CNN’s Anderson Cooper 360 television program recently aired an investigative report on charities that take in millions and pay out pennies to the intended beneficiaries. So where do the millions end up? Unfortunately the bulk of the money is going to the organizers and, in many cases, to the actual fund raisers…those annoying people who man the phone lines and call you in the middle of dinner! Alabamians have a long history of generous giving within our communities. So how do you make certain that the charities that solicit your donations are worthy? An old college acquaintance and prominent Mobile, Alabama attorney, Marion Quina, Jr., recently wrote me about the importance of doing due-diligence on a charity before you donate. He happily reported that a charity where he is a board member, Bay Area Food Bank, received the highest rating by www.CharityNavigator.org. Marion got me thinking about how folks might quickly check out charities before giving away their hard-earned money so I called Kate Nielsen, president of the Community Foundation of Greater Birmingham (www.foundationbirmingham.org). Kate suggested using charity rating services like www.charitynavigator.org and www. GuideStar.org in conjunction with your local community foundation. According to Kate, experienced local community foundations have intimate knowledge of the local charities and can personally advise you of their effectiveness in meeting their philanthropic goals. Fortunately, highly experienced community foundations dot the landscape across Alabama including Birmingham, Huntsville, Mobile and Montgomery, to name a few. For a complete list of community foundations in Alabama visit www.AlabamaGiving.org. So I urge you to take a moment before you write that check and make sure that your money will be used efficiently for the purpose you intend.
A couple of readers took issue with my answer to a reader’s question about paying for the expenses of their college student. Here’s what one had to say:
Reader comment: I read your column on paying for college. As a parent who has seen one recently graduate and have one who is a junior, I found your advice very disappointing. As a “financial planner”, I would think you would recommend options other than going into debt.
When my daughter was faced with a 5th year and we had indicated we only paid for 4 years of college, she applied for scholarships and found out there were ones available….not only freshman get scholarships. She got a job and paid for her last year of college by only having to get $2000 in student loans.
Our son seeing this happen decided to get a job and save his money in case this happens to him. If not, then he will have $4,000-$5,000 saved verses a load of debt.
Your “advice” is way too common place in our society and this type of thinking….borrow, borrow and refinance as much as you can….is a major reason we have the debt we have today. What happened to “Get a job, save your money and pay for things as you can afford them”? K.E.
My Response: My response was to a specific question from a reader whose child was in college and wanted my opinion about funding the costs using a 401k loan versus refinancing his home. I did assume that they would be using all cash resources in addition to making the loans. So let me be clear, I don’t like debt. However, sometimes it is the best solution to a problem.
You do bring up a great point that cannot be overemphasized. The very best way to pay for a child’s college is to ‘plan ahead’! Once a family finds out they are going to have a child, that’s the time to start setting aside money for college. It is so much easier if you start saving early. The best investment strategy is a college savings 529 plan and fortunately for Alabamians, Alabama has a great self-directed plan you can access at www.CollegeCounts529.com. As an added incentive, you receive a state income tax deduction for annual contributions of up to $10,000 for couples filing jointly ($5,000 for single filers). This can save you up to $500 per year. If you have money in another state’s 529 plan and transfer the funds to the Alabama plan you also are eligible for the state income tax deduction. Remember, contributions to 529 plans are not tax deductible (federal) but earnings grow tax deferred and withdrawals, when used for qualified education expenses, are tax free.
I love that your daughter and son have the foresight to get jobs to help pay for their college expenses. That’s a great idea on many fronts including accepting responsibility for funding their education and learning early the value of hard work as well as the ‘education’ you get by actually having a job. In my observations, the most successful adults worked throughout their teen years. Work is a great teacher! Thank you for urging me to expand on my earlier comments.