Wednesday, November 29, 2006

Charitable Gift Fund

I've been mulling over the idea of opening up a charitable gift fund with Fidelity. It's basically like setting up a mini foundation. Here's a summary of how the giving account works from Fidelity's website:

- Contributions to the Gift Fund are eligible for current-year tax deductions, and are then available to recommend grants now, or in the future. And, your contributions have the opportunity to grow and help make a greater charitable impact through the Gift Fund's investment pools, which benefit from access to a fund universe of approximately 2,000 Fidelity and non-Fidelity mutual funds.
- Make an irrevocable contribution of $5,000 or more in cash (by check or wire), securities, or other property and establish a Giving Account. Build the balance by making additional contributions of $1,000 or more at any time.
- Any IRS-qualified public charity is eligible – those you've supported for years, or new ones you discover using our research tools. Recommend grants of $100 or more online, via phone or fax, or by mail – on the timetable that works best for you and the causes you care about.
- Donate securities that provide the most tax benefit. Eliminate capital gains tax on gifts of long-term appreciated securities.

Last year, I gave away approximately 12% of my gross income to charitable donations. And I plan to do the same this year. But as I've mentioned in the past, I'm planning on quitting my day job next spring and hopefully, going back to school full time in the fall. There's a remote possibility that I might be able to work part time for my current employer, on a contract basis. But it's kind of just talk at this point. In any event, my income will drop substantially next year. And I won't have as much income in 2007 to offset any deductions. So, it would make sense to set up a charitable gift fund and have the tax advantages hit this year. Also, I know myself pretty well. And the temptation to hoard my wealth will become greater as my income drops. Since any contributions that I make to the charitable gift fund are irrevocable, it'll be a good way of helping me maintain the discipline of giving, even during the years when I'm still in school.

The only down side that I can see is that Fidelity charges a $100 fee each year to maintain the account. But I'm wondering if I'm missing something here?

Does anyone out there have any direct experience with a charitable gift fund?

Wednesday, November 22, 2006

Perils of Office Gift Giving

To be honest, I'm not a big fan of office gift giving. There are just way too many pitfalls involved. Several years ago, my co-worker and I spent $100 on a gift for an admin who only supported us one day a week. It didn't go over well. She was visibly upset with us. Perhaps because we spent $200 on a gift for the other admin who supported us the other four days of the week, or perhaps because she bought gifts for us, and figured that we should have spent substantially more than she had. After that particular experience, I just threw up my hands in frustration. I shouldn't have listened to my co-worker, who'd been working at the company much longer than I had. Since then, I've basically erred on the side of being overly generous.

But last night, I had to rethink the issue yet again. On my way out the door, I stopped at my boss' office for our semi-regular, end of day chat. We talked about Thanksgiving traditions and holiday parties and other random topics of conversation. And then she kind of caught me off guard with her next question. 'What do you think about giving donations to charitable organizations in each individual team member's name?'

My boss is a great manager as well as a great person. She gives credit where credit is due and really goes to bat for her people. She's also one of the few managers that I know who works a lot harder than the people who report to her. In short, she's part of a dying breed. Every year, around the holidays, she gives each of her staff of 20 a holiday gift, as a sign of appreciation and thanks. I'm guessing that she spends anywhere from $35-$50 per gift. But as my boss would say, 'no good deed goes unpunished.' Two years ago, she inherited another team of employees in a different geographic location. Apparently, those new employees were upset when they got gifts from her last year because they felt pressured to reciprocate in kind. She of course, had minimal expectations, maybe a token gift at most. Long story short, she eventually heard some of the grumbling through the grapevine, and was naturally a bit upset and frustrated that her act of kindness was creating dissension amongst the ranks. So, after talking things over with her admin, she's thinking of taking a different approach this year. Namely, a gift to a local charity in each person's name. But, I suspect that the folks who were upset last year about the gifts are going to be just as upset this year about the donations. So, if you were in my boss' situation, what would you do? Stop giving gifts altogether?

Anyway, it just goes to show that sometimes you're damned if you do and damned if you don't. At my old job, if you didn't give a generous gift to your direct reports, you'd be roundly chastised for being stingy.

Thursday, November 16, 2006

7 Deadly Sins

Maybe it's because of the upcoming holidays and the numerous articles and ads touting the must-have gifts of the season. But I've been thinking a lot about the 7 deadly sins lately, specifically greed and envy.

This past week, I was dropping off a friend at her house, and I saw another friend pull up in a Lexus SUV. 'Hey! Did Leon get a new car?' Oh, he got into an accident or something like that. So his parents gave him the Lexus. 'Must be nice!' I muttered under my breath. Just to give you some context, Leon's parents own several businesses, and they're quite wealthy. Several years ago, Leon dropped out of med school to go 'find himself.' I think he's still searching, but for now, he now works for a small company as a financial analyst. The car that he used to drive was a late model Audi A4 - a gift from his parents, naturally.

I don't have a problem with self-made millionaires. This is America, after all. But I do confess that I tend to resent people who were born with the proverbial silver spoon in their mouths. I'm grateful that my parents gave me a college education and taught me to be self-reliant and fiscally responsible. But there's an underlying expectation that I'll be supporting them financially during their golden years. Guys like Leon can barely support themselves, let alone their parents. And they tend to coast through life because they have the expectation that they'll inherit their parents' wealth someday. So, at times, his cavalier attitude towards money grates on my nerves.

Fast forward a few days to lunch with a coworker. We're going through the performance review cycle right now. So salary increases and bonuses are being discussed and determined by senior management. Naturally, my coworker is a bit anxious and worried about the actual numbers and how it'll all play out come next January. Her husband just started his own business, and they've had to dip into savings repeatedly in the past few months. So, for the first time ever, she's counting on a huge bonus to help tide her over while he gets his business up and running. She recognizes the fact that she's lucky - she has a nice home in an affluent neighborhood, a stable job, two wonderful kids and a husband who loves her. But she can't help but resent the fact that she's now the primary breadwinner. She envies her friend who has an even nicer house than she does plus the option of staying at home with the kids because her husband makes a ton of money. I told her that everyone struggles with feelings of jealousy and envy, and then briefly recapped my momentary lapse from earlier in the week with Leon.

So, what's the antidote to envy and greed and materialism? How do we banish the green monster when it rears its ugly head? Strangely enough, I think the key to being content with what we have is to give generously. When you share things with people, you're forced to loosen your grip. Or as my friend would say, to hold them lightly in the palm of your hand. For my co-worker, it helps that the folks in her church family have a lot less than she does. When she opens up her home to them for small group meetings and such, she feels embarrassed that she has an abundance of wealth. It helps keep her grateful.

Fast forward to yesterday, when my mom asked me if I wanted to hit the stores with her after Thanksgiving dinner. Absolutely not! I find it ironic and somewhat depressing that Black Friday now begins on Thanksgiving Day. Instead of counting our blessing and enjoying our time with family and friends, which is the whole point of Thanksgiving, the majority of Americans will be inhaling their turkey dinner and then rushing off to the big box retailers to gobble up so-called deals on really useless stuff to give to themselves and to others on Christmas Day. See for example the crazy behavior prompted by the release of Sony's Playstation 3.

Again, irony of ironies. Christmas is supposed to be about celebrating the greatest gift of all, not about buying the latest and greatest toys and gadgets. But we've managed to turn it into some weird spectacle of greed. And is it just me or does it get worse and worse with each passing year? So, this time around, I'm issuing a challenge, or more like a quiet plea. Please stop the insanity. During this holiday season, count your blessings, be hospitable and give generously to those in need.

[That's all. Nothing more. Stepping off my soapbox now.]