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The Most Charitable Time of the Year




charitable time of the year

Is the end of the year the most charitable time of the year?

Is this the most charitable time of the year?

As we get closer to the end of the year, my mailbox is filling up with requests from charities for donations. It is, after all, holiday gift-giving season. Since we’re in the latter part of December, it’s a little late, but better late than never.

Most charitable giving is done by individuals, and I would not be surprised if many are given at the end of the year when the holidays put us in a donative spirit. It is a fact, according to Giving USA, a publication researched by the Lilly Family School of Philanthropy at Indiana University, that most donations (72 percent) are from individuals (2016 data).

Foundations account for another 15 percent, with giving by bequest (8 percent) and corporations (5 percent) completing the picture. Thirty-two percent of charitable contributions were made to the religion category, 15 percent went to education, and 12 percent went to human services, according to Giving USA.
In a study by the Chronicle of Philanthropy completed in October 2017 using IRS data at the ZIP code level, 75 percent of itemized charitable giving in 2015 came from households earning $100,000 or more. This was up from a little more than half 15 years prior.

With the end of the year rapidly approaching, we are reminded that charitable donations can be tax-deductible to some extent.

The new tax plan may dissuade some who are motivated by tax deductibility.

Sean Parnell, vice president of public policy at The Philanthropy Roundtable, said in a statement following the passage of the Senate version of the Tax Cuts and Jobs Act that “95 percent of taxpayers will be unable to deduct charitable contributions from their income under the bill as a result of doubling the standard deduction.” His organization estimated that this would cause charitable contributions to decline between $12 billion and $20 billion. Individuals donated $281.86 billion in 2016, according to Giving USA.

No matter what the incentive for a possible charitable gift, how do you know who is a worthy recipient of your largess? Assuming you are a researcher, let me tell you about a website called Charity Navigator. The site lists and rates charities for what I call “exceptionalism.”

While many charities are profiled on the site, Charity Navigator prominently lists its “Perfect 100,” charities with perfect scores on the site’s two main metrics, which I’ll discuss shortly. These are charities that “execute their missions in a fiscally responsible way while adhering to good governance and other best practices that minimize the chance of unethical activities.”

Sixty-five charities have perfect scores for “financial health and accountability and transparency,” the two metrics that are reviewed for scoring.

Financial health is determined by assessing seven factors, four of which fall under financial efficiency performance metrics (program expense percentage; administrative expense percentage; fundraising expense percentage; fundraising efficiency) and three financial capacity performance metrics (program expenses growth; working capital ratio; liabilities to assets ratio).

These are numeric measures that are converted to a score ranging between 0 and 10.

Accountability and transparency metrics are shown as a checklist rather than a numerical result.

A charity either has independent voting board members or it does not. Same with having a conflict-of-interest policy and a process for determining CEO compensation.

Here are a couple of examples from the list:

The Rotary Foundation of Rotary International has a mission to “advance world understanding, goodwill, and peace.” As one example of its programs, it is known for funding exchange-student programs around the world.

Another Perfect 100 is the Greenville Humane Society, which operates a no-kill facility for animals in South Carolina.

Where can you turn to judge charities not rated by Charity Navigator? We’ll talk about some resources next week.

One final thought: If you are over 70 1/2, you may receive a solicitation this month from your favorite charity to make a gift to it directly from your individual retirement account (IRA). You may use your required minimum distribution (RMD) for this purpose, but be careful. You need to follow the IRS’ “qualified charitable distribution” (QCD) rules — and you have to act quickly so that your RMD is withdrawn before the end of the year.

You can find more information on QCDs in IRS Publication 590-B, “Distributions from Individual Retirement Arrangements (IRAs).”


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Julie Jason, JD, LLM, a personal money manager (Jackson, Grant of Stamford, Conn.) and award-winning author, welcomes your questions/comments ([email protected]). To hear Julie speak, visit

(c) 2017 Julie Jason.
Distributed by King Features Syndicate Inc.

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401 K

Have a 401k? You Can Now Invest In Private Equity Funds




Have a 401k? You Can Now Invest In Private Equity Funds

There’s good news for investors who are looking to add a little spice to their retirement accounts. For the first time ever, defined contribution plans – like 401ks – have access to private equity investments.

U.S. Secretary of Labor Eugene Scalia said in a statement yesterday that this step “will help Americans saving for retirement gain access to alternative investments that often provide strong returns.”

Typically viewed as a way to outperform the stock market, the average private equity investment has actually underperformed the stock market over the last 10 years. According to a study by Bain & Company, private equity investments returned an average of 15.3% compared to 15.5% for the S&P 500. The study does mention that top-tier private equity funds did manage to outperform the market.

Scalia’s announcement went on to add, “The Letter helps level the playing field for ordinary investors and is another step by the Department to ensure that ordinary people investing for retirement have the opportunities they need for a secure retirement.”

You won’t be able to invest directly into private equity funds in your 401k. You’ll only have access through specific investment vehicles like target-date funds. Defined benefit plans – like pensions – have had access to private equity investments for some time now. So, as Scalia mentions, this move now levels the playing field for investors.

Securities and Exchange Commissioner Jay Clayton supports the decision to allow defined contribution plans access to private equity investments. He also mentions that the new capital coming in will increase the funding sources available to private businesses.

How It Should Be Perceived

Investors, however, shouldn’t look at the ability to invest in private equity funds as a panacea of retirement riches.

Private equity investments are often much riskier than traditional stocks. As we mentioned earlier, they don’t always provide greater returns.

In an interview with Fox Business, Ed Slott, founder of, said that investment losses in February and March may have caused a sense of panic among savers who might be searching for larger returns.

“Some of those [private equity] returns are sensational but, with anything, you could lose a boatload too,” Slott said. “It doesn’t mean private equity always makes money.”

You may lose money while investing in private equity funds. When that happens, you’ll likely have no recourse against your broker or fiduciary who put you in those investments.

As part of the announcement, Slott noted that there is a “liability shield” for fiduciaries. As long as they follow the guidelines set out by the Department of Labor, they will be within their fiduciary obligations. This makes it harder for investors to sue over losses.

The ability to invest in a private equity fund is alluring. However, the best advice comes from Alano Massi, the managing director of Palm Capital Management.

“Should that investor not feel comfortable with private equity, or simply does not understand it, then he or she should not participate,” Massi said.

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We Just Set A Record For The Greatest 50-Day Rally In Stocks




We Just Set A Record For The Greatest 50-Day Rally In Stocks

The S&P 500 just turned in its best 50-trading day rally since the index expanded to 500 companies in 1957, according to research from LPL Financial.

Over that time period, the index has returned 37.7%. If history is any indication, there are plenty more gains ahead.

LPL went back and looked at every 50-day rally since 1957 when the index expanded. Their research found that six and 12 months later, stocks were higher 100% of the time.

The average return for the six months following a 50-day rally was 10.2%. On the other hand, the average return for the 12 months following a 50-day rally was 17.3%.

After the longest bull market in history ended this year when the S&P 500 dipped all the way down to 2,191.86 on March 23, the market has been on a rocket ship higher. In just 50 trading days, the index has climbed 41.7% from the March 23 low. This puts it only 9% below the all-time high set in February.

Markets have been pushed higher by a combination of record stimulus packages and low-interest rates. In March, President Trump signed the $2 trillion CARES Act that provided financial aid to families and small businesses. Around the same time, the Federal Reserve cut interest rates to zero. Also, more recently it started directly purchasing Treasury bonds, mortgage-backed securities and even bond ETFs as it pledges an unlimited amount of asset purchases.

Uneven Recoveries Despite A Rally

While the stock market has surged higher over the last 50 trading days, recovery has been uneven, to say the least. This comes with some stocks – and entire industries – getting hammered by the economic lockdown caused by the coronavirus. Meanwhile, others, particularly those that benefit from people being home all day – and working from home – have lead the charge.

Amazon, Facebook and Netflix have all surged to all-time highs. Meanwhile, the video conferencing platform Zoom has jumped 228% this year alone.

On the other side are stocks like cruise line operator Carnival Corporation or American Airlines. Both have fallen 66% as the travel industry came to a standstill.

Despite the appearance of strength by the stock market, even the greatest 50-day rally in history can’t shake the doubters loose.

Since the rally began back in late March, the country has had more than 40 million people file for unemployment. Our country’s economic output is expected to drop by as much as 50% this quarter, and numerous CEOs refused to provide forward guidance for their companies as they just simply don’t know how bad and for how long the economy will suffer.

Throw in ongoing civil unrest and a very strong likelihood of a full-blown trade war between the US and China, and it remains to be seen if the economic recovery can continue to blossom in the coming weeks and months.

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Morgan Stanley Expects V-Shaped Recovery, Citigroup Says Not So Fast




Morgan Stanley Expects V-Shaped Recovery, Citigroup Says Not So Fast

Analysts at Morgan Stanley expect the US to go through a “sharper but shorter” recession. They believe a v-shaped recovery can possibly occur after looking at recent data.

On Sunday, Chetan Ahya, chief economist at Morgan Stanley, said the resiliency of the American consumer has increased his confidence in a quick economic recovery as states slowly lift their economic lockdowns.

“We have been pleasantly surprised by incoming growth data and policy actions. These upside surprises are increasing our confidence in a deep V-shaped recovery,” he noted, saying that credit-card transaction data show that sales have rebounded from a 30% decline a few weeks ago and are now growing at 5%, showing pent-up demand from consumers.

Ahya also credits the Federal Reserve and lawmakers in Washington for a quick fiscal and monetary response to the crisis. He says the Federal Reserve moved quickly to cut rates. Also, congress implemented legislation that provided a much-needed stimulus to keep the economy from grinding to a halt. He mentions that the steps were necessary since there was no blame for the economic lockdown.

“Policy action has been far more decisive than during the [global financial crisis] for a simple reason—this recession is nobody’s fault!” Ahya wrote.

The Opposing Opinion

Manolo Falco, investment banking co-head at Citigroup, disagrees with Ahya. Falco believes any hope of a v-shaped recovery won’t be likely.

“Markets are pricing a V [shaped recovery], everyone’s coming back to work, and this is going to be fine,” Falco said. “I don’t think it’s going to be that easy quite frankly.”

Falco says we’ve only started to see the effects of the lockdown. He also believes things will become worse from here.

“As the second quarter comes along and we start seeing the pain, and the collateral effects of that, we think this is going to be much tougher than it looks.”

The bank has gone as far as suggesting to its corporate clients that they quickly raise as much money as they can. They need to do this before the true damage from the slowdown becomes evident and the cost of borrowing surges higher.

“We definitely feel that the markets are way ahead of reality. We really are telling every client to tap the market if they can because we think the pricing now couldn’t get any better,” said Falco.

Falco joins a growing list of voices like Meghan Shue, the head of investment strategy at Wilmington Trust, that believe a v-shaped recovery is unlikely.

The economic hit will become quite dramatic — “probably 40% on GDP for the second quarter,” said Shue.  She also says it seems the market’s “pricing in a pretty robust V-shaped recovery, and we just don’t see that as likely.”

We’ll get a better idea of how the American consumer is faring later this week. It will come weekly unemployment figures released on Thursday. Also, the May non-farm payrolls and unemployment rate released on Friday.

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