I think of poverty, I tend to think of foreign countries. It’s true, of course, that the majority of Americans have more resources than most of the people in the rest of the world; as this template at globalrichlist.com shows, a family of four living at the 2007 US poverty threshold ($21,700) still has a higher income than 90% of the people on the planet.
But poverty is not just problem outside the US. Roughly 12 to 15% of our population lives below the poverty line, where daily life is a struggle. Even in a prosperous city like Cambridge, MA, about 12% of the population (2000 census) lives in poverty, and approximately half of them have incomes that are less than 50% of the poverty threshold. 150,000 people in Massachusetts qualified for heating fuel assistance last year; more are expected to fall short of the funds needed to heat their homes this winter as the price of heating oil has risen dramatically.
Worldwide, poverty has many faces and a myriad of root causes. It can arise as a consequence of natural disasters, crop failures, corrupt rulers, disease, or other circumstances. In my previous career, if someone proposed a project with an unreasonably broad scope, it was quickly derided by labeling it a “world hunger” project. Obviously, it would be impossible in one fell swoop to address all the problems that cause hunger – much less poverty – in the world. However, there are a number of ways in which individuals can help reduce the prevalence and severity of poverty. I’d like to highlight a few of the agencies that exist to help do this, and then mention some effective methods for supporting their work financially.
This list of agencies barely scratches the surface of the organizations that are out there; however, it is illustrative of the great variety of opportunities that exist for individuals to reach out in kindness to others who are struggling to live. The current global economic downturn, as painful as its effects are in developed countries, is likely to bear more even painfully on the poorest of the poor here and abroad.
Some of the Agencies Helping to Relieve Poverty in the US
Good News Garage
No, this isn’t those guys - this is a New-England based group that accepts donated cars with the goal of repairing them and making them available to low-income households who need transportation but can’t afford to buy a car. Their site is set up to facilitate online vehicle donations.
The Boston Foundation
The Boston Foundation is a community foundation serving Greater Boston. Its grants address challenges in health and human services, education, community safety, and workforce development, among other areas. The foundation serves as a resource for a wide range of nonprofits in the Boston area.
Place of Promise
Place of Promise is a Christian non-profit that presently maintains a residential program in Lowell, MA for individuals who suffer from a range of challenges, including substance abuse, mental illness, HIV-AIDS, chronic disease, and/or homelessness. Participants receive advocacy and clinical support for their needs.
Meals on Wheels
Meals on Wheels focuses on addressing hunger among senior citizens across America. Well into her eighties, my mother served as a volunteer with Meals on Wheels, packaging meals for other elderly people.
Feeding America (formerly America’s Second Harvest)
Feeding America supports a nationwide network of over 200 member food banks and rescue organizations. In 2004, the estimated household income of the families served by its network was $11,210.
Eight Days of Hope
Eight Days of Hope began as a one-time grass-roots relief effort to help rebuild homes damaged by Hurricane Katrina. Since that time, the organization that has sprung up from that first effort has repaired or rebuilt almost 900 homes in the Gulf; the group is currently organizing similar help for flood-stricken households in Iowa.
Some of the Agencies Helping to Relieve Poverty Worldwide
Heifer International
Heifer International’s best-know programs involve providing households in the developing world with livestock and plants to help them become self-sufficient. It also provides training programs in sustainable development.
World Vision
Working on six continents, World Vision is a Christian relief and development organization providing relief services, community development, and advocacy for the poor in nearly 100 nations.
Geek Corps
Geek Corps seeks to improve the lives of people in developing countries by helping economically underdeveloped nations hasten the development of their computer infrastructure.
Doctors Without Borders/Médecins Sans Frontières
Known in the US under the name Doctors Without Borders, Médecins Sans Frontières received the Nobel Peace prize in 1999 for its work providing medical assistance to war-torn areas and developing countries suffering from epidemics.
Compassion International
Compassion International is a Christian organization devoted to assisting children living in poverty in twenty-four countries.
Strategic Ways to Help
An obvious way to assist the work of these agencies, and others like them, is to volunteer. Another is to provide financial support. Poverty relief organizations are normally set up as tax-deductible charities, so monetary donations are tax-deductible. If you’re considering giving money to an organization that you don’t know much about, a useful resource is through GuideStar, a web-base service that allows you to check the legitimacy of an organization, confirm that gifts to it qualify for tax deductibility, and learn about its mission, programs, and finances.
What are some of the most efficient ways to make charitable gifts?
“Bunching" charitable gifts
If your income varies significantly from one year to the next, you may find yourself in a higher tax bracket in one year and a lower one in the next. In such situations, it’s often to your advantage to lump your giving into the higher tax-bracket year in order to maximize the value of your charitable deduction.
Tax-Free Charitable IRA Rollovers
The recently-passed Emergency Economic Stabilization Act provides an extension of the opportunity for IRA owners 70 1/2 or older to make charitable distributions from their IRA to many charitable organizations count as their required minimum distribution. This enables a retiree to reduce his or her taxable income by making a charitable gift.
Donations of Appreciated Stock
Stock investments that have been held for many years may have accumulated significant unrealized capital gains, even after recent market downturns. A donor who is ready to sell the stock would pay capital gains tax on the sale of the stock, but this can be avoided by giving the stock directly to a qualified charitable organization. Not only does the gain escape taxation, but within certain limitations related to the donor’s income and the type of charity, the full value of the donated stock may be tax-deductible.
Donor-Advised Funds
Most of the major mutual fund families provide access to donor-advised funds. These are effectively charitable foundations which can maintain separate accounts for donors, who are permitted to designate gifts to qualified charities from their donated funds. One useful aspect of these funds is that the tax deduction for contributions made is given in the year that a contribution is made to the fund account, but gifts to charities can be spread over future years. This provides another opportunity to “bunch” several years’ charitable contributions into a single high-income year. Donor-advised funds can usually accept gifts of appreciated stocks or other securities, as well as cash.
Learn More About Poverty
In cooperation with Blog Action Day, there are bloggers across the globe blogging, podcasting, and videocasting today about poverty from a wide range of perspectives. Please use the badge link to find some of the other voices participating in today’s discussion; you may discover a new opportunity to relieve poverty in your town, or halfway around the world.