DATE: Aug, 2000

The following is intended as general information and does not represent legal or tax advice. Individual circumstances vary - please consult your legal and tax advisors about your specific situation.

CORPORATE GIVING | ELECTRONIC SIGNATURES | ELECTRONIC SIGNATURE TIPS | CAR DONATION CONCERNS

ARCHIVES OF PAST MONTHS

"Infinitely more important than sharing one's material wealth is sharing the wealth of ourselves -- our time and energy, our passion and commitment, and, above all, our love." - William E. Simon

Corporate Giving Increases for 1999

A new survey found that corporate giving increased by 12 percent in 1999 and is expected to grow briskly this year, the Chronicle of Philanthropy reported July 13.

According to the Chronicle's survey of the top businesses in the United States, corporate-giving budgets have seen double-digit growth in each of the last four years. This year, companies on average expect to make a 17-percent increase in cash donations.

The increase in corporate contributions was attributed to the nation's robust economy and the financial success of the companies surveyed.

Leading the list of the top givers of both cash and company products are the three pharmaceutical companies: Merck & Company, Johnson & Johnson, and Pfizer. Wal-Mart Stores reported giving the most cash contributions last year, followed by Philip Morris Companies.

But the survey also found that even though profits and the total amount of donations have increased, corporate giving as a percentage of net income has remained at about 1 percent. This year, corporations said they plan to give away cash and company products equal to about 0.9 percent of last year's pre-tax profits.

"There's safety in numbers in the way that companies think about sizing their corporate giving. If we can take the whole group of leading companies and move up their giving by larger leaps, we feel it will pull everyone else along," said Paul M. Ostergard, president of a new nonprofit group called the Committee to Encourage Corporate Philanthropy. The focus of the group is to spread the word about the importance of corporate giving.

"The capacity of corporate America to give," said Ostergard, "is greater than what we are seeing."

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Federal electronic signature law will let customers seal deals without ink
By Glen Fest
Star-Telegram

To buy a car or close on a house, you may no longer need your John Hancock.

The enactment of a federal electronic signature law in October will make paperwork optional for various online transactions. Automobile and home loans, insurance policy purchases and product disclosure statements are among the legal pacts being freed for online delivery.

Experts said the end of ink-on-paper is unlikely. E-commerce technology and methodology have to make strides, and some people remain cyber-phobic, they said.

"Anything in the past we've done with paper documents will be available online," said Rob Schneider, an Austin lawyer with Consumers Union. "But people still have a lot of concern about online transactions. There are a lot of practical changes that need to be made before we see the widespread use of this type of transaction."

The law, signed June 30 by President Clinton, allows the submission of an electronic signature instead of handwritten script if both parties agree. Companies can send legal notices electronically with consumers' consent, and both parties still have the option of paperwork.

The most worthwhile benefit is faster transactions, regional e-business officials said.

An Austin Internet company executive said eliminating courier and overnight deliveries of legal documents could save days during mortgage closings.

Experts said the foremost barrier to widespread e- signature use is the lack of a standard technology. The law does not specify an electronic signature, other than calling it technology that two parties agree to use.

Passwords, facsimile hand signatures and verification through thumbprints and retina scans may provide proof of identity. But fraud could occur if a person has created a false identity.

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Electronic signature tips

* Do not agree to an electronic contract or to receive electronic notices if you are uncomfortable with computers or email.

* Make sure that your software and hardware are compatible with those of the business.

* Remember, you can choose to receive paperwork.

* Read the fine print and do not sign what you do not understand.

* Keep backup paper copies of electronic documents.

* Notify the business of changes in your email address, hardware or software.

* Close unused email accounts.

* Do not give your email address to a business if you do not want to receive electronic notices.

* Notify the business of problems receiving its email or opening its documents.

SOURCE: Consumers Union

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Car Donations Are Becoming a Concern

Residents of large metropolitan areas such as Washington donate about 8,000 to 10,000 cars a year to charities, which sell the vehicles for an estimated $4.5 million, according to the Better Business Bureau. It is a good fundraising technique for charitable organizations - so good that many groups vigorously solicit donations of old vehicles. Radio advertisements promote the donations as a pain-free way to help a needy organization because consumers get a tax deduction.

But some groups may overstate the tax benefits, and consumers could wind up in trouble with the Internal Revenue Service. The IRS is taking a close look at the tax consequences of vehicle donations because of the increased popularity of donation programs.

Two areas of concern exist: Are vehicle owners properly calculating the fair market value of the cars they are donating? Are charities that sell the donated cars to a third-party auction house complying with the rules for charitable donations?

To avoid problems with the IRS and to make sure the charity fully benefits from the donation, here are some guidelines from the Better Business Bureau:

* Make sure the charity is eligible to receive car donations. The charitable organization must have tax-exempt status under Section 501(c)(3) of the Internal Revenue Code. Ask the organization for a copy of its IRS Determination Letter, which is a two-page form that states whether the group meets tax-exempt guidelines. Churches may not have such a form because they are not required to apply for tax-exempt status. IRS Publication No. 78 contains a list of qualified charitable organizations.

* Verify the charity's track record. Request an annual report and IRS Form 990 to find out how the charity spent its funds in the previous year. Also, make sure the charity is registered to solicit donations with the state. This information is usually available from the state attorney general's office.

* Find out the plan for the donated cars. Many charities say the cars will be used to help deliver services, such as transporting people to jobs or doctors' appointments. Some groups that solicit donations through major ad campaigns sell the donated cars at auction, however. In cases where an 800 phone number is listed, a third-party company may be collecting cars on behalf of a number of charities. If this is the case, the charity may get only about 20 percent of the sale of the car.

* Make sure to get receipts and proper tax forms. The charity should mail a receipt saying it has received the car. This information must be provided to the IRS.

If the donated value is more than $500, the taxpayer must fill out Form 8283 to submit with the tax return for the tax year in which the donation was made. This form requires the following information: name and address of the organization receiving the gift, description of the property contributed, date of contribution, date the property was acquired, how the property was acquired and method for determining the property's fair market value.

If the claim is more than $5,000, a professional, written appraisal of the car is required for tax purposes.

* Use caution when determining the fair market value of the car. The industry benchmark for used-car prices is the Kelley Blue Book, which is available in libraries or on the Web (www.kbb.com). The listings are based on cars in good condition. Some vehicles may be worth less than the Blue Book value if they have been poorly maintained or have numerous dents and scrapes.

The IRS will raise a red flag in any case in which a taxpayer has set a fair market value for a vehicle donation that exceeds the price the charity gets for the sale of the car.

To avoid problems, taxpayers should document their donated vehicle's mileage, condition and features, and include photographs for supporting evidence.

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