'What really matters' is a good guide for giving

  • Article by: CHRIS FARRELL
  • December 10, 2011 - 6:31 PM

December is a time for giving, buying presents for family and friends. 'Tis also the season for giving to charity.

Of course, there's the financial incentive of the tax calendar. We get a tax break on our personal philanthropy. Uncle Sam says the money has to go to charity before the end of the year to claim the deduction on your 2011 tax return. It's a nice incentive. But most of us give for far deeper reasons than exploiting a tax loophole.

Here's the thing: There's more to charitable giving than doing good and doing well at year-end. It has been a theme of these columns that charitable giving should form the foundation of your personal finances and money management throughout the year.

Think about the questions you ask yourself when contemplating giving money away. You wonder about how you'd like to help make the world a better place. You mull over the kind of legacy you'd like to leave behind. You put hard-earned money behind the answer to the question, "What really matters to me?"

Where to give is a very personal choice. Hunger is a real problem. So is homelessness. Many community arts organizations are facing financial pressures. So are religious organizations. There's no shortage of worthy causes.

Whatever moves you, you'll want to make sure that the nonprofit is legitimate and effective. I like tapping into the expertise of watchdog groups like Charity Watch and Charity Navigator.

Most of us write a check. If you're one of the few Americans with long-term capital gains these days, you can give appreciated stock, real estate and other assets. It's a cost-effective way to give since you get the charitable deduction and you don't pay any capital gains tax.

The desire to give pushes us toward asking fundamental questions about values and money. Why not ask the same questions when it comes to spending and saving? For instance, I like supporting local entrepreneurs whenever possible, especially small-business owners active in the community.

"Just as 'locavores' eat mostly foods that have been raised or grown within a radius of 100 miles or so, some people are investing the same way," writes Amy Cortese in "Locavesting: The Revolution in Local Investing and How to Profit From It.''

You wouldn't want to invest all your savings locally. Still, the giving "mindset" reminds us about what really matters in our everyday lives -- why we work, why we save, what we're trying to accomplish. Happy Holidays.

Chris Farrell is economics editor for "Marketplace Money." Send questions to

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