Make your gift count this year

American charities took in over $300 billion last year and hope to make this year even better. After all, we Americans are a giving people. Nearly two-thirds of us give something to charity every year with many of those donations occurring between Thanksgiving and New Years.

Why we give is still somewhat of a mystery. The economy is nothing to write home about, unemployment is high and most of us are pinching pennies. Yet, we somehow find that spare dollar or two to drop into the charitable pot or, in some places, the hands of the homeless.

Experts point to the fundamental social urge to help our fellow human beings. There is also the “feel good” factor, since giving makes us feel better about ourselves. There is also the social pressure to give during company fund drives, or marketing calls for example. Yet, each year we discover that things are not quite as they should be in the non-profit world.  Most readers are aware that many large charitable organizations use professional fund raisers at some point or another for phone solicitations, direct mailing, call centers, etc. These fundraisers charge a fee for their efforts, which can be enormous delivering as little as 46 cents on every dollar donated to the charity.

Recently, the Attorney General for the State of New York State released a report that found that, on average, just 37.6 cents of New Yorker donations actually went to the charity of their choice. In some places, such as the Hudson Valley, charities received even less, just 17.4 cents/dollar, which was the lowest percentage in the state. There were actually 61 cases where the charity lost money after paying telemarketers and other fund raisers. New York is no different than Massachusetts, Connecticut, Vermont, New Hampshire or most other states in this regard.

Various organizations have given donors tips on the dos and don’ts of giving. Suggestions such as resisting pressure from telemarketers to give on the spot. Others urge you to do background checks on charities before giving or use charity rating organizations that will do that job for you. Experts say that when giving on-line read the fine print and every watch-dog organization advises that we should all educate ourselves about charitable giving. All of the above advice is laudable, but where’s the fun in that?

You see, most studies on philanthropy indicate that charitable giving is an impulse thing. That’s right, we pass through the supermarket doors and toss our spare change into the bucket without thinking, receiving a heart felt “Thank you and Merry Christmas” for our efforts. In fact, numerous studies reveal that the more one thinks about things like which charity is the best choice or how this or that charity uses my money, the less generous one tends to be. So how does one give without spoiling the fun?

Give local just like you buy local. Most of us know the needs of our own communities. There are dozens of charities right outside your door that you can give to directly without worrying about fraud or how much of every dollar they will receive. Food banks, animal shelters, human shelters, its all there and when you give locally there is an added benefit. You improve the quality of life in your neighborhood, which helps everyone.

Take my company, for example. We gave away hundreds of turkeys last year at Thanksgiving.  Individually, this holiday season, some of us are sponsoring needy kids with holiday presents as well as donating money to a local animal shelter. Surely there must be a soup kitchen, children’s home or something that tugs your heart strings some where close. You don’t even need to donate money when you give locally. The donation of your time can be just as valuable. So get out there and give. And God bless us everyone.

“I’m not old enough to worry about a will,” said one of my clients recently.

Looking at him, you might agree, At 25, he is as healthy as the horses he shoes. As a Ferrier with his own business, he works hard and plays hard. Life is his oyster right now but if he dies, I reminded him, the state gets everything.

“No way,” he said, in utter disbelief.

But it is true. As a single man with no relatives and no will, the chances are quite high that the state would take everything. Fortunately, my client found religion and immediately did some estate planning, including creating a will. Unfortunately, most people will find every excuse in the book to avoid creating a will. Many individuals feel uncomfortable with the possibility of their own death or they take the attitude that when you’re dead, you’re dead, so why worry about it.

You may be surprised to know that most states are prepared for that and have effectively written a will for you. They are called statutes and are used to determine your heirs if you die “intestate” (without a valid will). Each state’s statutes are different and can have an enormous impact on your heirs, especially your children.

If you die without a will, for example, and have children under 18, the state will control who will care for them. Sure, siblings or grandparents are usually the go to choices as guardians, but not always. There are also many instances where a sister or brother may not agree with the court’s ruling. In which case, there ensues a long and costly custody battle with most of the emotional hardship born by your children.

It gets worse. Let’s say you have been diligently saving for your kids’ college education. Without a will, there is no guarantee that an appointed guardian will honor your wishes. They may simply use the money for your child’s support dismissing college as a frivolous expense or a luxury they cannot afford.

Probate is the term used for the long, arduous and expensive state court procedure that administers your estate. An uncle of yours dies in Florida and leaves a condo, but no will. As his nearest kin, you will need to hire a lawyer in state, spend the money, time and effort necessary to have the disposition of the condo adjudicated in the court system and hope that in the end the state rules in your favor.

You go through all those hoops only to find out a distant cousin disputes your right to inherit. At the same time you discover the condo’s mortgage is greater than its worth and the condo association doesn’t approve the one buyer who might take it off your hands. I think you get the point. Probate is a nightmare.

Many people have confused a revocable living trust with a will. They are two different legal documents, which serve different purposes. In a living trust, you transfer assets into the trust during your lifetime. When you die, those assets go directly to your beneficiaries and do not go through probate. It is a private document and is more difficult to be challenged.

In contrast, a will is a public document. It can be useful in combination with a living trust to ensure that any property that is not already listed in your living trust (such as furniture or antiques, or heirlooms) before death will be transferred to the trust at death. A will can also address the needs of your children by naming a guardian and spelling out the financial provisions for their care and education. A will can also accommodate your wishes and intentions clearly and at greater length than a trust.

Creating a will and/or a living trust is best done through an attorney. It may cost a couple hundred dollars but it is the best way overall to cover yourself and your family in the event of your death. I suggest if you haven’t done one yet, it’s about time you did.

Start saving now!

Back in the day, before the advent of government-sponsored savings plans, defined benefit pension plans and the odd annuity were the only investment vehicles available to me. As a young stud on Wall Street, it didn’t matter. Retirement saving was for others. I would live forever, make millions in the market and retire when I was thirty. Fortunately, I woke up to the realities of the real world and started saving early in my career. You should too.

In fact, the earlier you recognize that saving for retirement regularly is a no brainer, the easier it will be to retire. So let’s say you recognize that and want to start saving. The choices today can seem overwhelming. Start with the obvious: tax deferred plans where the U.S. government gives you a tax break. There are traditional IRAs, Roth IRAs, employee 401(k) s, 403(B)s, 457 plans, deferred annuities and many more. In my opinion, if you have earned income and your employer offers some kind of tax-deferred plan, that is where you should concentrate.

Any financial planner will tell you to try and take maximum advantage of the amount you can save in your tax-deferred plan. That would be $16,600/year in a 401(k), 403(B) and 457 plan and $5,000 in a traditional IRA or Roth IRA. For those over 50 years old, an additional “catch-up” amount of $1,000/year in your IRA is allowed and $5,500 in your 401 (K) 403 (B) and 457. 

Yet, few of us make enough to contribute the maximum. Instead, the best place to start is your employer plan, especially if it offers a matching contribution to your own. As an example, let’s say you make $50,000/year and your employer will match 3% of your salary ($1,500). It doesn’t take rocket science to figure out that you should put your first $1,500 of savings into your tax deferred employee program since your company is matching that amount as a free employee benefit.

But let’s say you want (and can afford) to save even more, possibly an additional $5,000. Should you just put it into your company’s 403(B) or 401(k) plan or open a traditional, tax-deferred IRA? In my opinion, you should open an IRA. Here’s why.

Both contributions are treated equally (i.e. tax deductible) by the Federal government. However, your company’s retirement plan will offer a limited number of investment choices. In addition, the fees you pay for investing in your company’s plan are quite high compared to opening your own IRA. Although you can’t contribute as much in your IRA, you have much more control over what to invest in and at a lower cost.

There is one caveat however if you are contributing to both your traditional IRA and your company plan, at a certain salary level (above $56,000-$66,000) the amount you can contribute as a single tax payer to a traditional IRA is reduced. For those married couples who file jointly the phase-out range for deductibility of your salary is higher ($90,000-$110,000). If your spouse does not participate in a qualified employer plan but you do, than the cutoff level for your spouse becomes $169,000 to $179,000 if filing jointly.  

You can also put your IRA contribution into a Roth IRA but remember, a Roth is not a tax deductible IRA, However, qualified withdrawals are tax-free while in traditional IRAs withdrawals are taxed as ordinary income. And like traditional IRAs, the Roth contribution is $5,000 yearly and phase-out salary limits also apply.

I suspect most of you will already be tapped out if you contribute the full Monty to both your employer plan as well as a traditional IRA, but in some cases a Roth might work better for you. If you still have money to save then I suggest you give me a call and we can discuss how best to deploy it.

The first thing to remember is there is no such thing as “can’t” when selling your home. It is just what price you are willing to take for it. Some homeowners have no choice. Underwater owners that are running out of money to pay their mortgage must sell or face foreclosure. Their woes have been well documented. But what about those of us who would like to sell, either a primary residence or a second home, but have the money to wait for a bottom in the real estate market?

  The rental market is booming across America.  Over 3 million Americans have entered the rental market over the last three years and as foreclosures mount, that number will only increase. It appears that demand for rental properties is outpacing supply.

Obviously, renting your home only makes sense if you have another place to live. If you are relocating because of employment, on sabbatical for a year or two, if you have a second home, or will be moving in with someone else (because of a marriage, death of a relative, etc.) then the economics of renting may be appealing.

On the plus side, renting allows the owner to keep the property until prices bottom out and hopefully begin to appreciate. In the meantime, rental income can cover mortgages, taxes and insurance payments if the rental price is right. Better yet, certain expenses such as mortgage payments, property taxes, repairs, maintenance, advertising, broker’s fees, transportation and insurance can be deducted from rental income.

There’s also a phantom tax deduction called depreciation (the wear and tear on your property) that you can deduct each year from your rental income. All you do is divide the fair market of your home (excluding cost of land) by its recovery period, which is 27.5 years for residential property. For example, assume your home is worth $ 350,000 divided by 27.5 years equals an annual deduction of $12,727.27 from rental income.

But there are some negatives as well. Landlords have plenty of headaches ranging from renters who fail to pay their rent, to vandalism of their properties. Housing maintenance issues don’t go away simply because you no longer live in your home. Depending upon its age, everything from leaky faucets, non-flushable toilets to really big emergencies like roof leaks, and lack of electricity and heat must be addressed immediately or you may be hauled into court and sued.

Renters too have rights and in some cases, even obvious reasons for evictions, such as failing to pay the rent, may involve the courts and we all know how lengthy court cases can be.

As it now stands, the U.S. government provides a generous tax break for homeowners who have lived in their house for at least two of the last five years. Married couples who file jointly can keep up to $500,000 in capital gains from the sale of their home, tax-free. Singles can enjoy up to $250,000 in wind-fall profits. By renting your home that tax break disappears under certain circumstances.

If you are renting for just a year or two, there is no problem. Simply move back within the qualifying time period, sell, and enjoy your gains.  However, if you want to rent over the long-term (five years or more), you need to understand the tax consequences. Of course, you can always have your cake and eat it too. If you are willing to rent for a period of years, then move back into the house for two years and then sell it, you will qualify for the tax break.

Before you decide, find out your rights as a landlord by consulting with an eviction attorney. You should interview property managers. They will charge a percentage of the rental income for handling all of your landlord duties; but it could be worth it. Finally, create a budget that encompasses all the expenses, taxes and other items you might incur as a landlord.

All of this may take more time and effort then you are prepared for, but let’s face it, renting is a business just like any other and requires preparation, planning and work.

New versus used cars?

My wife, Barbara, and I have been shopping for either a used or new car. We own matching 2004 Subaru’s that we purchased used back in 2005-2006. We would much prefer a vehicle with even better gas mileage, but we live in the Northeast where snow and ice demand a four, or all-wheel drive vehicle and that limits our choice of fuel efficient transportation.

The good news for us is that although all used cars are priced higher these days, smaller, fuel efficient models and hybrids are commanding especially good prices. As a rule of thumb, every $1 increase in the price per gallon of gas, the value of used compact cars rises 8% to 12%. So if the trade-in value of your car was worth $10,000 last year, it could bring $11,000 this year.

However, this shortfall in supply won’t last long. Dealers estimate by late fall or winter the pipeline will begin to fill once again.

Much of this used car price windfall is a by-product of the 2008 recession. The consumer was hit by the double blow– less income and, thanks to the financial crisis, increased difficulty in qualifying for either a lease or auto loan.  As a result, today, three years later, there are a lot less used autos for sale. The average car on the highway today is 10.6 years old, according to Polk, the auto research firm.  That’s up from 9.8 years in 2007.

 Another large source of used cars for dealerships has traditionally been the leased cars market. Companies sell leased cars as used when leases expire. But a lot less leases were written during the financial crisis, leaving a large hole in supply at the wholesale level.

“Wholesale prices are quite high,” says Mike Coggins, General Manager of Haddad Dealerships in Berkshire County, MA. “We haven’t passed those prices on to the consumer so our margins are smaller.”

Still, Coggins isn’t complaining since his used car sales are up 25% this year, leading all of his other divisions.

The effect of Japan’s earthquake has also contributed to an overall shortage of new autos this year. The disaster in Japan disrupted the world’s supply chain of auto parts as well as the export of many Japanese made vehicles to the United States. This is a far cry from three years ago when all three U.S. automakers were on the ropes and dealerships around the country were closing every day.

It may actually make more sense for us to look at replacing our autos with a new car this time around. I am going to do my research, something you should do as well, if you are planning to buy a car.  Figure out the price differences between a used model and a brand new vehicle before making a decision. I tend to drive my auto for many years (as opposed to trading it in every three years) so the new car avenue may make economic sense for me.  Find out a ballpark asking price for your vehicles from “Kelly Blue Book” on the internet and find out what similar cars are selling for in your area.

I know that we would probably get a higher price for our vehicles by selling them to a private party. Something I suggest you try if you really want to get the best price for your car. We will probably take a 10% haircut on the price by trading it in to a dealer.

Yet, neither of us is willing to put the effort into listing it on the internet and haggling with potential buyers. I would much rather devote that time to writing columns for you, my readers.

April 15th is around the corner

Let’s start with property taxes; something most of us have learned to despise. Until last year, if you owned a home you were able to deduct a portion of your state property taxes in the form of an enhancement or an addition to your standard deduction. The deduction was worth between $500-$1,000 depending on whether you were married or single. This provision was not extended, but you can still claim the deduction providing you itemize your deductions. The problem with this new wrinkle is that many Americans do not have a sufficient amount of deductions to make itemizing worth doing.

Given the vast number of workers who lost their job during this last recession, if you were unemployed in 2009, the government granted an exemption in unemployment income up to $2,400 per person. That meant you only had to pay taxes on earned income above that amount. That exclusion has been eliminated as well.
So if you were unemployed at any time last year and collected unemployment compensation you owe taxes on 100% of that income. The problem here is that few of these jobless taxpayers withhold taxes from this income, so now they will need to come up with the cash they owe the IRS.

The first-time home buyer credit and the follow-on homebuyer tax credit on primary residences provided a tax credit ($8,000 for first time buyers and $6,000 for other buyers) but require that you keep your new residence for at least 36 months. That means if you bought and sold that new home you must repay that tax credit to the government this year.

The American Opportunity tax credit was a bit of new legislation that replaced the Hope credit that allows taxpayers earning $80,000 ($160,000) for joint filers) to claim $2,500 tax credit for tuition, fees, books, supplies and equipment required for educational studies paid in 2010. There is some confusion about this tax credit because the government already allows a deduction of up to $4,000 for the same items. You can’t claim both the deduction and the credit.

People become confused between a credit and a deduction. Simply put, a deduction reduces your income while a tax credit reduces your tax bill. If you earned $60,000, for example, and took the $4,000 education deduction that would reduce your adjusted gross income to $54,000. If you were in the 20% tax bracket, then the tax savings for you would be ($4,000 X 20%) or $800. However if you selected the tax credit, your tax bill would be reduced by $2,500, a dollar for dollar tax savings.

Because Congress acted so late in the year, the IRS said that it would need until mid-February to reprogram its systems. As a result, they have advised that those who plan to itemize their deductions wait until after March 1 to file their taxes. Since most of us wait until the very last second (or longer) to file, this delay should not have a major impact on us taxpayers. In any case, the coast is clear for filing your taxes. I bet you just can’t wait.

Money, after all, is the number one argument among American couples today. Those who are recently divorced point to marital finances as the main reason for their breakup. However, money can also provide a wonderful life, a lot less marital stress and a guaranteed retirement if you know how to handle it. To do it right, however, both couples must agree to approach finances as they would any other business, although I admit that’s easier said than done.

“For us, it’s simply a division of labor,” protested one client whose husband takes care of the investments and the lawn while she takes care of the bills and the kitchen.

Many couples say the same thing. They divide household chores based on where their relative strengths lie, but who cooks and who weed whacks is not the same when it comes to household finances and investment.

It took my wife and I several years to grow comfortable in talking about finances and even today we still find our discussions stressful at times. That’s largely because money, itself, can be stressful, especially when you don’t have enough to achieve all your goals.

Sometimes one spouse is simply trying to protect the other from what they consider unneeded stress or simply think it’s easier to handle it themselves rather than to take the time and effort to educate a spouse with no financial education or background.

But excluding one’s spouse from financial decision-making often adds to the stress and creates a permanent atmosphere of unease within the family. In the case of one spouse’s death or disability, how will the excluded spouse cope with both grief and the new responsibility of running the family’s finances?

I’ve been on the receiving end of that predicament more times than I like to count as an investment advisor.  By waiting until your death before handing over your finances, you are opening him or her to unnecessary emotional anguish as well as creating an atmosphere where your spouse is susceptible to the worst kind of advice.

Whether you are just starting out or have been married 25 years, whether you are up to your ears in debt or living on easy street, it’s never too late to make a change. Here’s how to begin.

Obviously, like any issue in a relationship, the first step is to talk about it. But don’t make the mistake of having a marathon financial talkathon where you both try and vent your feelings and solve the problem in a day. That won’t work. Instead, agree to discuss finances every week at a convenient time for both, but keep it short. Start with the bills, because everyone has them. The bill payer must begin by explaining in detail what bills are coming in and how much income is going out to pay them. That’s gong to be uncomfortable because for most of us coming out of a recession, there’s more money flowing out than in. Understand that, face up to it and begin budgeting together.

If neither of you have established spending and/or savings goals now is the time to start. Household budgeting is the cornerstone of savings and investing. Sometimes one spouse leans toward spending too much while the other wants to save every dime. Remember to compromise; you’ve got to give a little to get a little, especially in the crucial establishment of financial goals and objectives. Too many couples fail in this crucial area by insisting on an all-or-nothing approach to finance. Like anything in marriage, that attitude only leads to failure.

Over the course of several weeks or months, both spouses should become knowledgeable (I didn’t say comfortable) in how much they are spending from  the monthly cable TV service to the rent or mortgage payment to the amount the kid’s school clothes cost every year. Sure, one spouse may be designated the bill payer, but that does not excuse the bread winner, for example, from knowing how and what bills to pay.

Some of us are blessed with a head for finance while others are not. It is your obligation to educate your spouse in the basics and do so in baby steps if necessary. The learning spouse has the obligation to be a willing and motivated student and to ask questions at every opportunity. Over time, a couple will begin to work in tandem to handle the family’s finances, but that doesn’t mean that all your finances must be conducted jointly.

It is a good idea that each spouse has their own individual bank account as well as their own credit cards. That way each surviving spouse can maintain their own credit history which will be important in the event of death or divorce. Finally, don’t take no for an answer. If your spouse is unwilling to work with you, call in a third party and get financial counseling. The counselor may be able to provide an objective point of view and helpful suggestions to help you both overcome serious money issues now and in the future. Don’t let money come between you and the one you love. Your relationship is worth it.

The Pew Research Center’s recent survey on Baby Boomers indicates that fully 80% are “dissatisfied with the way things are going in the country today“. Quite a bit of that unhappiness can be traced to personal finances and negative economic views. That makes sense since Boomers were hit harder than most segments of the population by the double whammy of declining stock prices and housing prices. For those laid off over 50 years of age, it has been harder to obtain a new job. And even those who are employed argue that real income has stagnated over the last decade. As a result, the majority say their household finances have worsened and a higher portion of Boomers than other ages have had to cut spending this year.

The current estimate of Baby Boomers in America is 79 million, about 26% of the total U.S. population. Although they still consider retirement age at 65, the typical boomer believes that old age doesn’t begin until age 72, according to the survey.

Times have changed since the Boomers came of age in the Sixties and Seventies. Back then, America was the land of honey and horizons seemed to stretch forever. Now, most Boomers point to the huge national debt, the deficit, a lack of political leadership and lament that America is past its prime. They and their country are in decline, or so the story goes.

“My parents worked hard, saved, retired and enjoyed their golden years,” said one disgruntled Boomer, (who gave me the idea for this column).

“Why can’t I do the same?”

Actually, there are a number of reasons why this time around it is different and most of the fault lies with us Boomers. Back in the day, our parents were part of a pension plan that included monthly retirement savings on the company’s tab. My Dad was a machinist at SKF (a ball bearing manufacturer) for thirty years and worked another full time job at night. The pension contributions increased as his salary rose and as the number of years worked at the company increased. His pension was conservatively managed by trained professionals. It was also fairly easy to calculate the money he would be receiving on the first day of retirement and my parents planned for that.

Their mortgage was fixed and ended right around the time of retirement. Your parents also knew how and what their medical plan would be in retirement as well as social security benefits. Most costs were controlled, or at least somewhat contained while families lived frugally and spurned debt. Some did so successfully and enjoyed those golden years, others (like my dad who died of a massive heart attack a few years after retiring) didn’t do so well, but at least the results were fairly predictable.

We Baby Boomers wanted more.

We did away with pensions and took control of our own retirement in the form of deferred retirement plans like 401(k)s and IRAs. The problem was that contributing to those plans was voluntary (unlike pension plans). And somehow there was always something more important to spend our money on. Besides it was much more fun to “flip houses and make a killing” than make those monthly contributions toward retirement.

Even those who did save only kinda sorta did it. Self-directed, deferred retirement plans should have done exceptionally well in the period from 1982 to 2000. It was the greatest bull market in recorded history, but few actually put enough money in these plans to make a difference. By 2001, when some of us actually began saving more, we watched those savings first disappear during the Dot Com bust and then again more recently in 2008-2009. As a result, retirement plans actually went nowhere in the last decade.

As if that wasn’t a low enough blow those of us who counted on our houses to bail us out—the “I can always sell my house” crowd–witnessed that store of wealth decline 30% in the last two years. Houses are not moving, or if they are, sellers are forced to take a cut depending upon the size and location of your home. For someone forced to sell, faced with the prospect of living on social security with insufficient retirement savings, there is definitely something askew with the American Dream. It is no wonder that Boomers are grumbling. Many feel their country’s economic prowess has peaked and the promise of prosperity for all has been broken. Living the dream for many has turned into living a nightmare.

Maybe it was that old long-haired Hippie in us that whispered we would live forever so why worry about retirement, or if we really had to, we could get by living in our old VW bus. It is only now that those romanticized notions are disappearing in the face of reality. But it is not too late. Maybe you can’t retire at 65 but that may turn out to be a good thing. You can always start saving, and if I am right about the stock market this year, even first time investors could make a substantial return on their money. This country still holds promise for those willing to grasp it. No one is ever too old for that.

“My broker doesn’t charge me anything,” protested a recent local investor “I just want better performance.”

I’ve heard those words countless times before. I said nothing but took a copy of his statements to review. After analyzing his portfolio, I discovered that not only had he paid that broker $16,000 in sales charges (called loads) but he was also paying $5,000 a year in 12(b)-1 fees. He was dumbfounded, although I quickly explained that many mutual fund investors were in the same set of circumstances.

Mutual fund companies normally have several classes of shares, for example, A, B and C shares. Each category may pay different fees and sales loads depending upon the category. C shares normally charge a 1% fee annually for as long as an investor owns the fund while “A “ shares may charge a 4.75% sales charge up front but a lower 12(b)-1 fee of about 0.25% going forward. The fee structure is intentionally complicated and rarely if ever appears on your statements.

Last week the Securities and Exchange Commission (SEC) announced a proposal to revamp these 12(b)-1 fees and require that these fees be disclosed to the investor. The SEC also suggested that broker-dealers should be able to set their own sales charges for mutual funds. The proposed rule change would cap the amount firms would charge for “marketing and services” (12(b)-1 fees) to 0.25%. Anything above that would be labeled an on-going sales charge and would be limited to the highest fees charged by the fund for shares without a sales charge.

For example, if a fund charged a 4% front-end load to an investor for buying one “A” share of its mutual fund, other classes of the same fund couldn’t charge more than that amount to the buyer over time. Since “C” shares charge investors 1% a year, the new rule would eliminate any 12(b)-1 fee after four years. Separately, the SEC proposal would create a new share class whose pricing would be determined by broker dealers.

This would be another important rule change and one that many broker-dealers don’t like. Most investors fail to realize that sales charges on mutual funds are fixed by the mutual fund companies. That means that brokers can’t compete with each other for your mutual fund business by reducing those charges. In comparison, commissions charged for stocks have been open to competition since the 1980s.

It is understandable, from the financial community’s point of view, why they oppose these changes. Last year 12 (b)-1 fees generated $9.5 billion for fund companies. Put another way, you the individual investor paid that much in addition to what you paid your broker or financial consultant in sales charges, which is several times that amount.

The financial services industry protests that there is already enough competition in the business with 4,600 broker –dealers vying for your business. They argue that if the SEC had it their way, brokers would only sell their clients the fund with the lowest possible price, with performance a secondary concern. Lacking only a sickle and black cowl, lobbyists warn that this would only encourage unscrupulous brokers to exploit their power to control prices and fleece the general public. Others lament that making this all about price devalues the counsel of the financial consultant or wealth manager to his/her clients. Finally, they say it would result in less, not more, competition as price wars developed and small firms would be forced out of business.

These were the same arguments used when the SEC de-regulated fixed commissions on stocks in the early eighties. Sure, some firms did go out of business because they couldn’t survive without gouging their customer base but it actually encouraged dozens of new discount brokers to open their doors. As for the advice of your investment advisor, after the financial crisis very few investors value their advice anyway.

My own experience in reviewing thousands of portfolios is that most advisors/brokers seek to place their clients in the highest fee-generating securities they can find while performance appears to be a secondary consideration. At least from the SEC’s point of view, why pay more when you can pay less for the same crappy funds.

Birthdays, Father’s Day, Mother’s Day, Valentine’s Day and maybe a half dozen other holidays a year require that we send someone a gift or at least a card. If you are like me, you’ve been conditioned to give, give, give through billions of dollars worth of marketing and advertising as a way of showing our love and appreciation. We scurry through the stores and catalogues to find a gift, sometimes any gift and gift giving means big money. Almost $10 billion alone, for example, was spent on gifts for fathers in America last month on Father’s Day and it’s not even the biggest gift giving event of the year.

Given that I am a notoriously difficult person to buy a gift for, the message from my daughter that popped up in my e-mail on Father’s Day morning really caught my attention.

“A Global Giving Gift Card for Bill from Jackie,” it read.

Jackie is my daughter so I immediately clicked on this missive and read the following:
“Happy Father’s Day, Dad, in lieu of a tie you won’t wear or a cookbook you probably already have, please use this gift card to support a project. Love, Jackie.”

Intrigued, I clicked on the attached web site—www.globalgiving.com—and was immediately captivated by both the idea and the simplicity of the organization. Global Giving, I discovered, is an online marketplace that connects you, the donor, to a whole host of causes and countries throughout the world.

Scrolling through their list of countries from Afghanistan to Zimbabwe I was immersed in one fascinating project after another. These projects would tug on the heartstrings of even the most callous and cynical observer. Children, animals, climate change, disaster recovery, human rights, health, women and girls, technology; the list of causes goes on and on. My daughter, in her own name, contributed to a project in India which provides clean water for drought-affected families as well as a program to establish and support models schools in Afghanistan.

Each project provides the background of the project, biographies of those who run the projects, where each is located and a wealth of information on the people the project is helping. There are also updates and a running total of contributions to date.

The Global Giving Foundation is a 501(C) 3 registered non-profit corporation founded by two former World Bank executives Mari Kuraishi and Dennis Whittle. The Foundation uses 15% of your tax-deductible contribution to help cover the costs of operating the internet marketplace, finding and researching projects, supporting project leaders in the field, attracting donors and building their website. That is a far lower percentage than most charities spend in covering overhead and administrative expenses.

So what project, you might ask, did I pick for my contribution? Well, I split my gift with the lion’s share going to HeroRATS, a project run by an organization called APOPO, based in Belgium, whose founder and director, Bart Weetjens, lives in Tanzania. As many of my readers are aware, I have a deep attachment to Africa where I have travelled and conducted business for over 25 years.

APOPO trains large rats to sniff out landmines in Mozambique. Twenty-eight HeroRATS and their human partners are deployed in that country’s abandoned and highly treacherous mine fields. The rats can find this deadly ordinance faster, more efficiently and with more far more safety then high-priced mine detectors since the rats are too light to set off the mines as they scurry among them. But that’s not all.

These rats do double duty. In Tanzania (where my wife and I were married) HeroRATS are trained to detect cases of tuberculosis. The rats are trained to sniff samples of sputum from suspected victims of this horrible and highly contagious disease. So far they have identified 905 patients that were missed in traditional screening by local hospitals. Once again the rats beat out modern technology (in this case, technician with microscopes). The humans can screen about 40 patient samples daily while rats can do that many in seven minutes.

As a self-confessed animal lover and a Vietnam Veteran, I gave a donation to help feed 140 orphaned chimpanzees and the final third of my contribution to helping U.S. war vets suffering from Post Traumatic Stress Disorder. They are beginning to heal with the help of shelter dogs who visit with them. My money will go to help feed and shelter some of these animals that would normally be euthanized.

I have picked those projects which have inspired me personally. There are plenty more to choose from among the hundreds of projects Global Giving offers in over 100 countries. As for my Father’s Day present, it was a gift that I will remember for a long, long time and think of my daughter every time I do. So the next time you feel the need to give a gift but don’t know what to get, remember Global Giving. It can turn a sometimes daunting task into something worthwhile and rewarding and its tax deductible as well.