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Individual giving makes a difference

After watching the powerful images and later learning about the economic and social impact of recent natural disasters here and abroad, many of us instinctively dug into our wallets and made donations. According to Giving USA, charitable donations rose six percent in 2005, to more than $260 billion, fueled by disaster relief giving.

Yet, if you're like many Americans, it probably seems as if whatever you donate won't be enough to make a real difference in these situations. Will your $25 or $50 or $100 really help?

The answer is 'yes.' Although corporate foundations give millions each year, individual giving continues to be the largest single source of donations, accounting for over three-fourths of all charitable giving in 2005. Representatives from most charitable organizations would agree that even the most humble gift is appreciated and does help.

The good news is that you don't need to be wealthy to achieve your philanthropic goals and support a favorite non-profit organization or a cause that is close to your heart. One long-term strategy that can effectively reach your philanthropic goals is giving the gift of life insurance. The gift of life insurance is an affordable and flexible way to maximize your contributions to help you leave behind a legacy for future generations.

There are several ways to structure a gift of life insurance, but the end-result remains the same - the organization benefits. As the beneficiary of a life insurance policy, a charity receives proceeds on a tax-free basis upon the donor's death. In most situations, a donor applies for a permanent life insurance policy on his or her own life and names a charity as both the owner and beneficiary of the policy. The annual premiums are income tax-deductible since the charity is the owner.

For those who want to maintain control and access to a policy's cash value without an income tax deduction, but still have the charity receive the insurance proceeds at death, a donor may retain ownership of the policy and simply name the charity as a beneficiary. Either way, you're able to leave a mark on a cause you believe in through life insurance.

Another more immediate strategy to support a non-profit organization is to make a charitable distribution from your IRA. A recent tax law change allows tax-free 'gift' distributions.

Previously, if an individual wanted to take funds from an IRA to give to a charity, he or she would be required to first take distribution of the funds, which were fully taxable as ordinary income. This could create quite a tax burden. The new law allows IRA owners age 70 ½ or older to gift up to $100,000 directly to the charity in 2006 and 2007.

The bottom line is that supporting a charity or organization you believe in - either through the gift of life insurance or gift distribution from qualified retirement accounts - is an easy way for you to leave your mark. All it takes is a simple call, a little paperwork and a heart that wants to make a difference.

For some donors, these gift strategies may be the answer to 'what else can I do?' Donating life insurance benefits or retirement account distributions to organizations and charities you believe in are easy ways to help further the organization's missions and contributions to society and to leave a legacy.

John Pawlowski

Managing partner of Lake Oswego branch of Northwestern Mutual Financial Network