Don't Mess With Taxes

Do you believe in fate? I do, sometimes. Maybe the better word is serendipity. Whatever, this morning I logged on and planned to do a little blog administrative housekeeping and accidentally opened one of my financial blogroll links.

I'm on the laptop and I still haven't figured out why its mouseover feature opens links if it hovers for more than a few seconds. But apparently, that's what happened and Experiments in Finance popped up on my screen.

And what happened to be the most recent entry on that blog right then? A look at an interesting philanthropic site, ModestNeeds.org.

Coming on the heels of my entry yesterday on charitable giving, it just seemed to be more than mere coincidence. Yeah, I know sometimes things just happen in seemingly related ways, but that's usually just us humans trying to convince ourselves that life is cosmically organized. But today, as we head into a season where a fat guy in a red, fur-trimmed suit takes center stage, I'm going with fate, or blog Karma or anything that means I was meant to read that particular item.

Basically, Modest Needs is designed to provide short-term help to individuals and families who usually are self-sufficient, but who've hit a rough spot. These are folks who might be between jobs or had a medical emergency or are dealing with unexpected and expensive repairs on a car that's critical to getting to work.

These folks just don't have the money right now to cover these costs or even the daily necessities until they get back on their feet. A little help in these cases makes all the difference. Without that short-term assistance, things could get worse, and quickly. Modest Needs aims to keep that from happening.

The group's approach really struck a chord with me. We've all been there or at least know someone personally in such a situation. And we've seen these people struggle (or done so ourselves) because they (we) are too proud to take even the tiniest bit of help from family or friends.

However, when the aid comes from a stranger, it's often a bit easier to accept. Modest Needs connects these strangers with the self-sufficient but struggling so that everyone wins.

Tax considerations: From the IRS standpoint, Modest Needs offers a tax break for this type of "personal" charity. In most cases, such donations are not tax deductible.

Yes, the $5 you stuff in the jar at the neighborhood grocery check-out will help out the local family whose home burned down. No, since the money is designated for a special individual, it's not a qualified (i.e., deductible) donation. Even if the money goes into a bank account set up for a special circumstance (they're called benevolence accounts in this story), the involvement of the financial institution doesn't make your contribution deductible.

But Modest Needs is a 501(c)3 not-for-profit corporation. That means it's registered with the IRS (it received its tax-exempt status OK in May 2002, a few months after the program was established) and is a qualified organization, making gifts to it deductible.

Now I know that when we give, deductions are not at the top of our consideration list. And if you want to go ahead and help out a neighbor or friend or family member with a few bucks to tide them over, then by all means do so.

But  if you and your loved ones are lucky enough not to be in need right now and you happen to be looking for a way to give to those who are, specifically during the holiday season, check out Modest Needs. You can even keep the help close to home by searching by state (or province if you're in Canada) for those who've registered for help and indicating which requests you most strongly support.

Even if you don't take advantage of the tax break, a modest gift to Modest Needs might just be the perfect gift for yourself and its recipients.