Data Breach Deja Vu

facebook-data-dislikeSocial media behemoth Facebook landed itself in hot water this week when it was revealed that the company allowed a third-party firm to gain access to user data. This latest scandal comes amid a slew of serious data concerns and shows just how careful we need to be with our information in this digital age. In the world of mobile devices, social media, and the cloud, it can be disconcerting to think that your personal information might just be floating around out there.

The data firm, Cambridge Analytica (CA), accessed information from tens of millions of Facebook users without their permission and “improperly” stored this data for years, despite CA’s claim that the sensitive data had been destroyed. Furthermore, CA, who is known for supplying marketing data for political campaigns, is believed to have harvested this information for political campaigns after 2013.

According to the Wall Street Journal, Facebook bears a huge amount of blame for allowing CA to get its data to begin with. However, reports calling CA’s data harvesting a “leak,” a “hack,” or a serious violation of Facebook policy are all, unfortunately, incorrect. All of the information collected by the company was information that Facebook had freely allowed app developers to access.

Now, an investigation is being launched to find out exactly who knew about this large-scale improper data usage and when they knew about it. According to Facebook, this serious slipup should not be considered a data breach, because the data firm abused user data that was openly shared with third parties. However, I think we can all agree that sharing user data with third-party firms opened up the floodgates for illegal data breaches and abuse of personal information – as seen by Equifax in June of 2017. While Facebook’s stock takes a nosedive and the company tries desperately to get out in front of this PR nightmare, the rest of us are left reflecting on how our sensitive data is being handled and what measures are being taken to protect it.

As a common rule of thumb, it should be noted that you should never keep sensitive information on any social media platform. This includes but not limited to phone numbers, addresses and even email addresses. While your email address, and sometimes phone numbers, are needed for the account setup in many social media platforms, this information should never be made viewable by friends or followers on any social media platform

With DWM, you don’t have to spend any sleepless nights wondering about how your personal and financial information is being handled. Our firm and our preferred custodian, Charles Schwab, would never jeopardize our clients’ information by handing out data to third parties. You can feel confident knowing that your information will never be released to any outside parties for any reason (except with your explicit permission).

You may want to consider deactivating your Facebook account, but you can rest assured that your financial information with DWM is safe and secure.

Giving Back in 2016

heart in handEveryone is talking about Mark Zuckerberg and his wife, Priscilla Chan, because of their remarkable philanthropic pledge to give away 99% of their Facebook stock in their lifetime.   The Chan/Zuckerberg Initiative generously provides some $45 billion as an investment in an LLC that is committed to helping solve some of the world’s problems. It is a new twist on charitable giving and is designed to change direction away from grant-making foundations where certain activities, like lobbying or contributing to campaigns, are prevented in order to keep their non-profit status. This new format allows for investments in for-profit businesses in fields like education and health care, which the Facebook founder and his wife believe will maximize their ability to achieve more of their philanthropic goals.

These kinds of stories can lead us all to thinking about our own charitable giving, especially as we start a new year. It turns out that it is good for you, too! According to a research study by Bank of America in 2015, giving of your time and money could be a key element to happiness in retirement. A study by The National Philanthropic Trust found that this country’s individual philanthropy has been increasing annually and Americans contributed $358 billion or $2,974 per household to charity in 2014. We have stepped up our charitable giving with an explosion of online contribution campaigns and gofundme pages, as well as through more traditional methods. We have our brazen consumption days like Black Friday, but now they are followed by ‘Giving Tuesday’ to celebrate and encourage charitable gifting. Americans are generous with their time as well and, in 2014, volunteering by Americans was worth $175 billion with 64.5 million of our citizens giving of their time. Seems as if this is a win-win for us all.

The end of the year is a popular time for making decisions about charitable giving as people have abundant holiday spirit and a good sense of their year-end balance sheet. As folks get caught up in the generosity that comes late in the year, this spirit can lead to impulsive contributions rather than a purposeful strategy. We think it is better to have a regular annual strategy for giving to ensure that your time and money are spent in ways that are as thoughtful and productive as possible. It is important to make sure your charitable dollars will have the most impact on the causes that you believe in all year long.

Including a disciplined approach to philanthropy in your financial plan can be both rewarding and make good sense for overall tax planning. It is a good idea to talk to your financial advisor, like DWM, and a tax professional to make sure that you are benefitting from any tax savings opportunities. There are some great plans you can use to make your charitable giving proactive and have maximum benefit. You can use donor-advised funds which allow clients to make contributions at one-time, but pay out over several years and to different charities, even if you haven’t yet determined the exact charitable recipient. You can also harvest appreciated assets by giving those assets to a charity or a charitable account which can help balance your investment accounts and avoid some of the capital gains taxes. Another possible approach is to make donations to charitable annuities or charitable remainder trusts where a donor can make a one-time gift, but look for some measure of returns on these assets. These accounts generally have some high costs associated with them and should be thoroughly and cautiously investigated before using them. Another option is to use your RMD as charitable contribution funds. At the end of 2015, Congress passed legislation to reinstate this income-reducing provision, which also can be used retroactively for 2015. These types of plans can be great tools for combining smart tax-planning and personal philanthropy.

One last reminder is that it is also wise to avoid gifting to organizations until you have properly vetted them for adherence to the causes they promote and for responsible administration of their budgets. There are several watch organizations, like www.charitywatch.org and media outlets, like Forbes, that rank charities on the success of accomplishing their missions. You may want to do some research to find out what a charity spends on administration versus what it spends on the goals of the organization before making a donation.

Having a consistent strategy in place will help guarantee that favorite organizations, like your alma mater or local church, don’t get left out of your generosity. As you start this New Year, we wish you all health, happiness and a plan for your financial freedom, including having the ability to give freely and wisely as you wish. We can’t all be as generous as Mr. and Mrs. Zuckerberg, but our giving can certainly have an impact on those causes that are closest to our hearts.