NEWS SOURCES | ARCHIVES OF PAST MONTHS

In Kind Donations Under Scrutiny

Charitable donations of everything from mittens and food to property and planes is coming under Congressional scrutiny, thanks to research raising questions about the real value of donated vehicles.

A report to be released Friday by the General Accounting Office, the investigative arm of Congress, finds that there were often wide discrepancies between the value donors of vehicles claimed as deductions on their tax returns and the amount received by the charities that were their beneficiaries.

Vehicle donations cost the government $654 million in tax revenue in 2000, but the study suggests that charities received less than 5 percent of the value donors claimed in two-thirds of 54 donations to four charities that gave information to the agency.

For instance, one taxpayer valued his 1994 Saturn SL2 Sedan at $5,750, the car sold for $1,350 and the charity received $968. In another case the G.A.O. examined, a taxpayer valued his 1986 Toyota 4-Runner at $3,950 on his tax return, the vehicle sold for $300 and the charity received $5.

In six of the cases, so little value was realized that the charities ended up owing money to the middlemen who handled the vehicles. "This report further exposes what's proving to be a rat's nest of problems in the area of aggressive valuation of in-kind gifts," said Senator Charles E. Grassley, chairman of the Senate Finance Committee.
NY Times

Misc. Economic Brief Reports of the Month

11/7 Greenspan on Interest Rates - Alan Greenspan, the Federal Reserve chairman, offered a first hint on Thursday that the era of rock-bottom interest rates may be slowly drawing to a close. Acknowledging for the first time that the economy has grown at a blistering pace in recent months, Mr. Greenspan gave an optimistic assessment of the prospects for strong growth and a gradual reduction in unemployment.

In a speech delivered to the Securities Industry Association, Mr. Greenspan said that the Fed was still more worried that inflation would be too low rather than too high and that the Fed could afford to be patient before changing monetary policy. But he also cautioned that "no central bank can ever afford to be less than vigilant about the prospects for inflation."

The comments left little doubt that Mr. Greenspan wants to keep interest rates low for at least the next several months. But they also offered a guarded hint that the Fed's open-ended commitment to easy money may be waning.
NY Times

11/13 Mortgage Rates Climb Slightly - Interest rates on U.S. 30-year fixed-rate mortgages edged higher for the second straight week, rising above 6 percent, as the market digests the pace of the economy's recovery, mortgage finance company Freddie Mac said on Thursday. Freddie Mac said US 30-year mortgage rates averaged 6.03 percent in the week ending Nov. 14, a slight increase from 5.98 percent in the prior week.

"Mortgage rates remained fairly stable this week as the financial markets tried to discern just how quickly the economy is growing and how sustainable that growth will be," Frank Nothaft, Freddie Mac chief economist, said in a statement.
Reuters News Service

11/25 GDP, Corporate Profits Blast Off - Economic growth and corporate profits raced ahead in the third quarter at the fastest pace in nearly two decades, the Commerce Department said Tuesday, while a second report showed consumer confidence jumped in November.

The nation's gross domestic product, the broadest measure of goods and services produced in the USA, rose at an 8.2% annual rate in July-September. That is above Commerce's initial 7.2% estimate and a huge jump from the 3.3% annual pace of the second quarter. Corporate profits grew nearly 12% from the second quarter and are up 30% from a year ago. Though firms still have limited pricing power, demand is up, and productivity has been increasing faster than wages, improving bottom lines.
USA Today

11/30 Federal Reserve Reports Widespread Improvements in Newly Optimistic Economic Assessment - Retail sales are up, residential housing is booming and even the nation's beleaguered factories are coming back to life, the Federal Reserve said Wednesday in its most optimistic assessment of the economy in more than three years.

The Fed said its latest nationwide survey of business conditions found that the economic rebound that got going in the summer was picking up steam in October and early November with improvements across many industries.

The survey, compiled from reports submitted by the Fed's 12 regional banks, was the most upbeat since before the start of the 2001 recession and the listless recovery that has extended over the past two years.

"Descriptions of the pace of growth varied somewhat. But improvements appeared to be reasonably broadly based with most districts noting growth in a number of industries," the Fed said.
The Associated Press

12/12 The Dow Jones industrial average closed above 10,000 yesterday for the first time in 18 months after the Federal Reserve suggested it wouldn't raise interest rates for at least the next year.

Stocks rose on better-than-expected November retail sales, good news on personal-computer shipments and a $1 billion addition to Home Depot's stock buyback program.

But minutes released from an October meeting of the Federal Reserve's Open Market Committee, which sets the benchmark Federal Funds interest rate, were the true catalyst. The committee agreed inflation would remain low "for a year or two" and interest rates would stay low "for a considerable period."
Newark Star-Ledger

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Plan for year-end charitable donations

It might be the holiday spirit or just thoughts about next spring's income-tax bill, but lots of people start feeling charitable as the end of the year approaches. If you are thinking of gathering a few more charitable deductions before 2003 expires, start planning now. Not only will you avoid the last-minute rush, you may be able to get more benefit for your buck.

Contact your charity ask for information about their giving options. All charities take cash, of course, but some have special programs to encourage larger gifts. For example, some offer charitable gift annuities that pay a monthly income for life. Because you get back a benefit, you only get a partial income tax deduction. However, this might be a good choice if you need to generate income from your assets. Charitable trusts can also be designed to meet specific income or estate-planning goals.

Look at your stock portfolio as a potential source for gifts. By giving away stocks that have appreciated in value, you avoid paying capital gains taxes and still get the full market value as a charitable deduction. If your stocks have declined in value, sell them and give the charity the proceeds. You can use the capital loss on your income tax return.

Paid-up life insurance policies, real estate and valuable art works are less conventional gifts that some charities may be equipped to accept. Be sure to ask the charity before transferring ownership.
By HELEN HUNTLEY, St. Petersburg (FL) Times Personal Finance Editor