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Practicing strategic compassion: a year after Katrina, the Gulf Coast is still rebuilding. Here's how to make sure your charitable giving is effective.

CHERRELLE ROBINSON FEARED THE worst. Last August, the Los Angeles resident worried that her cousin Charlene, after years of living below sea level in a flood-prone section of New Orleans, might have been one of the more than 1,000 people killed during the wrath of Hurricane Katrina. "I panicked because that was my only relative in New Orleans," says Robinson, 34. "There was a connection that we had. She was like an extension of who I am."

Robinson filed a missing persons report with the police, but months passed before authorities located her cousin in Florida. Meanwhile she sat in dismay, watching the horrific television footage of people, mostly African Americans, stewing in the heat and contaminated floodwater. "I couldn't imagine her being caught up in those images. It definitely touched me," she says. Robinson knew she had to act. "It's something that you feel responsible to do. If I were in that situation and I needed help, I would want someone to help me."

Now, more than a year later, the city of New Orleans still needs help. "There is an immediate need for charitable funds to assist us in rebuilding our great city of New Orleans," says Mayor C. Ray Nagin. The decimation of the business community, at the heart of the city's growth and development, exemplifies the destruction that still lingers. Before the hurricane, "New Orleans was a thriving metropolitan city with over 22,000 businesses," Nagin says. "As a result of the devastation of Hurricane Katrina, nearly one year after the storm, we only have about 2,100 of our companies back in business--that is only 10% of our businesses that have been able to return."

In times of crisis, we all want to give of our time, talents, and money. In fact, African Americans have traditionally been a philanthropic community, donating 25% more of their discretionary income to charities than whites, mostly to churches, says Stacy Palmer, editor of The Chronicle of Philanthropy. Yet, when it comes to making monetary contributions, blacks often do so indiscriminately.

To have the most impact, your financial contributions should be part of your overall wealth-building strategy, as stated in Declaration of Financial Empowerment Principle No. 9: to use a portion of my wealth to strengthen my community. Bead on to learn how to make sure your gifts go where they're intended and that your giving is in line with your financial goals.


Tragedies such as Hurricane Katrina, the tsunami in Asia, and 9-11 can spark an unprecedented outpouring of giving. When many African Americans reach into their pockets, they seek out African American-led charities and organizations that will use their collective funds in communities of color.

That's what Deborah A. Elam did. As chief diversity officer of General Electric and a member of the executive leadership team of GE's African American Forum, one of several company organizations that facilitate dialogue and progress in diversity, Elam listened to Forum members' concerns about reaching out to the community after Hurricane Katrina. They wanted to make sure their financial gift made the biggest impact on those in need.

Since Elam is from New Orleans, she was charged with finding a suitable charity. Her strategy began with calling prospective recipients with a list of questions designed to find out what the organizations were doing with the money they collected.

Elam was most impressed with the Baton Rouge, Louisiana, and Jackson, Mississippi, affiliates of 100 Black Men of America Inc. "There were children who needed school supplies. We had babies who needed stuff, too, so we were buying formula and diapers for them as well," says Jonathan C. Augustine, general counsel for 100 Black Men of Metro Baton Rouge.

The group raised $30,000 for each chapter, and GE matched the funds for a total of $60,000 each, to help them continue to buy supplies for impacted families.

Company groups weren't the only ones to donate large sums of money for hurricane victims. Collectively, African American organizations raised at least $12 million in the first month alone, according to The Chronicle. Black Entertainment Television Inc. and the National Urban League spearheaded the S.O.S. Saving Our-Selves Telethon, which raised the bulk of that total.

The fundraising efforts are far from over. "When you look at the devastation and you look at the magnitude of it, the rebuilding efforts along the Gulf are a long-term process," says NAACP President and Chief Executive Officer Bruce S. Gordon. Indeed, Nagin has instituted a Bring New Orleans Back Commission, which is tasked with rebuilding the educational system, reviving the city's cultural district, enticing business owners to stay in the Big Easy, and preparing the local government for future challenges. A Bring New Orleans Back Fund is in place to collect the necessary contributions.

While New Orleans officials continue to raise money, black political and philanthropic leaders outside of the city are hoping to use Katrina as a lesson in the art of harnessing financial power strategically to create change in the community.


Robinson, a freelance creative story developer for film and TV, ultimately gave $1,000 to her alma mater, Howard University, because she was impressed that Howard had taken in hundreds of displaced students from Xavier, Dillard, and Southern universities, and she assumed the money would go toward their education. She didn't learn until after she had donated her money that the finds Howard collected were administered to the American Red Cross.

Before you write that first check, follow your head, not your heart Here are some additional tips to consider:

* Check the organization's designation. Ask if it has the 501(c)(3) classification, meaning the Internal Revenue Service recognizes it as a qualified charitable entity that can receive tax-deductible donations. You can call the IRS to find out if a charity makes the list or check online at Just because an organization says it's tax-exempt does not mean a donation to it will be tax deductible.

* Find out how the organization will use your funds. Even if you're familiar with an organization, don't assume it will spend the money the way you see fit. "I should read the fine print a little better next time," Robinson acknowledges. "At this point, I can only hope that the Red Cross is allocating the money to Katrina students in need." A year later, Robinson is going so far as researching charitable organizations that can handle donations in times of crisis so she won't find herself in the same predicament the next time there's a disaster. "We know every year hurricanes hit the Southern region of our country. Have a list of reputable places to send your check, which will put you more at ease than if you were waiting for Jane Doe to pop up with an organization," she says.

* Ask the right questions. The best way to make sure your money is going to a cause you believe in is to ask, says Elam. "We wanted to know if they had an infrastructure in place. Did they have relationships already established with other community-based organizations? Would they really be able to have the clout and pull to draw all the right parties to the table to get the dollars that we would contribute transitioned into services that would help the impacted people?"

* Review the mission. Check an organization's Website to make sure you understand and agree with its mission and initiatives. Many charities keep a copy of their annual report online, which provides a breakdown of how they spent their money in the past. Research how much money goes to the cause and how much goes to overhead such as administrative staff and marketing. According to charity watchdog group Charity Navigator, if an organization spends less than 75% of its funds on the cause it's raising money for, walk away.

* Check up on an organization's finances. Ask for a copy of its most recently filed IRS Form 990, which is a reporting return that most tax-exempt organizations must file. To get a copy, along with compensation information for top executives, log on to, a site that monitors nonprofit activity. Other "Websites such as, www.char, and also provide information on how various charitable organizations spend their money.

Foundations--philanthropic entities that provide grants to groups or individuals working toward a particular cause--offer another avenue for giving. Foundations are ideal for people who want to contribute to a specific concern such as education or race relations but who don't want to do the legwork to check out charities.

In the days after Katrina hit, the Twenty-First Century Foundation instituted the Hurricane Katrina Recovery Fund to provide money to organizations on the ground helping victims rebuild. "Our mission is to promote strategic giving in the black community," says Erica Hunt, president of 21CF. "We research organizations in the community that solve our problems." Ten days after the fund was created, it had raised $215,000 and had awarded grants to organizations such as the National Coalition on Black Civic Participation and the S.O.S. Coalition.

But in order for the African American community to have true financial clout, giving must take place long after the disasters have disappeared from the headlines, Hunt says. Only when giving takes place year-round will the black community be able to build resources rather than desperately trying to raise money for crisis after crisis. "If we have our own resources, we can build the agenda and say, "We have these issues, and here's how we think they should be solved. We're ready to put some money down on the table.' That's a much stronger position than one in which we always seem to be asking for something."


Strategic giving also means that you consider your financial situation. "You're not giving to a charity to get a deduction," says Genevia Gee Fulbright, vice president of Durham, North Carolina- based Fulbright & Fulbright CPA. "But that's an additional win-win."

Figure out how much you can afford to give and stick with that figure. A tax professional can tell you if you're better off donating more money in certain years to reduce your tax burden. "If you find that you have a little more money at the end of the year or you made a little more profit than you anticipated, you can give more to charity," says Fulbright.

Generally, your deduction for charitable contributions is limited to 50% of your adjusted gross income, though there are cases in which 20% and 30% limits apply. The best way to donate is via credit card or check because they provide proof of the transaction. However, "If you decide to give cash, always request a receipt," says Fulbright. "If the charity is unwilling to give you one, do not donate to the group."

If you consistently donate to charity, organize a team of financial professionals to help you make sound decisions. "Ideally you want your financial adviser, tax person, and estate planning person working hand in hand," says Lanta Evans-Motte, president of the Association of African American Financial Advisors. "Each of those three parties will have a different perspective that they're trying to focus on. Your estate planning attorney isn't necessarily going to be keyed in on how your money is invested and what rate of return it's getting. The financial adviser and attorney aren't necessarily going to be up on tax laws."

Estate planning is a consideration that you should not take lightly. Not only can you bequeath assets such as stock and real estate to your favorite charities but you can make other provisions as well. "You can certainly structure your estate so as not to give it to the government but to give it to organizations that you care about," says Obren V. Barnes, an estate attorney and president of Literacy Institute for Financial Enrichment in Lanham, Maryland. You can leave all or a percentage of your estate to charitable organizations and even designate when the assets become available to the charity, such as after the death of a spouse or child.

"Any strategy needs to be coordinated with your overall financial plan," says Evans-Motte. "Not just your current income, expenses, and assets, but also what your projected ones will be." That way, you'll ensure that your gifts have the most impact.
Major Katrina Relief/Recovery Funds

Relief Fund The Tom Joyner
 Morning Show,

National Urban National Urban League Monetary
League Katrina Fund

NAACP Disaster NAACP Monetary
Relief Fund

NBCSL Relief Fund National Black Caucus Monetary, supplies
 of State Legislators

Hurricane Katrina Twenty-First Century Monetary
Recovery Fund Foundation

National Conference National Conference Monetary, food,
of Black Mayors of Black Mayors clothing
Relief Fund

SOS Coalition Relief Saving Our Selves Monetary, clothing,
Efforts Hurricane Coalition computer equipment

Jazz Musician Fund Jazz Foundation of Monetary, instruments,
 America counseling

FUND USED CONTACT To support households
Relief Fund that have taken in Relief Fund;
 Katrina victims P.O. Box 803209;
 Dallas, TX, 75380-3209;

National Urban Rebuilding with focus 877 NUL-GULF;
League Katrina Fund on jobs and housing

NAACP Disaster Emergency relief; 410-580-5746;
Relief Fund ensuring equitable
 distribution of
 relief services from
 government, other

NBCSL Relief Fund To help Alabama, 202-624-5457;
 Louisiana, and
 Mississippi Black
 Caucuses' relief

Hurricane Katrina Grants given to 212-662-3700 ext. 201;
Recovery Fund groups supporting
 recovery, rebuilding

National Conference Rebuilding funds for 404-765-6444
of Black Mayors towns affected in
Relief Fund region

SOS Coalition Relief Helping victims find 866-372-9SOS;
Efforts jobs, housing;

Jazz Musician Fund Given to Gulf Coast 212-245-3999
COPYRIGHT 2006 Earl G. Graves Publishing Co., Inc.
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Author:Holmes, Tamara E.
Publication:Black Enterprise
Geographic Code:1U7LA
Date:Oct 1, 2006
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