The Independent Investor: Give Local

The bells of the Salvation Army are ringing on Main Street. Yep, it's that time of the year again when visions of "Tiny Tim" tug at our heart and purse strings. This season try something new; donate your charitable contributions to local organizations.

American charities took in over $300 billion last year and hope to make this year even better. After all, we Americans are a giving people. Nearly two-thirds of us give something to charity every year with many of those donations occurring between Thanksgiving and New Year's.

Why we give is still somewhat of a mystery. The economy is nothing to write home about, unemployment is high and most of us are pinching pennies. Yet, we somehow find that spare dollar or two to drop into the charitable pot or, in some places, the hands of the homeless.

Experts point to the fundamental social urge to help our fellow human beings. There is also the "feel good" factor, since giving makes us feel better about ourselves. There is also the social pressure to give during company fund drives, or marketing calls for example. Yet, each year we discover that things are not quite as they should be in the nonprofit world. Most readers are aware that many large charitable organizations use professional fund raisers at some point or another for phone solicitations, direct mailing, call centers, etc. These fundraisers charge a fee for their efforts, which can be enormous delivering as little as 46 cents on every dollar donated to the charity.

Recently, the attorney general for New York State released a report that found that, on average, just 37.6 cents of New Yorker donations actually went to the charity of their choice. In some places, such as the Hudson Valley, charities received even less, just 17.4 cents/dollar, which was the lowest percentage in the state. There were actually 61 cases where the charity lost money after paying telemarketers and other fund raisers. New York is no different than Massachusetts, Connecticut, Vermont, New Hampshire or most other states in this regard.

Various organizations have given donors tips on the dos and don'ts of giving. Suggestions such as resisting pressure from telemarketers to give on the spot. Others urge you to do background checks on charities before giving or use charity rating organizations that will do that job for you. Experts say that when giving on-line read the fine print and every watchdog organization advises that we should all educate ourselves about charitable giving. All of the above advice is laudable, but where's the fun in that?

You see, most studies on philanthropy indicate that charitable giving is an impulse thing. That's right, we pass through the supermarket doors and toss our spare change into the bucket without thinking, receiving a heart-felt "Thank you and Merry Christmas" for our efforts. In fact, numerous studies reveal that the more one thinks about things like which charity is the best choice or how this or that charity uses my money, the less generous one tends to be. So how does one give without spoiling the fun?

Give local just like you buy local. Most of us know the needs of our own communities. There are dozens of charities right outside your door that you can give to directly without worrying about fraud or how much of every dollar they will receive. Food banks, animal shelters, human shelters, it's all there and when you give locally there is an added benefit. You improve the quality of life in your neighborhood, which helps everyone.

Take my company, for example. We gave away hundreds of turkeys last year at Thanksgiving.  Individually, this holiday season, some of us are sponsoring needy kids with holiday presents as well as donating money to a local animal shelter. Surely there must be a soup kitchen, children's home or something that tugs your heart strings some where close. You don't even need to donate money when you give locally. The donation of your time can be just as valuable. So get out there and give. And God bless us everyone.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or email him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.