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7 top tips for charitable giving

If you're over the commercialism of Christmas and want to get into the spirit of charitable giving, charities are eager for the help. With the recession, many nonprofits have seen charitable giving drop, so your donation this year will mean more than ever. But just because you're feeling generous doesn't mean you shouldn't be wise. Here are the top seven tips for charitable giving and avoiding frauds:

Charitable Giving Tip #1: Be specific and proactive with your personal mission. Though you have more than 1 million charities to choose from, you're wise to focus your charitable giving on a few causes rather than spreading your donations thin. That way, you have a better chance of making a significant difference. This means doing some homework instead of just giving to any organization that solicits donations. Spend some time deciding what your specific mission is and whether you want your charitable giving to make a difference with that cause on a local, national or global basis. Don't just settle for a charity that is close to doing something in an area you're sort of interested in -- your goal with charitable giving is to hit the bulls-eye. (Also, check on the donor rights of your charity -- make sure it has a donor privacy policy, where it agrees not to sell or trade your contact information.)

Charitable Giving Tip #2: Consider the Internet a friend and foe. The Internet makes charitable giving convenient, in that you can research what's going on with your charities and make donations easily. But beware of phishing scams that email you asking for donations. In fact, make sure charities you find online have a street address and telephone number before charitable giving, and check them out with Charitynavigator.org. Remember, a dot.org URL doesn't make for a legitimate charity -- 501(c) (3) status does.

Charitable Giving Tip #3
: Find out what the program ratio is. This program ratio is the number you'll look at to determine how effectively the organization will use your charitable giving. It measures how much of your charitable giving actually goes to accomplishing its mission vs. paying for executive compensation, administrative, marketing or fund raising costs. Unless an organization is less than two years old, 75% to 80% is the lowest acceptable program ratio. Track ratios at Charitynavigator.org, Give.org and GuideStar.org.

Charitable Giving Tip #4: Use shopping promotions as part of your charitable giving plan. Many retailers are involved in programs such as (Product)Red, where a particular purchase contributes to a specific nonprofit -- this holiday season, there are even (Red) popup stores in New York City, San Francisco, Tokyo and London, so you can do your shopping and charitable giving simultaneously. And look for charitable giving opportunities through short-term retail promotions -- Gap, for one, occasionally sends out coupons where a portion of your purchases on specific days goes to charity (you get to choose which one from its selected list). Or shop at Web sites like Charitymall.com, where you can purchase from hundreds of retailers, with 100% of the proceeds benefiting the Cancer Research Foundation.

Charitable Giving Tip #5:
Beware of frauds and telemarketers. As more people step up their charitable giving for the holidays, you can bet charitable frauds are going to be stepping up as well. If you're getting the hard sell from someone, do not feel pressured to give. Legitimate charities will provide information instead of pushing, and will never try to persuade you to give them your credit card or bank account number or any other financial information. (Those pesky telemarketers have a motive behind the pushiness -- telemarketers for for-profit fundraisers usually keep 25-cents to 95-cents of every dollar people give.) Don't ever conduct your charitable giving over the Internet or phone if the so-called charity is the one who contacted you first. If you feel uncomfortable, trust your instincts. At the very least, take the information you get over the Internet or phone and do your own research before deciding to donate.

Charitable Giving Tip #6
: Make sure to claim your tax deduction. Of course, this isn't the main motive for your charitable giving, but you should check with your tax adviser to make sure you know all the great tax benefits you get when you give. If your donation is deductible, that means the actual cost of your $100 donation is $67, if you're in the 33% tax bracket. Your deduction is only good for the year in which the donation is paid. If you donate used clothes, furniture or equipment, get a receipt and keep in mind that you can only deduct items that are in good condition or better. In fact, keep all records of donations. While many organizations do qualify you for this deduction, charitable giving to some foreign charities and private foundations is not deductible, and there might be a ceiling on deductions for charitable giving to churches and religious organizations, educational organizations, hospitals and medical research organizations, etc. Check with CharityNavigator.org for more information on charitable status.

Charitable Giving Tip #7: Give more than your money. You want to spend to make a change, not a purchase, which is awesome. But don't limit your charitable giving to monetary efforts. You can give your time, by volunteering. Speaking of giving, give your family, friends and co-workers an opportunity to join in on the cause you're passionate about and volunteer as a group.

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