Thursday, October 23, 2008

Charitable Giving At Work May Rob Your Charities

Author: Nick
Category: Money
Topics: ,

comic 64 - charity

You may be an employee of one of the thousands of companies throughout the United States which organizes workplace charitable giving campaigns—company-sponsored fund drives designed to encourage employees to donate their own money to various worthwhile charities. These campaigns come in many varieties, including charity-specific efforts (where all donations go to one charity, such as the United Way) as well as so-called “charity of your choosing” campaigns where employees can choose from many listed charities or write in their own.

For businesses, the purpose of these campaigns is two-fold. First and foremost, it allows a business to demonstrate its genuinely philanthropic side. Second, it gets them some good press. If your business can brag that its employees donated millions of dollars of their own money to charities last year, you’re going to score some free publicity one way or another. At the very least, you’ll get people to forget for 30 seconds that your company makes death-bringer missiles or cons people into buying houses they can’t afford.

For employees—those who do the actual giving—as well as those on the receiving end of contributions, workplace giving campaigns bring two benefits. One, they actively encourage and remind employees to give a little bit back to their communities. Two, some employers will provide matching funds for their workers’ charitable contributions during annual campaigns. A few employers will even match every employee charitable dollar with two more dollars! Wow! And even if they don’t match your funds, most employers will cover the administrative costs of running the charity drive. Giving through your workplace must always be a no-brainer decision then, right?

Well, not quite.

You see, there’s something your boss won’t necessarily tell you about your company’s annual charity campaign. While your company will always loudly and proudly trumpet the facts that they either provide matching funds or cover the costs of running the fundraiser, some companies neither match donations nor cover the administrative costs. But since those operating the charity campaign (either employees at the company or, more and more often these days, an outside vendor) have to get paid, and it costs a good bit of money just to make everyone in your company aware of the campaign, there are always administrative costs. And if the company isn’t paying those costs, who is? That’s right… you and your charities.

I was startled to learn this year that my own employer is no longer covering the administrative costs of its annual “charity of your choosing” campaign. This wouldn’t necessarily be so bad if they provided matching funds, but they’ve never done that. In past years, all materials advertising the campaign were sure to note that the “company covers all costs of running the campaign.” When I didn’t see that writing on their campaign literature this year, I had to poke a little harder to find a new statement in its place: “95% of your contributions go straight to the charity of your choice.”

“Whoa whoa whoa,” I said out loud in my office. I was shocked to learn that the company would be quietly shaving off almost 5% off every charitable dollar that passes through its campaign in order to cover the costs of its materials as well as paying the third party charity payment processor, America’s Charities.

This was the first year I decided not to participate in my employer’s charity campaign. Instead, I just went to my favorite charity’s website, found their mailing address, and sent them a check. Bam. The charity gets 100% of its money, I feel 100% better about myself, and my company sends me 83 reminder e-mails urging me to donate through them.

While I find it reprehensible that a company would skim from charitable donations to pay its own costs, I will admit that charities still stand to benefit more than they would without these campaigns. Because many people will only give if prompted to by their employers’ annual charity drives, the charities will get more money than if those employees didn’t donate at all. Indeed, 95% is still much greater than 0%. That said, I hope that anyone who bothered to read through the fine print of the campaign saw the 95% warning and decided to send their donation straight to their charity instead.

If you want to make sure your workplace charitable contributions are helping the people who need it most, follow these simple steps:

  1. Research your charity first. Just because your company offers a list of thousands of “worthy” charities doesn’t mean those charities all make the best use of your money. Use the Charity Navigator website to determine just how much of your charity’s money is put to use directly helping others. Or just donate to my favorite charity, The Save the Idiot Personal Finance Writer His Own Sense of Self-Righteousness Fund.
  2. Check for company matching funds. If your company will match your donations to a charity of interest to you given through their campaign, you should pump as much money as you can spare through your employer. This way, you’re helping your charity even more than you could just by yourself.
  3. Find out who pays the fees. Even without matching funds, a company that sends 100% of its fund drive donations straight to the charities is still worthy of recognition. In this case, whether you give through the company or not is your choice; it may just be easier to do it through your employer as it may offer features such as payroll deductions to spread your donation pledge throughout the year.
  4. Whatever you do, just give. If your company is like mine and takes even a dime of that charity money for its own costs, just write a check and send it straight to your charity instead. (Try not to pay by credit card, as up to 2% of your donation may end up going to the card processing company instead.) They’ll get the full benefit, and you’ll be telling your company that you won’t stand for its dipping into donations to cover administrative costs.

And of course, don’t forget to take the tax deduction to which you’re entitled for eligible charitable donations; there’s no point in giving the government a free donation too when it already funds itself quite well out of your paycheck each week.

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