2010 – Banner Year for Philanthropy?

Some institutions that depend on philanthropy for their existence are worried that proposed tax changes may dampen the enthusiasm for giving among the 89% of the U.S. population who donate regularly to charity. For many, tax deductibility isn’t a factor, because only those who itemize their income tax returns can make use of it. But if tax deductibility is an important benefit for you, some changes may be in store after the end of 2010.

An income tax benefit for donations to charity has been part of the U.S. income tax code since 1917, four years after the income tax was instituted. While it is a boon to charities to be able to show a possible benefit to the donor, it represents a revenue loss to the Internal Revenue Service. Total revenue loss – from both individuals and corporations – was estimated at $47.4 billion in 2008 and $39.2 billion in 2009 (the weaker economy accounting for the drop).*

Under current rules, a $50,000 charitable donation from a taxpayer in the top tax bracket (35% in 2010) generates $17,500 in tax savings ($50,000 x .35). However, under proposed legislation, the top rate applicable to charitable deductions would be capped at 28%, making the tax deduction worth somewhat less – that $50,000 donation referred to above would result in a tax savings of $14,000 if this legislation passes.

Clearly, giving in 2010 could provide a greater tax benefit than if you waited until next year.

IRA Charitable Rollover?

In 2008 and 2009, legislation made it possible for anyone 70½ or older to roll over as much as $100,000 in traditional IRA funds to a charitable institution as a “qualified charitable distribution.” The benefit to the taxpayer was that the distribution was not counted as income (traditional IRA distributions count as regular income in the year they are withdrawn). While, at this writing, the provision has not been extended to 2010, the House of Representatives in May agreed to extend the rule through 2010. Taxpayers interested in taking advantage of this rule might want to stay alert for any Senate action and presidential signature that would make it law.

Return of Pease

Some philanthropically minded high-income earners are watching warily for the possible re-implementation of a rule first proposed by Ohio Representative Don Pease – a phase-out applied to various itemized deductions for couples earning more than $254,550 and for singles earning more than $203,650. As proposed, 3% of adjusted gross income (AGI) above those levels would be subtracted from allowable deductions. That is, if a couple report an AGI of $304,550, they would be required to subtract $1,500 from the total of their allowable deductions ($1,500 is 3% of the $50,000 in AGI that is above the $254,550 threshold).

It is uncertain whether the Pease provision will become the rule in 2011. It doesn’t exist in 2010, so it would not limit the value of your charitable deductions made this year.

Effects of Deductions

How much the tax deductibility of charitable contributions actually affects American philanthropy is a point of contention. Some point out that a large portion of giving comes from foundations, estates and corporations, as well as from individuals who do not itemize their contributions on their tax returns. Itemized contributions represent 62% of total charitable giving, according to the Giving USA Foundation’s Annual Report on Philanthropy for the Year 2007, the most recent data available.

You may be among those who don’t think about your tax return when giving to charity –  scholars who study charitable giving patterns say many don’t – but if you make substantial gifts and value the tax benefit, you could be affected if a cap is set on the value of your deductions.

No matter what your considerations are, if you’re intending to make a tax-deductible philanthropic gift soon, you are likely to receive the best tax treatment if you make it in 2010 rather than waiting to see what happens in 2011.

Before You Donate

Want to make sure that a healthy portion of your donation will actually go to its intended recipients, rather than to administrative functions or other purposes? Check out the charity of your choice at one of these websites developed to assess philanthropic organizations.

• Charity Navigator – charitynavigator.org
• Better Business Bureau – bbb.org/charity
• American Institute of Philanthropy – charitywatch.org/criteria.html

*Figures contained in “Charitable Contributions for Haiti’s Earthquake Victims” by Molly F. Sherlock. Congressional Research Service. January 22, 2010.

Loss of Rights:
Adult Children Can Allow Parental Health, Legal Access

Parents are sometimes surprised to learn that federal and state laws may limit their rights of access to some aspects of their minor child’s medical information. But once the child reaches the age of majority, unless certain documentation is in place, it is likely that no one other than the adult him- or herself has the power to make medical or legal decisions.

Leaving it this way can lead to potentially thorny medical and legal problems. Most of us go about our daily lives without anticipating dire situations. But remember 26-year-old Terry Schiavo, the Florida woman who collapsed in 1990 and fell into a coma. Her fate became the center of a 15-year struggle between her husband and her parents over whether to take her off life support (which happened in 2005). Divorced parents may disagree over who can make medical decisions for an adult child who is temporarily or permanently unable to speak for him- or herself. No one knows the future, but once something drastic occurs, it’s usually too late.

Estate Planning Remedy

Certainly, seniors and those who face serious health problems should have advance healthcare directives in force. For younger adults, situations don’t have to be as sudden or as dramatic as Terry Schiavo’s to warrant having medical decision-making documentation in place in an emergency. Suppose an adult child simply needs appropriate medical attention, but is temporarily incapacitated. Someone has to give consent.

A remedy for most situations is available from your estate planning attorney in the form of an advance healthcare directive – also variously called living wills, personal directives or advance directives – recognized in all states.

Your child will want to ensure the appropriate Health Insurance Portability and Accountability Act (HIPAA) language is incorporated to make sure the privacy provisions under that Act don’t interfere with the appointed agent’s access to medical information.

Hopefully your child will never face a situation where an advance health directive or power of attorney is necessary. But should the unthinkable occur, however, it could easily justify your foresight in ensuring the existence of the appropriate documents.

Life in Transition: Continuing Ed Plays Vital Role in Career and Professional Growth, Mid-Life Reinvention

As women continue to expand the range of career choices and life transitions, continuing education programs are growing dramatically to accommodate them. Those programs, originally designed to cater to women who are re-entering the workforce after raising a family, have enriched their offerings to keep up with women’s opportunities. Many are designed to be flexible and convenient for career women who are managing full schedules that may include child-rearing, as well as caring for aging parents.

Women who are interested in advancing their careers, who are exploring a mid-life reinvention or who are simply seeking self-enrichment will find a plethora of programs both online and in more traditional college settings.

Career Self-Management

Enrolling in these programs makes good sense. Updating skills to stay competitive in a global economy has become essential for women in nearly every profession. Preparing for the future by staying abreast of new information on trends and issues affecting promotion in one’s industry is all part of good career self-management.

Most large companies and many mid-sized firms offer employer-sponsored on-site training, online training or long-distance learning programs. Make it a practice as part of your career management to keep your human resources department updated on your training initiatives in off-site degree and certificate-granting programs, workshops, continuing education units (CEUs), and seminars. Your HR staff can provide information on in-house programs or funds that may be available to reimburse you for off-site training programs. If you’re self-employed, consider how your business might benefit from your learning new related skills, even if the career ladder you’re scaling is of your own design.

The ‘Third Stage’

It’s generally accepted that the current generation of women is better educated and has higher expectations for life in the later years than did their mothers and grandmothers. Modern women are living longer, healthier lives than those of previous generations and in the process creating a new stage of life that aging experts are calling the “third stage” – one that comes after young and middle but before old.

Possessed with energy and a desire to find meaningful work, many women find themselves considering a mid-career switch. That may mean pursuing dreams of opening a business, volunteering to address social problems or engaging in activities for personal enrichment.

Returning to school at mid-life can be energizing and it can make possible an encore career. There are advantages in going through this process as a mature person. Women find themselves gaining wisdom and clarity of purpose – and becoming better self-managers. Going back to school can open up an engaging new path that is just right for you.

---

Choosing a program

Campus-based programs
Universities and community colleges offer credit and non-credit programs through a division or school of continuing education, sometimes referred to as the university's extension school. Instruction in these programs is typically delivered in traditional classroom situations, but most have also developed extensive online courses. A study by the Alfred P. Sloan Foundation found that 65% of the universities that offer in-person graduate programs also have those courses online, so unless you want a classroom setting, you may be pleased to discover that your continuing education choices aren't limited to your geographic location.

Online programs
Many colleges offer online programs only. They are fully accredited institutions, considered eligible for federal funding. While they may not have the established reputation of traditional colleges and universities, they are designed for maximum flexibility and convenience. Instruction is delivered via online interactive courses and may include videotaped/CD-ROM material, conference-type group study, online study networks, and various kinds of seminars and/or workshops. A combination of traditional, distance and conference-type study, or two of these three types, may make up a particular continuing education course or program.

---

Not sure where to look for online courses or programs?

Try edvisors.com/schools, a useful education portal that can lead to comprehensive information about programs available throughout the country. There is a broad spectrum of opportunities out there. Continuing education and professional growth experts advise taking the time to explore what's available and what best fits your needs.

Parenting and Money:
Imparting Financial Literacy Benefits Children of All Ages

It’s not uncommon to hear stories about children who made it into adulthood without becoming financially responsible, sometimes to the point that parents are expected to underwrite an adult child’s lifestyle. That can be more than merely a drain on family finances – it may have the unintended consequence of undermining the child’s sense of autonomy, resourcefulness and self-confidence.

One cause of situations of this kind is rudimentary financial illiteracy. Even Federal Reserve Chairman Ben Bernanke has expressed concern that too few children of high school age understand basic personal finance and economic matters. Bernanke and family finance experts say parents can help promote financial responsibility by providing a thorough financial education from an early age.

If you know of a situation that should be improved, you might encourage parents to let older children participate in family budgeting sessions or investment meetings – they need not be involved in all of the details to, in time, gain an appreciation of the value of the process.

Helping children in this way can not only help them prepare for a responsible financial life, but it may also help to generate parental confidence when it comes time to hand over the family’s investment portfolio.

If you know of a situation that should be improved, you might encourage parents to let older children participate in family budgeting sessions or investment meetings – they need not be involved in all of the details to, in time, gain an appreciation of the value of the process.

Helping children in this way can not only help them prepare for a responsible financial life, but it may also help to generate parental confidence when it comes time to hand over the family’s investment portfolio.

---

Investment Myth:
Children Come First – I’ll Save for Retirement Later

It may sound like the right thing to do, but if saving for your children's education interferes with funding your retirement, it may not make financial sense. College can be financed through grants, scholarships, part-time jobs and loans. There are fewer resources available to finance your retirement lifestyle, which may well depend on your putting away a hefty percentage of your income.