My daughter has a strange attachment to things. It startles me whenever it rears its adorable (nothing she does is ugly) head.

Since my daughter was born, we’ve been both the recipients and givers of many clothes to and from many different homes. It’s a karma-based system whereby you may not be giving hand-me-downs to the same family you get them from.  read more »

In a recent blog post, Charity Navigator highlights the Top 10 Best Practises of Savvy Donors.  This post is directed at the American donor, but the basic premise can be applied to anyone who makes charitable investments.

For more information and resources on making charitable investments click here.

Twitter Unveils New Effort to Boost Online Giving

Twitter is taking an approach similar approach to Facebook’s to help charities raise money and visibility for their causes, the technology-news site TechCrunch reports.

A new feature, TwitCause, will highlight a different charity every Thursday and ask followers of its Twitter account to alert readers about the cause. When people post the alert, or “retweet” it, they will also include a link to a place to donate to the charity using PayPal. The service started Thursday by featuring the V Foundation, a cancer-research charity.

The 12 for 12K Challenge is using social media to change the world.  Unlike other giving circle models - this one is global and is part of a societal change that is fast-paced with huge potential.  I am not sure of the process for selecting the charities (criteria and who is reviewing selections).  They will be updating the site every month with the new charities they have selected.

Another social media phenom is Charity:Water and Twestival.  Today, Charity:Water drilled their first water-well in Ethiopia.  This fundraiser brought together thousands of people from Twitter to different events around the world with proceeds going to this one charity.  During the course of the evening they raised over $240,000 as people twittered about their various events. 

Generating social capital is not just about raising the funds for societal projects.  It's also about bringing people together to generate greater impact with those funds.  The Twestival experience is just one of those opportunities.

Here is the video of the well being drilled in Northern Ethiopia:

One of the questions that I posed to them on Twitter, was to find out how they are teaching the community about water sanitation so as to avoid contamination of the new water source.

Last weekend I was working on taxes... Well, the first half was spent thinking... (couched for procrastination)... Thinking because doing would imply that I actually pulled all the pieces of paper out of their respective files and assembled them in some sequence to give to my accountant.  By the end of the weekend I did end up pulling papers out files and sorting the various documents.

But, while I was thinking about taxes I was also thinking about my own charity, both through Dexterity Consulting and me personally.  My father taught me to, "Pay Myself First".  You know, the idea that you put 10% of each pay-cheque aside (this was a reasonable request until I became self-employed... hmmm...).  My conscience taught me, with distinct influence from our Judeo-Christian society, that I should also put 10% aside for "Repairing the World," however I determine what those repairs should be.  Then I was introduced to Imagine Canada and their Caring Companies program.  This is a group of corporate citizens who have committed to investing 1% of their pre-tax dollars into community organizations.  A copy of the commitment document is attached at the bottom of this blog.  I invite you to join Dexterity Consulting and 120 other companies across Canada is making this commitment.

A few months ago I had to submit my renewal to Imagine Canada for my commitment.  I hadn't given much thought to what this would look like as it is just second nature to how I operate.  I am proud to share with you that last year Dexterity Consulting donated over 75% of revenue in cash and services!!! 

Dexterity Consulting provides a flexible workplace for its employees to engage in volunteer activities in the community during "regular work hours" as well as donating a portion of contract services time to charities that align with our corporate values of effective Community Economic Development.  In addition to these in-kind supports, Gena Rotstein and Dexterity Consulting made cash donations of $1,644. 

As a small company targeting individuals and other small and medium sized businesses to help them strategically and tactically invest in community projects it is important to me, and those who associate with Dexterity Consulting as staff and associates, that strengthening our communities (however we choose to define them) is at the core of our work.  Thank you to everyone who made this amazing accomplishment possible.

Organizations we supported in 2008:

ChristmasFuture, The Safe Haven Foundation, The Calgary Inter-Faith Food Bank, Canadian Humanitarian, and programs/services supported Calgary Jewish Community Council.

We are currently reviewing our commitments for 2009 and will be updating the charities we support in the coming months.

On Dec. 12th, 2008 Holden wrote a piece on The GiveWell Blog about stuff to know before you make your holiday giving.  Holden raises a good point about programs that "just don't work at changing people's lives."

Investing in social capital means that there are inherent risks associated with your donations.  In previous posts I have highlighted some of those basic accountabilities and transparency issues.  What Holden is referring to, is investing in social programs that are stop-gaps or band-aid solutions to major problems.

Where I think that Holden has fallen short is that he is looking for one-off solutions to major problems.  The solutions to major problems require multiple responses from multiple directions.

His first example is education, and how disillusioned he was about the impact that his personal donation had in the school system.  I am not sure what project he invested in, but here is an example of the ripple effect of not investing in extra-curricular programs in our school system.

School Music Program: Alberta government several years ago cut funding for the music programs in elementary and junior high schools.  Our province now has an entire generation growing up that doesn't know, understand or appreciate the need for a local symphony.  Big deal, right? 

 Here's what has since transpired:

 Photo Credit: art4linux.org/node/465 

That means that when this generation ages and is able to make their own financial contributions the symphony will struggle.  Good for the symphony???  It means that it will have reinvent itself.  It also means that it might have refocus its mission to provide music programs where the government has cut the program (once again, the non-profit sector picking up where the government has fallen short).  Okay, so let's assume that the symphony has the resources to provide a rotating music program around the city, does this make for a strong base of musically inclined, and educated students? 

So, now to the next ripple.  We have a group of kids who have had limited or no access to music, the impact so far has been increased expenses on the local symphony (which they have to fundraise for) to provide that education if they can (further drain on human resources and increased mission drift).  We have now created a generation that is void of, or has limited knowledge of music education, which means that other cultural opportunities are lost (musical theatre, creation of new music, loss of cultural memory, etc.). 

How do we know this, because history has repeatedly shown how when cultural assets are diluted from society, the social memory of that cultural disappears (most drastic case in recent memory - the Native Americans and First Nations people).  First the European settlers took away their language which meant that the music of the people was lost.  We are reaping the "rewards" of our own actions.

So, while the symphony might not be changing the lives of people directly like fresh water.  It holds a purpose in society, as part of our collective cultural memory.  If we do not fund the extra-curricular programs in our education system, like music, we run the risk of impacting future generations at a very basic, social level.

This goes back to the very first premise of why I do what I do - find your core values.  If music is at your core, then start asking the organization what the ultimate impact is going to be of your gift.  It ultimately is up to you to shape the direction of where you want your society to be.

The Alberta Government has made it even more accessible for people to donate to charities.  Attached is a chart and sample explanation for the tax benefits from donating over $200 to Canadian based charities.  The bottom line is, if you file your charitable donation receipts with your income tax, the deduction is equal to almost 50% (adding the provincial and federal tax benefits together). 

So when you are thinking about your charitable giving this year, consider that it will provide you with a significant tax break, perhaps providing you with some extra resources to contribute a little bit more.

Thank you for being so generous!

My father always said, "You never get something for nothing."  That motto holds true for philanthropic investments.  In the news the past couple of days there has been discussion around the ethics of the Banyan Tree Foundation.  At the time of this posting there were no notices on their website indicating the charges laid against them and their donors.  There was a series of correspondence between the Foundation and the Canada Revenue Agency on the topic of donation filing.  Click here to view the correspondance.

It is up to you, the donor to do your due diligence when it comes to making donations.  Questions should immediately arise when you make a donation for $1,000 and you get a tax receipt for more than that.  CRA is pretty clear on what constitutes a charitable donation and it is not on the accrued amount over time (i.e. principal plus interest earned until donation was disbursed).

Another thing that I find especially unnerving is the fact the BDO Dunwoody LLP were the auditors for 2004, 2005 and 2006.  The cover letter of all three audited statements reads, "We conducted our audit in accordance with Canadian generally accepted auditing standards.  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  In our opinion, these financial statements present fairly, in all material respects..."

If the auditors were doing their job they should have found some discrepancies between what was being receipted, what was being donated to the Foundation and how much was going out of the Foundation to charitable organizations.  The other item that caught my eye was in the 2004 audited statements there were some fundraising fees that went to corporations which are, "...under the common control of the directors of the Banyan Tree Foundation."  The way I am reading this is that board members are getting financial kick-backs for donations brought into the foundation.  Besides that not being ethical, professional fundraisers (of which I was one for 15 years) would not accept compensation that was directly tied to the amount of donations brought into the Foundation.

So what are some questions to ask.  As I have said in previous blogs a donor should ask the following:

1. Are you a member of the Association of Fundraising Professionals (AFP)?

2. Do you hold by the code of Ethical Fundraising either through AFP or Imagine Canada?

3. Go to the CRA charities section and see if the organization has ever been flagged.

4. How are you going to spend my money?

Your receipt should NEVER be more than what you have given.  

I hope that this negative experience will not preclude you from making your donation to any of the thousands of reputable organizations.  Just ask questions.  If you would like some more guidance on how and what to ask, please drop me a line.  I look forward to hearing from you.

For a list of links please visit the Links section of this website. 

I was recently asked what the best philanthropic tool is for distributing funds to chosen charities.  My response to the individual was that it depends on what your needs are and how much you want to donate in a year.  Below is a chart that might help with the decision making process.  Please note, these categories apply to Canada ONLY.  There are different benefits and tools available to Americans and I am unsure of what is available overseas.  If you are living outside of North America, please share with everyone your information.

Photo Credit: NewfieBullet

Sources for this posting come from:

The Calgary Foundation

The Toronto Community Foundation

PlanGiv

Canada Gives

and the Scotia Private Client Group - Aqueduct Foundation

I was planning on writing this piece before the Bell Canada Enterprises (BCE) deal was stopped by the courts and their stock tumbled.  The concepts are still the same, if the dollar figures are not.

Until recently, BCE stock prices had been making considerable gains and if the sale had gone through shareholders would have had to sell by the end of this calendar year.

Any sale of stock where there is a net gain is subject to capital gains tax.  This tax is applied to 50% of the shares sold and as a result the seller can be paying upwards of 24% tax on the money earned.  So how can you avoid paying tax on the gains?

In 2006 the Canadian government passed a bill ensuring that donations made to a registered charity by way of publicly-listed securities are 100% free of capital gains taxes.  By donating a portion (or all) of the taxable amount to a charity through stocks the donor not only receives a tax receipt for the donation (tax credit) but they also do not pay the taxes on their earnings AND they generate additional social capital through the investment in a charity that is benefiting society.

BCE aside, any stock that has seen considerable gains (EnCana) over the past year can be used in this example.

(All figures are rounded and approximate)

Let's say you sell 5,000 shares at $30 with an adjusted cost/share of $14 and the tax credit rate is 46%.  Total value of the sale is $162,500.

If you DO NOT donate your stocks to charity you will be paying capital gains in the amount of $46,000 (total capital gain recognized $92,500 - after $70,000 adjustment).  This leaves you with $141,000 to reinvest back into the stock market, add to the economy by purchasing a new car or going on a nice holiday.

If you DO donate your stocks (or a portion thereof) to charity you will be paying capital gains in the amount of $0!  How does this work?

You determine what your taxes would be on selling 5000 shares (in this case $46,250) if you didn't make the donation.  Now here is where it gets tricky...

Then you donate IN-KIND a portion of that value in shares to a charity(ies) of your choice.  This amount should be the value of the charitable tax credit that you would like to see offset your capital gains AFTER you have set up a donor advised fund.  Keep reading, it makes sense...

So let's say that you decide to donate 1200 (of the 5000 that were in scenerio 1) shares at $30.  After adjustment the capital gain recongized is $20,000.  You aren't paying tax on the capital gains and you receive a donation credit of approximately $16,000.

With the remainder of the share (just over 3800 totalling 5,000) you sell those shares.  The adjusted sale is $72,000 and the capital gains is $16,000.  You have a $16,000 tax credit from the donation of stocks in-kind to a charity that offsets the capital gains you with $126,500 in cash to reinvest, buy a new car, or go on a very nice holiday!  AND you have $36,000 in your charitable fund or foundation (the initial portion that you donated through your fund to a charity(ies) of your choice earlier).  The net total exceeding ($162,500) what you would have if you had just sold off the shares without developing a funding strategy.

Phew that was hard... Drop me an email if you have questions.

Here's to generating social capital!