Eric's Charity Page

Welcome to Eric's Charity page.

In order to find out about prospective charities that you might wish to support, consult the following "watchdog" organizations: the American Institute of Philanthropy (AIP), the Charity Navigator, and the Philanthropic Advisory Service of the Council of Better Business Bureaus (CBBB).

My favorite charities these days (i.e., those that I most regularly support) are:

• The Boy Scouts of America.  As an extremely involved volunteer leader, I can attest to the good work this organization has consistently done over the past century.  At present, I serve as an Assistant Scoutmaster of Holland, MI Troop 147, and as Assistant Boy Scout Roundtable Commissioner of Lakeshore District in the Gerald R. Ford Council.
   

• The American Red Cross (I donate blood whenever I can -- As of March, 2008, I had donated over 23 gallons over my lifetime) and I used to teach lifesaving classes as a volunteer instructor ('91-'95)
  
  Money magazine has ranked the American Red Cross as the "charity of the year." Following a comprehensive analysis of 100 leading charities, the magazine's November 1996 issue lists Red Cross as the No. 1 charity on the basis of how efficiently the organization spent its income over a three-year period -- 1993, 1994, and 1995.
   

• The Tulip City Aquatic Club.  This is an age-group swim team in Holland, MI.  I donate several dozen hours each year working in a concession-stand to raise funds for this program.
   

• Black River Public School.  This is a K-12 charter school in Holland, MI.  I donate about 80 hours annually opening doors for children in the morning "car lines".  I also have been working the scoreboard and being scorekeeper at varsity and JV basketball games, as well as occasionally manning the admissions table at various events.
   

• Berea College in Berea, Kentucky.  This college charges zero tuition and restricts enrollment to low income students.  It seems like a spectacularly worthy charity.
   

• The Bill and Melinda Gates Foundation.  You can have your charitable dollars spent as well as those of two of the world's wealthiest people: Bill Gates and Warren Buffet.  The foundation spends over a billion dollars a year on world-wide projects.  Among their current priorities are improving health and reducing extreme poverty in the developing world and improving high school education in the U.S.  Here's info on how to donate to this foundation.
   

• The SETI@Home project. SETI (Search for ExtraTerrestrial Intelligence) is an interesting project. No, I'm not interested in this because I believe in alien abductions or anything bizarre like that. I'm interested in the project because of the uniqueness of their approach.
  
  Just as depicted in the movie Contact, starring Jodie Foster, the group is using an enormous radio telescope (the largest on earth) to try to "hear" radio signals that might come from other worlds. The radio telescope is located at the Arecibo Radio Observatory in Puerto Rico. They record massive amounts of data on an ongoing basis. This data requires phenomenally massive amounts of computing power in order to sufficiently analyze it (i.e., for radio signals that may come from extraterrestrial civilizations).
  
  In order to access this enormous required computing power cost-effectively, the group (headquartered at the University of California at Berkeley) is soliciting volunteers to provide their own computing resources when not otherwise being used. As of late December, 1999, over 1.5 million people (including me) in 224 countries have used their own computers (e.g., PCs) to donate over 125,000 CPU-years of computing power to the project.
  
  Here's how it works: you download the analysis program from the SETI@Home web site and install it on your computer. It works as a screen saver: it only runs when you aren't actually using your computer -- once you start using your computer, it turns itself off until the screen saver is again activated. Once it is done analyzing a set of data (which takes a few hours, ultimately depending on how fast your computer is), the program prompts you to connect to the internet so that it can transmit the results of computation and get more data for analysis. I admire the elegance of the approach to solving the apparently intractability of this enormous computational project.
   

• The Duke University Fuqua School of Business (I felt an obligation to repay the scholarship I received in 1990-92)
   

• The Federal Government Bureau of the Debt (you can make deductible contributions to the Treasury that are flagged for reducing the national debt)
   

• There are various organizations which I support by being an aggressive advocate for their central causes. Among them are:
  
  The National Marrow Donor Program
  The United Network for Organ Sharing
  The Concord Coalition

Donor-Advised Funds.

• If you make contributions in the form of cash (i.e., by writing a check), it is very easy, and you get the benefit of the charitable gift tax-deduction.
   

• However, if instead you donate the same amount of an appreciated security, not only do you get the same tax-deduction benefit, but you also get the benefit of not having to pay the capital gains taxes on the appreciation (and the charity doesn't have to either).
   

• So it is almost always better to donate appreciated securities than cash. HOWEVER, it is kind of administratively burdensome to donate appreciated securities. In order to do this, the charity of your choice must have a brokerage account. You must get information about their brokerage account. Then you must direct your brokerage account to transfer securities to their brokerage account. It's definitely a hassle.
   

• The solution to the dilemma of item 3 above is the "donor-advised fund." Imagine, if you will, that you could donate appreciated securities to your own personal charitable foundation. Because the charitable foundation is itself a charity, you'd immediately get the benefit of tax-deductions. Then, whenever you felt like it, you would issue a check directly from the foundation to your favorite charity.
   

• This is basically how a donor-advised fund works. You donate appreciated securities to the donor-advised fund. Because it is itself a charity, you immediately get the tax-deduction for that amount. You direct the donor-advised fund how to invest the assets. Then, whenever you feel like it, you direct the donor-advised fund to send a check to your favorite charity.
   

• The elegant thing about the donor-advised fund is that you only have to do the hard administrative burden thing once (or rather, once to set up the account, then you'd donate more appreciated securities whenever the balance gets too low). Further, you immediately get the full benefit (to the extent otherwise allowed by tax laws) of the entire charitable gift, rather than having to wait for it to be dealt out to your favorite charities.
   

• There are many of these donor-advised funds out there, but only two worth mentioning: Vanguard's and Fidelity's.
  
  Vanguard's has the lowest fees. They have a minimum of $25,000 for the initial donation and $500 for each distribution check. Here's more info:
  http://www.vanguardcharitable.org/
  
  Fidelity's fees are almost as low. They have a minimum of $5,000 for the initial donation. Here's more info:
  www.charitablegift.org
  
  Some of our clients like the lower level of the initial donation at Fidelity. That shouldn't be an issue for you. We recommend Vanguard's for you. We have many clients using it and they are all very happy with it.
   

• So -- we recommend that you set up a Donor-Advised Fund at Vanguard. You'll have to decide how much to initially fund it with -- at least $25,000. The bigger the amount you donate, the less often you'll have to go through the administrative effort to do so again.
   

• When the time comes to fund it, you need to look closely at your taxable holdings. You basically want to list all your taxable holdings in order from the most appreciated (by percent) to the least appreciated. You'd donate stuff from the top of the list until you've donated as much as you wish to donate at that moment. We might also consider some other issues (like a desire to eliminate undesirable investments), but the capital gains tax avoidance issue would be primary.
   

• So when you set up the donor-advised fund, you would specify yourself as the "advisor" to the fund (i.e., you would be the one advising the donor-advised fund when and where to make distributions). You might specify your children as successor advisors. This fund could last into perpetuity if you wanted it to.
  
  It might be fun to get your kids involved in helping pick the charities that you are going to help (i.e., subject to parental veto). Perhaps giving them responsibility for deciding on the charity to receive perhaps $1k/yr/child, or something like that.
  
  8) While the money was at the donor-advised fund, it would be invested in one of very few investing choices (i.e., we think Vanguard gives you five or six choices). There's no reason for us to be involved in managing this money.
  
  Note that our giving you this advice makes us less wealthy (i.e., because it takes away assets that we would otherwise be managing). We just want to point out that we really want what's best for you. Occasionally, there are VERY modest conflicts of interest we come across (like here), but we think we are pretty good about not being swayed by the conflict of interest.

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This page last updated 03/12/08

© 1998 - 2008 Eric E. Haas