Getting the biggest bang from your charity buck

Personal Finance. By Katherine Vogt, AMNews staff. Dec. 8, 2003.

When given the opportunity to contribute to a new chapel at his hospital, Edward L. Schulte, DO, reached deep into his pockets.

The anesthesiologist wanted to give the best gift he could to the St. Alexius Medical Center in Hoffman Estates, Ill., so he turned to an investment adviser for help. The adviser devised a strategy to transfer some appreciated stock to the cause. That way, the money went directly to the cause without being depleted by an intermediary. And because the stock was gifted away to a charity instead of sold, Dr. Schulte didn't have to pay capital gains taxes on it, and that meant a larger donation.

The gift, nearly $40,000, was used for an altar in memory of his parents, and a statue. Dr. Schulte said the method he chose to make the donation made all the difference. "I just think it's the right thing to do when you make a donation to be as generous as you can, and you can certainly do that this way."

Dr. Schulte is among a growing number of people who are educating themselves to ensure that their charitable donations are used properly and made in the most advantageous way.

Experts warn that it is easy to lose track of where donated money is going. It may end up getting used for administrative costs or paying to keep solicitors in business. But there are steps that a savvy donor can take to ensure that the contribution is used in the way it was intended.

If you give to a health care research organization, for example, "what you think might be going to laboratory research may actually be going to marketing research," said Daniel Borochoff, president of the American Institute of Philanthropy, a charity watchdog organization.