Posted Jun 01, 2012 07:00 am CDT
Doing good is one goal that many a lawyer has had upon entering the profession. That desire often extends beyond satisfying clients and taking on pro bono work and into making financial donations for chosen charities.
But before donating, consider these strategies to maximize philanthropic value:
• Do Due Diligence: “There are several ways to research the organization,” says Eileen Heisman, president and CEO of National Philanthropic Trust, a charity that manages donor-advised funds. “Get a copy of the IRS Form 990 that charities must file. It shows how the charity is using its resources. Do site visits. Check Guidestar or Charity Navigator for ratings. Google the management. It takes a special combination of social services expertise and business basics to make cost-effective use of donations.”
Heisman suggests scrutinizing the organization in totality. “Good administration is necessary for all organizations. Smaller or newer charities may have greater overhead for a legitimate reason, but for a long-established national organization, about 25 percent of donations going to administration with 75 percent to programming is a reasonable split. Look at a charity’s job training, state-of-the-art equipment for efficiency, program staffing, and ask: Are they doing the right things to deploy their resources to the mission they want to accomplish? Does it match my donation goals?”
• Check on the Tax Deductibility of a Donation: Not all donations to tax-exempt organizations are “qualified” in the IRS view for purposes of donors benefiting from the potential charitable deduction. The IRS website’s Exempt Organizations Select Check tool allows users to learn whether the Form 990 was filed. Donors can consult IRS Publication 526, Charitable Contributions, for additional tax-deductible eligibility rules.
• Explore Options for Giving: No time for research? Consider a donor-advised fund. “Basically, it’s a mini-foundation with flexibility. I am as involved as my time allows,” explains Philadelphia businessman Arnie Zaslow about why he, his wife and his brothers chose a donor-advised fund.
“We are strong believers in giving while living. But the administration of having your own foundation is burdensome and expensive. NPT researches and matches our grant goals with a qualified charity and handles the recordkeeping.”
Unable to maintain the five-figure minimum common to donor-advised funds? Consider a “giving circle,” where individuals pool contributions to fund purpose-driven grants. The Women’s Foundation of Greater Kansas City’s 360˚ of Giving program is an example.
Founding member and foundation board member Sherri Wattenbarger explains: “Working as a government lawyer in 1999 at the age of 31, I didn’t have a lot of money to give and neither did my friends. However, I liked the idea that my money would be pooled and invested with the money of thousands of others. So I engaged the ‘jar of philanthropy.’ That is, every two weeks when I was paid, I put $40 in a jar so that I could donate $250 per quarter. I encouraged my friends to do the same. We went out less often but relished seeing how our ‘jar dollars’ were making an impact.”
• Dovetail Philanthropy with Marketing: Consider that donating and getting involved with charities boosts your firm’s profile. Sponsor fundraisers and volunteer your time. Both activities allow you to network, and to be introduced in a positive way to community leaders with similar interests.
United Way, for example, is a good start for lawyers wanting to meet businesspeople in their communities. “Small, local charities love having lawyers on their boards,” Heisman says. “But do pick and choose only causes that are important to you. If you catch yourself thinking during a meeting, ‘Why did I agree to do this?’ the time you’re spending there is probably not the best use of it for you or the charity.”