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How we plan to use technology to serve women in Guatemala during the COVID-19 crisis

 

Everything has changed. It’s true for the whole world and for the work we do at Friendship Bridge for vulnerable women in Guatemala. All our in-person operations have stopped and in just a few short weeks, we’ve turned everything around. How did we do it?

Like you, we are using technology in new and creative ways to continue providing invaluable services to our clients. We wrote 3 weeks ago about the steps we’ve taken to prepare and support them through this challenge from afar. Not only are we calling clients to address their concerns about COVID-19, we are also striving to continue regular business operations while treating staff responsibly.

We adapted quickly, but not without costs and challenges. With your help, we are now ready to take the next step and use this time to strategically strengthen our position and continue empowering Guatemalan women to build a better life.

 

Friendship Bridge is seeking to raise $30K to support women in Guatemala through technology solutions. A group of generous donors answered our call for support and together are offering a match on all donations up to a total of $30k until May 8th 2020. Thank you to Christy and Geoff Hoyl, Katie Kitchen and Paul Kovach, and Brandi and Dave Mason for providing Friendship Bridge with this generous match. Double your gift today. Donate now to help us carry out our plan to use technology to solve the problems this crisis is creating.

 

• Although Guatemala is a poor country, many clients own a cellphone. When our facilitators call clients, they can continue their relationships with women who may be afraid and worried about how they will earn money. They can offer exemplary customer service, provide information that is accurate, show care, and comfort our clients during a time of uncertainty.

• Our calls in mid-March gave us real, on the ground information regarding the level of knowledge, clients have about the situation and their concerns. The calls gave us the opportunity to prepare clients to confront the situation, demonstrate our commitment to them, and get feedback on what might be the best solutions or interventions in response to the crisis.

 

 

 

  • We have 11 nurses in our Health for Life Program who are ready to provide telehealth services to our clients to keep them safe and informed.
  • In partnership with Maya Health Alliance, our nurses will be able to call clients to discuss symptoms, provide healthcare education, and direct women on treatments as needed. When reliable and trustworthy information is scarce in Guatemala, our clients will have access to accurate healthcare education and share it with their communities.

 

 

  • We have over 170 staff in Guatemala who will begin using our new INTRANET, our new internal communications tool, to receive timely, imperative, and streamlined organization-wide communications from Friendship Bridge online.
  • We are also using this time strategically to take advantage of remote learning opportunities during restrictive shelter-in-place orders. With the use of an online learning platform, staff will be trained on customer service, emotional intelligence, and responsible loan collections practices from the safety of their homes.

 

 

As you know, Friendship Bridge works with the poorest of the poor. We have a proven record of helping women and their families climb out of poverty and the need for microcredit will be greater than ever once this pandemic is behind us. To weather this storm, Friendship Bridge needs your help now.

Can you make a donation today? We’ll put it right to work by being Here for Her through technology solutions.

 

 

Giving Tuesday: #GivingTuesdayNow is a global day of giving and unity that has been moved up and will now take place on May 5, 2020 as an emergency response to the unprecedented need caused by COVID-19. Join the movement and donate to Friendship Bridge today.

CARES Act Charitable Giving Incentive: Includes a new above-the-line deduction (universal or non-itemizer deduction that applies to all taxpayers) for total charitable contributions of up to $300. The incentive applies to contributions made in 2020 and would be claimed on tax forms next year. The bill also lifts the existing cap on annual contributions for those who itemize, raising it from 60 percent of adjusted gross income to 100 percent.

ReFUND Colorado: Now you can give some or all of your Colorado State income tax refund to Friendship Bridge. Choose Friendship Bridge with registration number 20033005126 in the “Donate to a Colorado Nonprofit” line on your Colorado state income tax return or software. You may also share this information with your tax preparer.

Here for Her.

 

Since 1998, Friendship Bridge has stared down multiple crises while standing steadfast alongside the women we serve in Guatemala. We persevered through those challenges and emerged more resilient on the other side. Now is no exception, even as the virus responsible for COVID-19 continues to spread worldwide, presenting unknown risks to all.

Because this crisis will be especially dire for our organization and our clients, we are more committed than ever to being here for them and their families now and, most importantly, after the crisis. The health and safety of our community, staff, and women in Guatemala are at the core of our decision making. In an effort to ensure the safety of all our stakeholders, we are being proactive, compassionate and thoughtful in our response to COVID-19.

Below is an update on the situation in Guatemala and a list of just some of the measures Friendship Bridge has implemented thus far, rooted in our core values.

 

When this was written on March 24, 2020, there were 20 confirmed cases of COVID-19 in Guatemala and testing for the virus has been extremely limited. Testing is only available in the nation’s capital, Guatemala City, and health experts believe the number of cases is much higher and will only continue to climb as testing becomes more available.

Honduras and Guatemala are the countries most susceptible to a large-scale outbreak due to the poor quality of their health systems. The Guatemalan government understands this and they are implementing measures like closing borders, canceling all Semana Santa activities, and closing restaurants and schools until further notice.

Guatemalan economists believe that the country is already losing nearly $128 million every day to lost productivity. Also, remittances from the U.S. (which represent nearly 13% of Guatemala’s GDP) are a vital source of income to families across the country. Although they have remained steady up until now, economists predict they will soon plummet as the economic calamity becomes widespread and intractable in the U.S., which will disproportionately affect migrant laborers.

 

Communication, Education, and Support

Mainly through phone calls and What’s App messaging, our staff has been communicating with clients to disseminate information about the Coronavirus, often hearing about it from us first. The early calls were focused on how to stay safe with proper hygiene and social distancing, information on common symptoms, and who to call if someone is sick.

 

Loan Restructuring + Grace Periods

The containment orders have a direct and negative impact on our clients’ ability to earn income. In response to growing concerns of our clients, Friendship Bridge is offering clients the option to restructure their loans to include a one-month grace period.

We also are offering prepayments with no penalties and reduced interest and are prepared to offer a two-month grace period if needed. Clients should not have to choose between making their loan payments and buying food or necessary medical supplies.

 

Suspended Travel

We have postponed our Building Bridges Gala from May 1 to Oct. 8 knowing that large gatherings are not considered to be safe now and in the coming months.

We have also suspended all business travel between the U.S. and Guatemala and suspended all Trust Bank meetings, technical training, agriculture programs, health services, and nonformal education sessions. Some branch offices remain open for support, but with reduced hours and managed by only essential staff.

 

Working Remotely + #TogetherAtHome

Most of our employees in the U.S. and Guatemala, which is approximately 175 people, are now working from home where they remain committed to getting us through this crisis while still supporting our clients. While our most critical systems are cloud-based, access to the necessary information is available with an internet connection. Access to the internet can be a challenge for many employees in rural Guatemala, but most have smart phones and can access the internet that way. It is complicated!

 

Honored Agreements + Stopped Spending

Even though the economic climate in Guatemala is highly uncertain and risky, we are honoring our agreements for March 2020 and will disperse new loans to clients that were previously approved. And we will continue to offer new loans where longer-term clients still have viable businesses.

We have canceled all organizational spending and purchasing of anything not deemed essential.

 

Open + Accurate Information

Misinformation abounds in Guatemala regarding COVID-19 and we are doing our best to counter false messaging with accurate medical guidelines to keep our clients and staff informed and safe. We continue to be transparent with our clients about their loan status and with our supporters about the steps we are taking to respond as an organization. We are constantly reviewing various financial scenarios as we make some very difficult decisions about a future no one knows for sure. These are indeed difficult and sad times for Friendship Bridge and our clients.

 

 

You have always stood by our clients and now we need you here for her more than ever. Our clients continue to be at the forefront of our decisions. Our response to our clients’ needs through restructuring of loans and deferment of payments will not be possible without your ongoing support.

We ask for your continued support through a gift today to allow Friendship Bridge to continue creating opportunities that empower Guatemalan women to build a better life.

Please contact us by email if you have any questions and please take good care of yourselves.

 

 

Got Health?

by Rachel Turner

Maria, born to subsistence farmers, didn’t remember a time in her childhood when she wasn’t working in the fields. In Guatemala, it’s not unusual for children to work in agriculture instead of attending school. This was the path Maria’s childhood took. She worked long, hard hours with sharp tools, no protection, and lots of exposure to pesticides. As she grew older, she learned to weave when she wasn’t farming. Education was never an option since there wasn’t
extra money.

Maria married a farmer who had a different vision on life. He supported Maria in her desire to attend school. After much persistence, Maria learned to read, write, and study. At 20-years-old, she graduated from sixth grade. Excited by her accomplishment, Maria determined each of her four children would attend school. While her husband farmed, Maria started a side business weaving traditional Guatemalan blouses (huipiles). A few years later, she became a Friendship Bridge client, expanding her weaving business and diversifying her income by selling tamales three days a week. She enjoyed the monthly education sessions at her repayment meetings since they gave her access business training and how to explore income options. Maria began saving her profits and after a while she had
enough to start a convenience store in her village.

“I’ve always been a weaver, and when I joined Friendship Bridge, I not only had the opportunity to have financial resources for my textile business, but I was able to start another business,” said Maria. “With the training I have been receiving, I have been able to grow my business. Thanks to the last two parallel loans I received, I have been able to increase and diversify my inventory. My husband helps me with the business, and he is so proud of me.”

Maria also received free preventive healthcare through Friendship Bridge’s Health for Life program and learned how to better her children’s nutrition.

“I feel less stressed since I’m making a profit in my businesses. I have enough food for my children and grandchildren, and I feel empowered to make good decisions,” said Maria. “We Friendship Bridge clients are lucky because the organization doesn’t just care about helping us build a business, they also care about improving our health and wellness.”

Like Maria, 78% of clients say that because of Friendship Bridge they have increased the number and quality of meals their family eats. Maria, now 54-years-old, currently houses 14 family members, and she is confident they will continue to thrive. Through programs and services, Friendship Bridge is meeting United Nations Sustainable Development Goals 2 and 3 – Zero Hunger and Good Health and Well-Being.

From Orphan to Entrepreneur – Elena empowers change

by Rachel Turner

Elena thought back to sitting outside with her grandmother as they both weaved with backstrap looms. Only a third-grader, Elena’s full-time work was weaving intricate huipiles (Guatemalan traditional blouses) and caring for chickens.  After all, in El Quiche, Guatemala, not many girls attended school after third grade. All they needed was the ability to read and write–according to family tradition. To make matters even more difficult, Elena and her four siblings had lost their parents.  Thankfully, their grandmother took them in, but it took all of them working to make ends meet.

Today at 35-years-old, Elena spends her days sitting at a treadle loom, traditionally only used by men, creating beautiful cortes (Guatemalan traditional skirts). All of those years elaborating designs for the huipiles certainly came in handy. Elena is happy. She and her husband Miguel are business partners, and they have three beautiful girls.  It had not always been this way, but after a long journey of growth, Elena finally felt they were on the right road.

Just a short time ago, Elena lived the life of a single mother while her husband worked in the United States doing construction. He couldn’t find work in Guatemala, so he left. For five long years, Elena worked her husband’s treadle loom bringing in as much income as she could. During that time, she was introduced to Friendship Bridge’s programs and services.  Suddenly, she found a support system. With the financial capital, she slowly began building her weaving business. The monthly education sessions taught her about health, business administration, and self-esteem.  Her Trust Bank (the group of women with whom she took out a loan) gave her moral support.

Five years later, when her husband was deported back to Guatemala, Elena was a different woman. She felt strong, confident in her decision-making skills. She had supported her daughters well and had plans for the future. Miguel noticed the differences and was surprised. He grew to like the new Elena. She became his greatest ally as he tried to figure out what to do next. “I told him that Friendship Bridge would continue to give us loans to improve our business,” said Elena. “We could look for more clients, improve our designs and together build our business to employ more people.” Miguel was inspired. He stopped planning how he would go back to the United States to work, and he started figuring out with Elena how they could grow a larger business. “Because of the empowerment that I gained through the years with Friendship Bridge, I was able to convince my husband not to travel to the United States again,” said Elena.

Together they have grown to employ seven people from their community. Together they have made the decision to give their daughters the education not normally afforded to girls. “I realize now that girls and boys have the same rights. We want our daughters to become professionals one day,” said Miguel. “They will achieve what my wife and I couldn’t due to the poverty we grew up in.”

Just as Elena was empowered to speak her mind, so 88% of clients say that because of Friendship Bridge they have increased the frequency of contributing opinions to important family decisions. Friendship Bridge is helping solve the problem of gender inequality through programs and services meeting the fifth United Nations Sustainable Development Goal.

 

Diversify, Study, Grow

by Rachel Turner

Being widowed can be a poverty sentence for a woman in rural Guatemala – especially when she has a child.  However, Martha was determined to create a good life for herself and for her daughter. She started a small corner store in her village but lacked the financial capital to make it flourish. She had heard about Friendship Bridge’s microcredit services and decided to check it out.  She joined a Trust Bank, a group of women borrowing together, and grew her small business into a gift store. At her monthly repayment meetings, she received training about business, health, women’s rights, and family. Over time she began to realize her potential as an entrepreneur. She continued to look for opportunities to diversify her business and knowledge which led her to Friendship Bridge workshops on baking and designing decorations.

During this time, Martha also met and married her second husband. They had two more daughters. From young ages, Martha taught her daughters that the key to achieving goals is hard work and determination.  She inspired her daughters to make education a priority by going back to school and proudly graduating from ninth grade even as she ran a store, baked cakes, and made decorations for special events.  She attended a workshop on nutrition to learn how to better care for herself and her daughters. “I want them to be healthy and focused in school,” said Martha. “Education is the foundation for the girls to be successful in their futures.”

Little by little, Martha has improved their lives through a better home, as well as a large space to receive and work with clients.

“Thanks to the loans, I have been able to diversify my business because I have the necessary financial capital to work with,” said Martha. “Now my three daughters have the opportunity to go to school. I want my daughters to have better opportunities – those that I did not have.”

Through Friendship Bridge’s programs and services, nearly 30,000 women are receiving quality education in business, health, women’s rights, and family.  Many of these women are also prioritizing their children’s education providing a foundation for their futures.  Friendship Bridge is committed to helping meet the United Nations Sustainable Development Goal number 4 – providing quality education.

Don’t Worry, Farm Happy

by Rachel Turner

Catarina awoke before daylight to prepare for the day. A small candle gave her enough light to see. She washed with water she had hauled in a bucket. She left her home as the sun was rising hoping to find enough firewood–and clients to buy it–to pay for food. Widowed, it was up to her to feed her four children. Later she would work in her tomato garden. The dry land of her home in Sacapulas didn’t always treat her crop well. But she didn’t complain. Almost everyone in her community also lived in poverty. Natural disasters were not infrequent. Climate change hit them hard in the Extended Dry Corridor of Guatemala.

This was normal life for Catarina before she found educational and financial resources through Friendship Bridge. She joined a group of women called a Trust Bank who take out a group loan and receive monthly business training. “That first loan made a big difference in my life,” said Catarina.  She used the capital to plant a small tomato farm. Later she joined the Agriculture Credit and Training Program learning from Friendship Bridge agronomists about modern farming techniques that improve crops–especially against climate change. They worked closely to identify the various agriculture risks and then introduced new techniques and technology like drip irrigation.

“I fought really hard for my family,” said Catarina. “With Friendship Bridge I found a great opportunity because before we had nothing, and the Agriculture Program helped me to produce good tomato crops. The difference the program makes here is noticeable since other people who are not part of Friendship Bridge have losses. But me and my friends in the Trust Bank have succeeded as agricultural entrepreneur women.”

Like Catarina, sixty percent of clients in the Agriculture Credit and Training Program who have received the trainings have modified their traditional methods and adopted modern ways of farming. Through this program, Friendship Bridge meets two of the United Nations Sustainable Development Goals — Responsible Consumption and Production (Goal 12) and Climate Action (Goal 13). As the population is growing, resources are becoming more limited. Therefore, it is increasingly important to educate farmers on responsible uses of land resources. Learning sustainable farming practices and risk mitigation, our clients begin understanding water conservation and how to produce higher yields. In addition, they better understand their production costs and how to run their business more effectively.

For Catarina, the profits and business trainings motivated her to create a parallel income by starting a store and buying a motorcycle to distribute her products. Now she and her family enjoy basic services like running water, electricity, and telephone access. “Thank you, Friendship Bridge, for your support. We had nothing, we suffered a lot, we didn’t even have basic services,” said Catarina. “Now my sons are growing healthy. I have no worries because I have enough to have a decent living without worrying about the future.”

Rising Up: Maria’s Story

by Rachel Turner

Fifteen days after Maria gave birth to her only daughter, her husband abandoned her and their six children with a mountain of debt and no source of income.

“It gave me the opportunity to be brave and rise up for the good of our children,” said Maria, an entrepreneur at heart. She had learned to sew and design from her father and brothers as a young girl after her mother died. When her father married her off to the neighbor boy at seventeen, the new couple decided to design jewelry together and sell it. With Maria managing the business, it grew considerably. However, fourteen years later, her husband took the business and left debts.

Determined to build an independent life, Maria traveled via bus three hours from her home to build a clientele for a new jewelry business. Her neighbors ridiculed her. Others advised her not to go. She pressed on, visiting boutiques and artisan businesses showing samples of her work in a new territory. Her trip was a resounding success. She met a shop owner looking for someone to create new designs out of Colombian beads. Today, she continues to provide products for him.

During that time, she also met America Chiyal from Friendship Bridge and joined a Trust Bank.  She obtained a loan to help build her artisan business but also received moral support from the women at her monthly loan repayment meetings.  Her confidence began to build. Old clients began looking for her since they valued her integrity and the quality of her work. Little by little, her business grew.

Along with business training, and community support from other businesswomen, Maria also used Friendship Bridge’s Health for Life services, allowing her to receive preventive healthcare for free in her native language through a mobile clinic in her community.

Later she joined Friendship Bridge’s Artisan Market Access program which taught her about expanding her business, quality control, product pricing, and exporting. “I bettered my children’s nutrition so they could be healthy. They attended school, and four of them are now working while two finish school,” said Maria. “Today I employ more than 25 women, I export to the United States, France, and Colombia, and I own property where I will build a house next year.”

Today, Maria employs her two daughters-in-law and works daily with her 16-year-old daughter.  Two of her sons also work in the business.  “My life is full,” said Maria. “To get up after a failure is difficult. However, today my business is thriving, I feel empowered, and I can make my own decisions and support my community.  I’m very grateful.”

Each time you donate to Friendship Bridge, you change the world, one woman at a time. Now is your chance to make an even greater impact! A generous donor is matching donations up to $30,000 until December 9th. Take advantage and make each of your dollars go even further by donating at www.friendshipbridge.org/Maria

The Passing of Rebecca Cueto

On October 5th, we lost our dear friend and longtime co-worker, Rebecca Cueto. As it says in her below obituary, “Rebecca was a compassionate and thoughtful person committed to being kind to those around her and making the world a better and brighter place, especially for women.” At Friendship Bridge, we are humbled to have had Rebecca as an incredible advocate for our clients through her hard work, deep compassion and support. Her strength has been passed on to the thousands of women we work with who Rebecca was fiercely committed to serving. We will miss our dear friend greatly.

You can read Rebecca’s obituary here:  https://www.kasslyfuneral.com/notices/Rebecca-Cueto

Martha: How Her Success Blossomed

“I want my daughters to have better opportunities, opportunities that I did not have since my father abandoned us when I was a little girl and my mother, with tremendous effort, moved us forward. Because of her, I was able to reach the 9th grade.”

Martha is 34 years old and a mother of three children. Nine years ago she came to Friendship Bridge looking for those better opportunities. She took out her first loan, and now, 14 loan cycles later, her business and family are thriving.

“I have been able to diversify my business because I have the necessary financial capital to work. In addition, I was selected to participate in an Advanced Training provided by Friendship Bridge and I learned to make cakes. Shortly after that, I was able to buy a new stove for my cake business. Now I have a handicraft store selling wreaths. I also sell shoes and clothes, and I was able to buy my electric machine to make “Granizadas” (crushed ice with flavor and fruits on top).”

Martha also had taken advantage of Friendship Bridge’s Chanim Chanim loan and recently took our her fourth loan of this kind. Chanim Chanim means “fast” in Maya Kakchiquel language. This loan gives quick access to loan capital to existing clients with a good credit history.

Now Martha makes enough money to be able to fix her house. She also is sending all three of her children to school. Her oldest daughter just started High School.

Martha is one of the many client success stories featured in our 2018 Annual Report. Click HERE to read more about our program, clients, and how we are growing as an organization!

Gloria: An Honor Earned by Whole Planet Foundation

by Marta Julia Ixtuc Cuc

Whole Planet Foundation was founded by Whole Foods Market. They work in 77 countries around the world. The region of the Americas (including North, Central, South America and the Caribbean) has approximately 23 partners. Among these is Friendship Bridge. Every year Whole Planet Foundation recognizes the hard work of the field officers from the organizations they partner with by giving the Field Officer Appreciation Award. In the last 3 years, Friendship Bridge has nominated exceptional Facilitators (loan officers) for this award. This is the third time one of our nominees has won, and it was presented to Gloria Cholotío. The Whole Planet Foundation award committee was impressed by Gloria’s character, the quality of her portfolio, and her passion for delivering Non-Formal Education. As a result, she was recognized as one of the top three facilitators in all of the Americas!

At 41, Gloria is Friendship Bridge’s longest-serving Facilitator. She has been working for the organization for 16 years. Since then, she has built a client portfolio of over 580 women who she meets with monthly to provide education and microcredit. When Gloria first saw the vision and mission of Friendship Bridge, she said: “I was struck by the fact that Friendship Bridge supports women through credit and non-formal education.” Gloria has two daughters and one son so a commitment to women’s education is important to her. All three of her children have pursued education. The oldest is in university for systems engineering, the next oldest is a preschool teacher, and the youngest is still in school.

Gloria with JP Kloninger

During a small award ceremony on July 30th at the Friendship Bridge office in Panajachel, Guatemala, JP Kloninger, the Regional Director of the Americas from Whole Planet Foundation, highlighted different reasons why the committee chose Gloria as one of the winners. Among the many reasons he mentioned were her dedication to educating more than 580 women per month which is not only above the average for facilitators within the organization but also above the average for the entire region of the Americas. JP also highlighted the fact that Gloria’s parents put a lot of value in her education, and that she has passed on that same value to her own family and also her clients. She is a role model for many women.

When Gloria went to receive the award, she felt very excited and shared with the crowd, “Thank you very much for the trust you have in me! I didn’t expect this award after so many years in the organization! But it has been worth it because of the women.” With tears in her eyes, she said, “JP touched my soul when he mentioned my parents because everything I am is because of them. I have seen many colleagues grow up in this organization. I love and admire them. I greatly appreciate Friendship Bridge because of the many lessons I have received. I have had many clients, and I have seen them stand up, fall, and lift up again. Some have died, and for them, I dedicate this award.”

At Friendship Bridge, we feel so honored to have members of our staff, such as Gloria, who align themselves with the vision and social mission of our organization. We are proud of Gloria for her hard work during these 16 years in the organization, and we greatly appreciate the recognition of our staff by our wonderful partner Whole Planet Foundation.

 

 

Marta Julia Ixtuc is the Client Communications Coordinator in Guatemala. Based in Sololá, she continues seeking to support the development of Guatemalan women in search of their own ways out of poverty.

Maria: Success After Failure

“To get up after a failure is difficult. I had an unsuccessful marriage. However, it gave me the opportunity to be brave and to move forward for the sake of my children. I found Friendship Bridge, which not only supported me with financial resources for my small craft business but also helped me with moral support through my monthly Trust Bank meetings. Today, my business is thriving, I feel empowered, I can make my own decisions and support my community. Thanks to the growth of my business, I have been able to employ 25 people from three communities.”

Maria is one of our many success stories. Like many clients, Maria was struggling to survive on her own after her marriage ended. She turned to Friendship Bridge for support. Now in her 5th loan cycle with us, she is an employer and recently came in second place for the 2019 Citi Award as recognition of her business success! She is an example of how the tools we offer clients through our Microcredit Plus programs make a lasting difference in their lives.

Maria recently came to our Central Office with two large cakes, and a letter expressing her gratitude for Friendship Bridge’s support. Her letter is below:

Friendship Bridge,

I cordially wish you success in your daily work.
 
Through this letter, I want to thank you for the opportunity that you gave me to participate in the Citi Bank Awards. For me, it was a huge joy to win 2nd place. I learned so much and, at the same time, I was able to show my artisan products at an international level.
 
I am so happy for the support that Friendship Bridge gave me in that process. It was an unforgettable and good experience for me. I hope to continue working with you in the future. God bless and I wish huge success for all Friendship Bridge employees.
Yours truly, María
We are proud of Maria and her success! If you are interested in supporting her further you can shop some of her beautiful artisan items through our Handmade by Friendship Bridge online shop. Follow the links below!
More Bang for the Buck with Charitable Contributions from an IRA – the Qualified Charitable Distribution

More Bang for the Buck with Charitable Contributions from an IRA – the Qualified Charitable Distribution

 

by James Wood

Are you 70 ½ or older?  Do you have an IRA?  IF SO, read on:

What motivates us to give to charities?  The answer to that question is different for everyone, I suppose.  In my case, my wife and I generally look to where we think our donations can get the most bang for the buck — does the charity really need our help?  — are our dollars going to be well spent?  — what aspects of the charity earn our long-term loyalty, or cry out for some short-term support?  While our primary motivation has little to do with any tax benefits that might accrue to us, we look at the tax benefits as a way to maximize what we can afford to give away.  In this light, I wanted to share with a subset of our wonderful Friendship Bridge donors an idea that might be appealing.  As you might already know, provisions in the recent tax law change created a relatively simple way for many donors to make charitable contributions on a more “tax-efficient” basis, through something known as a “qualified charitable distribution,” or “QCD.”

If you are 70 ½ or older and have an IRA, you can make a charitable contribution directly from your IRA to a 501(c)(3) tax-exempt entity such as Friendship Bridge, and the contribution will count as part of your “minimum required distribution” for the year in which the contribution is made.  This may have some big benefits if you fall within a “sweet spot” under the new tax law.  (QCDs are limited to $100,000 each year.)

Normally, most or all of the required minimum distributions that you receive from your IRA will be taxable to you, but if you make a QCD, then the amount of the charitable contribution, if made directly from your IRA, will not be included in your adjusted gross income but will count as part of your minimum required distribution.  The kicker is that you can still use the new, more generous personal exemption of $24,400 for joint filers ($12,200 if filing singly), and the extra standard deduction for the aged and blind of $1,300 each for joint filers ($1,650 if filing singly) – these are all 2019 amounts.  For many of us older donors, this may fit us to a T.  Like us, maybe you’ve paid off your home mortgage by this time in your life, so you aren’t generating a lot of mortgage interest deductions.  And maybe it’s going to make more sense for you to use the increased personal exemptions instead of itemizing your deductions; this is especially true now since the deduction for real property taxes and state income taxes has been capped at $10,000.   If you happen to be in the same boat as my wife and I are in, you are going to want to stop itemizing and instead will use the personal exemptions and standard deductions.  But by using some of your minimum required distributions from an IRA to make your charitable contributions with a QCD, you effectively are getting a charitable deduction AND the benefit of the higher personal exemptions.

To boil all of this down, if you are 70 ½ or older and you have an IRA, you really ought to look into this.  Your attorney, tax accountant, or investment advisor can give you advice on how to do this and whether it makes sense for you.  It’s not complicated at all.  But it takes a little bit of planning, so don’t wait until the last minute!

 

James joined the Board of Friendship Bridge in 2011 and is now Co-Chair of the Board. He was a business law attorney at Sherman & Howard in Denver for over 42 years.  James received his B.A. from the University of Texas at Austin and his J.D. from Yale Law School. He first became interested in Friendship Bridge when he helped develop an experiential learning program at the school where his children attended; students took school-sponsored trips to Guatemala and learned about Friendship Bridge. For several years, James provided pro bono legal services in connection with borrowings by Friendship Bridge and various corporate and contract matters. His wife (Felicity Hannay) was a board member from 2006 to 2012.