It is hard to believe that the middle of Novem-ber is here. Where did the year go? The stores are all in full holiday mode, and The Salvation Army bell ringers are shining their bells to begin their annual Red Kettle Campaign.
When Christ-mas decorations start appearing, it is a not-so-subtle reminder that donors are running out of time to make year-end gifts. Giving to charities at the end of the year is an American tradition that extends beyond The Salvation Army. In fact, according to a study conducted by the Lilly School of Philanthropy at Indiana University, 25 percent of household giving is done between Thanksgiving and New Year's Eve.
Why does so much giving take place at the end of the year? See if you can find your own patterns of year-end giving in the following seven reasons:
1. There is money left in your charitable budget that has not been spent. This could apply to you on a personal level or apply to your business. This assumes you made some reasonable calculation of what you wanted to give to charity this year, and you realize that you have not spent it.
2. There is money left in your business' marketing budget. This type of giving is used to sponsor events such as golf tournaments or galas, where a business receives some significant recognition or has an opportunity to reach potential customers as a result of the sponsorship. Following the "use-it-or-lose-it" financial strategy, businesses may use any remaining marketing budget during the current year to pre-pay for sponsorships for events that will take place in the following year.
3. Some people give at the end of the year to make up for lack of giving throughout the year. Giving is an annual priority for someone using this rationale, but it doesn't become a high priority until they know they are running out of time. These givers do their best work under pressure.
4. The spirit of giving is high at the end of the year and all the news and talk about giving encourages many people to join in. Giving Tuesday, a national effort to encourage online giving on the Tuesday following Black Friday and Cyber Monday, is an example of the contagious nature of giving. According to the Giving Tuesday website, "We have a day for giving thanks. We have two for getting deals. Now, we have #GivingTuesday, a global day dedicated to giving back. On Dec. 1, charities, families, businesses, community centers and students around the world will come together for one common purpose: to celebrate generosity and to give."
Perhaps you are motivated to give by seeing and hearing about the generosity of others.
5. Many employers give bonuses around the holidays, and the extra cash is all that is needed for some people to become more generous.
6. Businesses engage in profit sharing. Similar to bonuses, many businesses evaluate their performance at year end and are able to make distributions of profits or company stock to shareholders, partners, owners and investors. This additional personal income, which fluctuates annually based on the performance of the company during the year, provides an opportunity for charitable giving that is often uncertain until the final calculations can be run at the end of the business year.
7. For most individuals and businesses, the stroke of midnight on Dec. 31 marks the end of any opportunity to make tax-deductible contributions to charity. The majority of individuals do not cite tax advantages when asked why they give, but the tax deductibility of gifts certainly affects how they give. Smart donors often are good stewards of their resources, and our current tax code encourages and incentivizes charitable giving by allowing such gifts to be deducted from income, thus reducing taxes. If you want to give complex assets such as real estate, closely held stock, tangible personal property or mineral interests, the charity will need time to transfer ownership to meet the IRS deadline, so don't delay. Dec. 31 is a hard deadline for procrastinators of all varieties.
You may see yourself reflected in one, or more than one, of the year-end giving reasons listed above. Whatever the reason, 'tis the season to give well.
Guest columnist Kyle Penney is president of East Texas Communities Foundation and a Chartered Advisor in Philanthropy. The mission of ETCF is to support philanthropy by providing simple ways for donors to achieve their long-term charitable goals. To learn more about ETCF or to discuss your charitable giving, contact Kyle at 866-533-3823 or email questions or comments to firstname.lastname@example.org. More information is available at www.etcf.org.