In the past the IRS has cracked down on donors of cars in bad condition to charity. Who are the latest charitable tax dodgers that the IRS is casting its lines for?
According to a tip from Marketwatch, the IRS is eyeing donor-advised funds as the next charitable-cheating scheme. When used correctly, donor-advised funds allow donors to control how a charity uses their money without incurring the expenses of a foundation. However, the IRS is concerned that some are using these funds for personal gain. For example, a person could give to a university, and then designate the funds to be used for financial aid for his or her child. The IRS intends to nip this in the bud.
Unfortunately, everyone loses from these money-laundering schemes. Genuine philanthropists might be frightened to use donor-advised funds as a legitimate and flexible tool for directing their donations, and then charity loses out. This is a shame.
3/19/2007
Hedge Fund Philanthropy: Where's the Buffett?
The hedge fund industry has two faces. There is the bad face. On Friday, a former hedge-fund manager Imperium Advisors LLC agreed to pay almost $120,000 to settle charges that it violated securities rules. This is only the most recent scandal that has tarred the hedge fund industry.
As long as there are bad actors like these in the hedge fund industry, hedge fund philanthropy will fail to repair the industry's image. It doesn't help that although hedge fund money has built many mega-mansions, it has failed to build a foundation on the order of the Bill and Melinda Gates Foundation. There is no Andrew Carnegie, John D. Rockefeller, or Warren Buffett in the hedge fund industry.
Then there is the good face. Some do-gooders are attempting to change the perception of hedge fund managers as a band of robber barons--as well as fill a social need. Rob Davis, a founder of Hedge Funds Care, a nine-year-old charity, tell the New York Times: "we may have failed to change the perception of hedge funds, but I think we've succeeded in helping children." The Robin Hood Foundation, a well known hedge fund charity, raised $48 million at its annual benefit dinner last year. These charities are respected and have a solid results-oriented approach to philanthropy. However, there seem to be fewer Rob Davises than Kirk Wrights in the hedge fund world. Kirk Wright is a hedge fund CEO who went on the lam last year after $100 million in investment funds disappeared. Until more hedge fund managers put their talents in the service of good rather than evil, "hedge fund" will remain synonomous with scandal, not altruism.
As long as there are bad actors like these in the hedge fund industry, hedge fund philanthropy will fail to repair the industry's image. It doesn't help that although hedge fund money has built many mega-mansions, it has failed to build a foundation on the order of the Bill and Melinda Gates Foundation. There is no Andrew Carnegie, John D. Rockefeller, or Warren Buffett in the hedge fund industry.
Then there is the good face. Some do-gooders are attempting to change the perception of hedge fund managers as a band of robber barons--as well as fill a social need. Rob Davis, a founder of Hedge Funds Care, a nine-year-old charity, tell the New York Times: "we may have failed to change the perception of hedge funds, but I think we've succeeded in helping children." The Robin Hood Foundation, a well known hedge fund charity, raised $48 million at its annual benefit dinner last year. These charities are respected and have a solid results-oriented approach to philanthropy. However, there seem to be fewer Rob Davises than Kirk Wrights in the hedge fund world. Kirk Wright is a hedge fund CEO who went on the lam last year after $100 million in investment funds disappeared. Until more hedge fund managers put their talents in the service of good rather than evil, "hedge fund" will remain synonomous with scandal, not altruism.
3/10/2007
If the Dow Drops, Will Corporate Giving Drop? Look to the Mortgage Industry
The mortgage securities bubble is about to burst, and investors are worried. Charities should be worried, too. Will the industry maintain its commitment to fighting homelessness and poverty? We'll be watching like hawks, because the Dow is rebounding, but still shaky. If the industry drops its support of critical causes, that will be a bad augur for corporate philanthropy overall. Corporate giving in 2006 was $19.7 billion. Will corporate commitments to causes be sustained?
At first blush, Fannie Mae's decision to close its foundation appears to be a bad omen. The closing happens just as the government-sponsored enterprise, rocked by accounting scandals, announced it will cut operating expenses by 200% compared with 2006. Since 1979, the Foundation spent over $1 billion to fight homelessness, increase the supply of affordable homes nationwide and increase the quality of life in its hometown of Washington, DC. Will causes be left in the cold?
Fortunately, Fannie Mae is replacing its foundation with a new internal giving office. It closed the foundation to deflect criticism that Fannie Mae was using its tax exempt status to advance corporate interests and skirt campaign finance and lobbying laws. The new office plans to expand the foundation's "help the homeless" initiative beyond Washington to five major cities.
Let's hope so. If the mortgage securities industry balks on its social responsibility, that's not a good harbinger for Wall Street at large. Corporate giving is not a fair-weather commitment, and corporations must sustain their level of social responsibility--come rain or come shine.
At first blush, Fannie Mae's decision to close its foundation appears to be a bad omen. The closing happens just as the government-sponsored enterprise, rocked by accounting scandals, announced it will cut operating expenses by 200% compared with 2006. Since 1979, the Foundation spent over $1 billion to fight homelessness, increase the supply of affordable homes nationwide and increase the quality of life in its hometown of Washington, DC. Will causes be left in the cold?
Fortunately, Fannie Mae is replacing its foundation with a new internal giving office. It closed the foundation to deflect criticism that Fannie Mae was using its tax exempt status to advance corporate interests and skirt campaign finance and lobbying laws. The new office plans to expand the foundation's "help the homeless" initiative beyond Washington to five major cities.
Let's hope so. If the mortgage securities industry balks on its social responsibility, that's not a good harbinger for Wall Street at large. Corporate giving is not a fair-weather commitment, and corporations must sustain their level of social responsibility--come rain or come shine.
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