We Are The World 25th Anniversary

For those who missed it, the opening ceremonies of the 2010 Winter Olympics on NBC featured a new video for the 25th anniversary of the Michael Jackson song "We Are the World." The video is available for free online through YouTube, and you can buy the song through iTunes, with proceeds going to charities. The first charity is, of course, Haitian relief efforts ... and as I've discussed before, Haiti still needs a lot more aid. If you like the song, this is a great way to give a little bit extra while getting something nice for yourself, as well.

Overall, though, I wouldn't use this as my primary charity to give to Haiti. There are a lot of other great organizations in place to offer Haitian relief. You can use Charity Navigator to view the ratings on these organizations, so that you can make a better decision on your own giving.

Haitian Giving - It's Not Enough Yet

On a recent broadcast of NPR's All Things Considered ("Haiti Donations Soar Despite Economic Crisis," Jan. 26, 2010), Melissa Brown of the Center on Philanthropy at Indiana University said that giving in the 13 days immediately following the Haiti earthquake outstripped all previous giving efforts, including the previous gold standard: the donations after 9/11. The overall giving has been nearly $520 million dollars already, which is very impressive. As Brown points out, this is in part because systems were immediately put in place - such as the text-giving campaign - that made giving easy.

The average (depending on how you define average) is coming in at about $50 to $150 per person, which most people could probably fit into their budget. In a time of economic trouble, it's heartening that people are able to give this much.

However, one thing occurred to me as listening to this - on a per capita basis, are we really giving more for Haitian relief than we gave for 9/11 relief? Remember that 9/11 also happened during a recession, though it wasn't as severe as the current one.

Consider the 9/11 numbers, as compiled by the New York Magazine. 2,819 people died in the September 11 attacks, 1,609 people lost spouses or partners, 3,051 children lost parents. Let's assume also that, on average, for each person lost, there are 2 parents and one sibling also left behind. Let's also assume that for each widowed person, there are two parents and one sibling. That gives us 20,763 whose lives were directly and profoundly affected by the deaths on 9/11. Let's go ahead and double it, to include close friends and such. So we get about 42,000. In addition, the "by the numbers" count indicates that 422,000 New Yorkers suffered from post-traumatic stress disorder following the events and 146,100 people lost their jobs - so that brings the count up to 610,100 ... let's round up to 750,000 people who are directly affected by the 9/11 disaster, to some degree or another. Okay, let's double it again to 1,500,000 people. This is probably a very generous estimate.

Now, according to these numbers, $1.4 billion was given in donations to 9/11 charities. (This is on top of the $40.2 billion paid out in insurance payments worldwide, plus billions in government expenditures for renovations of downtown Manhattan/etc.) So, just on the charitable side, donations came in at about:

$1.4 billion / 1.5 million people = $933/person affected*

* I am defining "affected" very broadly here, but I'm trying to make a point.

Estimates indicate that 3 million people were affected by the Haitian earthquake - exactly twice as many as September 11 (according to my estimates). Therefore, if we assume that their lives are just as valuable as the lives of people who suffered from September 11 (an assumption that shouldn't be too controversial), then the total amount that we should expect to be donated overall is:

3 million people affected * $933/person affected = $2.8 billion

Now, it's important to remember that these are just the charitable amounts. The government spent billions of dollars in taxpayers money to rebuild infrastructure, and there were billions of dollars in insurance payouts, none of which are figured into these calculations. Haiti has virtually none of this at its disposal ... it's all charity, either by individuals or by other governments. (You could argue that our rebuilding was funded by "charity" from China, in the form of loans, but that's another story.)

So, while it's certainly laudable that we've given so much in such a short period of time, the key thing to remember is that, over the long haul, these people need a lot more help. About $1,000 dollars per life affected would go a long way in a country like Haiti, toward giving them a future worth looking forward to.

We have about $2.28 billion to go.

Let's step up.

Save on 2009 Taxes by Helping Haiti

Normally, if you itemize deductions you can save by including charitable donations to appropriate non-profit organizations. The problem with this is that, unless you're diligent about tracking your tax liability and change your W-4, so that your withholding is adjusted accordingly, you really don't see this as a benefit until as much as a year after you've given the donations. For people moved to donate in the wake of the Haiti earthquake - which has become the largest charitable giving activity performed by Americans at $518 million, even exceeding the amount donated following 9/11 - these deductions would take over a year to materialize, until people file their 2010 taxes.

Fortunately, it looks like Congress is actually doing something right, and has implemented a new rule that allows those donating to Haiti relief to retroactively include this deduction on their 2009 tax return, if they choose to. This means they could make the donation, file their taxes, and get the deductible amount in their tax refund in a matter of weeks. There's a limited window for when those donations need to be made to count on the 2009 return.

Note: This deduction applies also for donations of supplies and other property, but I strongly encourage people not to donate supplies. Getting these to Haiti just isn't efficient. It's better to give to charities like Doctors Without Borders or UNICEF, who have infrastructures and supply chains in place to get these supplies there quickly and efficiently.

Now, you have a choice ... instead of doing this, you can still include this donation in your 2010 tax return, which certainly makes sense if you already have low taxes in 2009 and are worried about your 2010 liability.

(I'm in this position, as I have research and promotional expenses from String Theory for Dummies in 2009 that largely offset my other income, but don't yet know what my income will be in 2010, largely because I don't know if 40 Days of Giving will actually get published - i.e. generate revenue - or not.)

Of course, for many Americans, itemizing doesn't really provide much benefit over taking the standard deduction, but for some it has a real impact ... and these are the people who, as a rule, have more income overall, and therefore likely have more discretionary income available to give larger amounts. If you are in that category, and you've given to Haitian relief, it may be useful for you to think about using this retroactive deduction to help offset your 2009 tax liability.

The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them by means which the law permits, cannot be doubted.

- United States Supreme Court (Gregory v. Helvering, 293 US 465)

Investigating Charities

When I began donating to charities, one of the first problems I ran into was trying to figure out which charities I wanted to give to. Some charities are so massive and bloated, or tied up with corporate interest, that the donations just don't get where they need to go. Sometimes you'd be better off giving to a smaller charity than a larger one, because those charities actually help people.

One tool which I find very helpful in sorting all of this out is Charity Navigator, a website that evaluates most major charities on their efficiency and capacity. It's a good site to check before you give to a new charity. Charity Navigator also has some great tips for giving for Haitian disaster relief ... especially, you should consider that direct donations of supplies just isn't an efficient way to help out. I've seen a lot on the news about people donating supplies, but getting these supplies from all over America to Haiti just isn't practical.

Though Charity Navigator is useful, it still takes some care. For example, one of my favorite charities is Heifer International, which only has a rating of 3 out of 4. Heifer provides livestock to people in developing countries, so they can be self-sustaining. However, donations to Heifer has a "pay it forward" element (each recipient donates the first offspring of the animal they received) which isn't taken into account in the rating, and it provides training to the recipients along with the animals, so it's understandable that there's more overhead with this charity than some others.

I can't stress enough the importance of these elements of Heifer. It's very easy to give money, but much harder to give it wisely. Resources are limited, so they should be leveraged in ways that provide "residual philanthropy" (a phrase I heard from real estate mogul and financial expert Robert G. Allen) ... a benefit that begets further benefits down the road, helping to solve the problem instead of just ameliorate it. This is summed up by the saying:

Give a man a fish, and he'll eat for a day. Teach a man to fish, and he'll eat for a lifetime.