Charity and Finance

I thought I'd do a post about how I handle charitable giving, since I know it's a big topic this time of year. I'm actually really disorganized in some areas of my life, but when it comes to charitable giving, I run a tight ship.

I set aside 6% of my gross income for year-end charitable giving. I donate a bit more on top of that throughout the year, and that number doesn't count political campaign contributions. I used to feel terribly guilty not having any money to give to charities at the end of the year, until about six years ago, when I switched to an awesome system that lets me meet my goals with no pain.

Basically, I use direct deposit to withdraw 6% of my paycheck (and any bonus) and that 6% goes to a separate online savings account at ING Direct. It never hits my checking account and I don't include it in my budgeting.

At the end of the year, I line up all my charities, go to networkforgood.com and spend all the money in that account. I put the charges on my frequent flyer credit card, then pay it off immediately from the charity account, because that way I earn a lot of frequent flyer miles. Network For Good charges you a credit care processing fee which is also tax deductible. That means the charities don't have to pay processing fees, and they also don't have to expend money or labor to physically deposit the check. Network for Good also gives me a central record for my charitable tax deduction.

The way the system works, I don't have to agonize that I can't afford to give money. As long as we don't have a huge crisis, I can leave the money untouched and building up all year.

Here's the year-end list of charities I donate to. I've taken three or four off and added some more this year, but it's a lot like last year's list. Some guidelines:

1) I like legal defense funds because they help create lasting social change. However, I didn't donate to the NAACP this year because I'm not happy with their organizational effectiveness right now. I use Charity Navigator ratings and news stories to check that organizations are effective. Some organizations that don't have a perfect rating there -- like the Southern Poverty Law Center -- I'll donate to anyway because I'm very familiar with their work.

2) I like environmental organizations that work with local people to create sustainable conservation. For example, Wildlife Alliance has done a lot of stuff to try to stop Chinese people from eating threatened and endangered animals. They don't just say "stop it because white people think it's bad"; they sign on celebrities like Jackie Chan and Yao Ming who then try to persuade people using local media campaigns.

3) I try to use charitable donations to make amends for some of the horrible things my tax dollars have unwillingly helped cause. For example, giving to American Near East Refugee Aid.

• AHIMSA House, Inc.
• American Near East Refugee Aid
• Atlanta Community Food Bank, Inc.
• BUDDHIST CHURCHES OF AMERICA-ENDOW
• Center for Asian-American Media
• Center for Pan Asian Community Services, Inc.
• Children's Defense Fund
• CHRIS Kids, Inc.
• Cooperative for Assistance and Relief Everywhere, Inc. (CARE)
• DOCTORS WITHOUT BORDERS USA INC
• EcoLogic Development Fund
• Hands On Network
• HOSEA FEED THE HUNGRY AND HOMELESS PROGRAM INC
• International Rescue Committee, Inc.
• Japanese American Citizens League
• Lambda Legal Defense and Education Fund, Inc.
• MADRE
• MEXICAN AMERICAN LEGAL DEFENSE AND EDUCATIONAL FUND
• Nature Conservancy, Inc.
• PACHAMAMA ALLIANCE
• Save the Children
• SEVA FOUNDATION
• Sierra Club Foundation
• Southern Center for Human Rights
• Southern Poverty Law Center, Inc.
• THE CORAL REEF ALLIANCE
• Unitarian Universalist Service Committee, Inc.
• United Way of Metropolitan Atlanta, Inc.
• Wildlife Alliance, Inc.
• World Wildlife Fund, Inc.

My Reaction to the Financial Crisis So Far

I'm keeping a close eye on the stock market. I handle retirement accounts for myself, my mother, father, stepfather and husband. It's pretty ugly out there now!

Luckily, my own 401(k) had been almost entirely in cash by early this year. I didn't like any of the funds, so I've just been parking the money. Thank goodness.

Spread across the other accounts, I had some positions in inverse ETFs that go up when the stock market went down. Those are all sold as of today at high profits, so the accounts have some cash. Right now, I'm planning on 1) waiting until the battered positions come back up again in about three to five years... as long as we have an Obama administration, that is, because with McCain we might be a nuclear wasteland by then 2) waiting until we hit bottom so I can start buying again. Ultimately, this is probably going to be a good buying opportunity.

I know a lot of people are just not looking at their retirement accounts right now because they don't even want to know. All I can say is, face it and take control, it will make you feel better. Get rid of what you need to get rid of, and try to adopt a long-term outlook.

I'm sanguine when it comes to doomsday scenarios. I believe in keeping your eyes open, thinking about the worst and best that could happen, but going about your daily life as if everything is not about to fall apart. Not that I believe things won't ever fall apart, just that if they do, the stock market, cash and even gold is not going to protect us. Nothing will. I'm just a fatalist, not a pessimist or an optimist.

I've been watching some financial news clips at home. I usually don't, because the signal-to-noise ratio is so low. For example, this morning I was trying to get some information about who is going to have it worse over the next couple years, America or Europe. I ended up with a bunch of pundits going off on a completely irrelevant anti-socialist rant.

I actually love reading socialist perspectives on the global financial system. I'm a leftist with an MBA, after all. I've actually read and studied the first volume of Capital. I'm more of a progressive Democrat faux-Socialist nowadays, but I can appreciate the more radical critiques you can get at places like Lenin's Tomb.

I know this may seem odd for an investor like me to say, but individual investing is a terrible way to prepare for retirement. I don't believe in 401(k)s from a policy perspective because they're way too complicated and risky for the average person, especially given the pathetic state of financial education in this country. I feel really terrible for the retirees who are depending on income from their accounts right now. We need a lot more regulation: smart regulation, not worthless stuff like short selling prohibitions. The financial sector is kind of like a brain-damaged cow. It's very large and powerful. You need it for milk, but if not watched very carefully, it might try to eat your shirt or collapse on top of you.

I don't much to say about the bailouts, except that they're probably a bad idea. I don't know enough about economics and finance to advocate for better solutions, though.