The Hindu Business Line : It is in giving that they receive

While the Christmas season brings with it the feeling of generosity and of giving to others, such humanistic motivations are not sufficient for all. For, December is not only the `season to be jolly' it is also the end of the tax year, which means that there are only a few more days to make that charitable donation in order to claim a tax deduction.

Santa's in town: Charity is not all that spurs the generous gifting and giving during Christmas season. — Bijoy Ghosh

CHRISTMAS is close and the carollers remind me that "`Tis the season to be jolly." It is also the season to be giving, and as people buy gifts for family and friends, charitable organisations get into high gear with their mailings requesting a portion of your generosity. Americans gave about $241 billion (Rs 10,84,500 crore) to charity in 2003 of which 75 per cent was made by individuals.

Often, a person's individual beliefs, values and priorities drive the activities to which he or she would donate. Melinda and Bill Gates have focused on AIDS prevention and treatment around the world, Ted Turner is bothered by the existence of nuclear warheads and gives substantially to further that cause, George Soros would like to spread democracy and freedom around the world and backs that with his money. These activities are far removed from their vocations and business interests, and only a cynic would accuse them of furthering their personal agenda through their charities.

Going by the number of appeals I get, I often feel that many charities must be considering me to belong to the club of wealthy people described above. Charities often share names and addresses of donors and hence, if you give to one, you get onto several lists as a potential donor and open yourself to perpetual appeals.

Most appeals give you the description of the activities they undertake and that should be sufficient to motivate you to share your wealth. After all, if you subscribe to Gandhi's trusteeship principle, anything you own in excess of your needs is to be used to benefit others.

When I read the appeal from `Doctors Without Borders' (who received the 1999 Nobel Peace Prize), I am amazed at what they are doing to save lives threatened by armed conflicts, natural disasters, epidemics in over 80 countries, and feel like helping them.

Others resort to marketing gimmicks. Most often, there would be a set of self-sticking address labels (with my name and address) included with the appeal that I could use in my correspondence. The fund-raisers would call it as a small token of thanks in anticipation of my donation.

I wonder whether it is anticipatory thanks or an attempt to prime my guilt for every time I use one of those labels when sending out personal mail, it gnaws into me that I have not yet sent my contribution. But I was quite surprised to receive a box from the Leukaemia and Lymphoma Society. Apart from the usual appeal letter and mailing labels, there were about 20 appeal cards and envelopes. They were not only asking me to send them a donation but co-opting me in their programme by asking me to send their appeals to people I know. Their mailing also tells me that they spend 75 per cent of their funds on research and patient services, so the remaining 25 per cent goes towards administration, and paying consultants to come up with innovative appeal mailings.

It is useful to check how much the agencies spend on administration as an indication of their efficiency. The `Smile Train', an agency that performs free surgery on children who suffer from cleft lip and palate tells me that 100 per cent of the donations they receive from the general public go towards programs (their costs are met by members of their board and other special donors).

Programme funding accounts for 95 per cent of receipts according to the appeal of the `Food for the Poor, Inc.' That is comforting to know since there are some who seem to be spending the bulk on themselves. A press report charges that the Firefighters Charitable Foundation spends 86 per cent of its receipts on professional fundraisers and only 12 per cent for program services.

The American Institute of Cancer Research, in 2001 spent 66 per cent of receipts on research and public education programmes, 24 per cent on fundraising costs, and 10 per cent on administration.

The American Institute of Philanthropy that rates charities (charitywatch.org) recommends that non-profit organisations should devote at least 60 per cent of their expenditures on programmes for which they are set up.

While a few of the well-run charities reveal this information, most don't. But one creditable statute in many States in the US is the requirement that the State provide to those who seek, the account statements of organisations registered with them. Thus, appeal letters will give you the address of the State agency to whom you can write for more particulars. If one is contemplating making a sizable donation to an agency and wants to check on its functioning, it is easy to find out.

The National Charities Information Bureau (www.give.org) does a great job summarising publicly available information and tracking many charities. When on visiting their Web site, I find that the Bureau has been receiving complaints about the fundraising efforts of the `American Police Officers Association,' and the State of Massachusetts has filed a suit against the association for not being registered in the State but still conducting activities there.

Humanistic motivations are not sufficient for all. So apart from the charitable mood of the season, we should not forget that December is the end of the tax year and so this season is also a reminder that there are just a few more days to make that charitable donation in order to claim tax deduction while filing the tax return for the year. It may not be morally appropriate to make the donation only for the tax benefit but every incentive helps. Along with the incentive come those who will misuse it.

The Boston Globe, a local newspaper, has been publishing several investigative reports on charitable foundations that are hijacked by family and friends of the original creators of the fund, and who now run the foundation merely as a means of maintaining their luxurious living standards.

The tax laws in the US allow donation of items such as cars to charity to be claimed as a tax benefit and there are over 4,300 charities with such vehicle donation programmes. The Internal Revenue Service, the tax collection agency in the US, now complains that there are several cases of people overvaluing their vehicles only for the tax benefit.

When it's a tax benefit and not moral behaviour that is the prime motivator for giving, one should not be surprised at this deviance. But the tax cheats may be considering taxation itself as an immoral act!

Meanwhile, I just received an appeal from the Kanchi Kamakoti Seva Foundation in New York that wants me to support several noteworthy charities sponsored by the Sankaracharyas of Kanchi. These include planting trees in rural areas, free food to poor cancer patients, and restoring dilapidated rural temples.

But the picture of Sri Jayendra Saraswati on the letter reminds me of the continuing controversies challenging the credibility of the Mutt, and I would need additional information assuring me that the funds are truly being used for the purposes claimed before I write that cheque.

(The author is a professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu)

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