Mellody Hobson: Creative Ways to Give to Charity

Sept. 13, 2005 — -- After Hurricane Katrina, many Americans are looking for ways to help the victims. "Good Morning America" financial contributor, Mellody Hobson, answers questions on donating to charity.

Q: How has the response been compared to what we saw after the 9/11 attacks and the South Asian tsunami?

According to Philanthropy.com, Americans have contributed at least $739 million to help victims of Hurricane Katrina. To put this number into perspective, in the 10 days after the 2001 terrorist attacks, Americans donated $239 million to charitable causes, and in the nine days after the tsunami hit, major American relief groups raised $173 million. The Internet has been a dominant channel for donations. For example, almost 60 percent of all donations received by the Red Cross have come via the Internet.

Q: In addition to having your employer match your contribution, are there any other creative ways you can benefit from giving at work?

Last week, the Internal Revenue Service announced a new program that allows workers to donated unused vacation time and sick days for victims of Hurricane Katrina. Employers can convert the donated time into cash contributions to charities and workers would be able to deduct the amount donated from their federal tax return. A similar program was put into place shortly after the Sept. 11 attacks. This is an excellent way to use up those vacation days you know you will never get around to taking. A Wisconsin-based health-care system, ThedaCare, is already making use of this program by allowing employees to donate an hour or more of personal time off to a disaster pool, which will then be donated to the American Red Cross.

Q: Hotels and airlines are getting into the action as well. If you are a frequent traveler, how can your mileage help?

In addition to many of the major airlines giving free airline tickets to victims of Katrina, some are also encouraging their frequent fliers to donate their miles to aid organizations. The miles are used to pay the travel costs of aid workers. Keep in mind, you are not able to claim a tax deduction for donated frequent flier miles. Additionally, United and American airlines are giving bonus miles to rewards members who donate at least $50 to certain charities aiding hurricane relief efforts. For those road warriors who are frequent hotel guests, chains such as Best Western, Hilton, Intercontinental, Marriott and Starwood have made it possible to donate hotel points to the Red Cross.

Q: Are there creative ways some of the cities closest to the disaster are reaching out to victims?

In Houston, residents are able to donate food and clothing by literally leaving it at their curb. The city's Solid Waste Management Department, along with a local charity, is picking up the items concurrently with residents' weekly garbage pickup.

Q: What about points earned with credit card programs? Can they be donated as well?

Although I am constantly reminding consumers to be cautious when enrolling in credit card reward programs, many of these programs can help you help the victims of Hurricane Katrina. For example, American Express is allowing cardholders enrolled in its Membership Rewards program to redeem points and make a donation to more than 30 designated charities, including the American National Red Cross, Catholic Charities, the Salvation Army, the United Way, Feed the Children, the Humane Society and more. The company will also make a corporate contribution of $5 for every 1,000 points donated by Oct. 31, and it has pledged to match up to $1 million in total donations. In addition, when making a donation with your American Express card, the company will waive all fees associated with accepting American Express charges for contributions to designated relief organizations. Lastly, the company will make a $1 contribution for every donation made using an American Express card.

Q: Many people have asked if there is a good way to donate school supplies to the schools in the region that are most in need. Is there a creative way to do this?

An excellent way to help some of the schools is to fund specific classrooms through DonorsChoose.org. At this not-for-profit Web site, teachers submit project proposals for materials their students need and are matched with funds from individuals anywhere in the country. Teachers do not receive any money, but instead purchase the items online through a provider that receives the funds directly from DonorsChoose.

Mellody Hobson, president of Ariel Capital Management (arielmutualfunds.com) in Chicago, is "Good Morning America's" personal finance expert.