It pays to be wise when giving to charities
The holidays are that generous time of year, when hearts and wallets open wide. It's not only giving gifts to family and friends, but also making charitable donations to causes we care about.
Many Americans wait until December to do their charitable giving, inspired by the season, if not the tax deduction.
Charitable donations by individuals hit $298.42 billion in 2011, still $11 billion below the 2007 high-water mark, according to a June study by the Giving USA Foundation and the Center on Philanthropy at Indiana University.
"When we see businesses leaving or downsizing, it has an impact on giving. Many people are still feeling conservative [about donating] and understandably so," said Dawn Lindblom, CEO of the 11-county Sacramento, Calif., chapter of the American Red Cross. But, "others know how fortunate they've been and want to help out."
Last month, a nationwide effort, Giving Tuesday, was launched to get Americans thinking about donating their time, as well as their money. Coming just after the country's Black Friday/Shop Local Saturday/Cyber Monday shopping spree, the Nov. 29 donation day was a reminder to think about giving, not buying.
According to published reports, many did just that. Giving Tuesday's website said $10 million in online donations were processed that day, a 53 percent spike compared with the same Tuesday a year ago.
"People are feeling a little more flush," said Ruth Blank, CEO of the Sacramento Region Community Foundation, an umbrella group for donors and dozens of nonprofits. Events such as GivingTuesday, she said, "may be having an impact."
Another factor is the uncertainty surrounding how Congress will act on taxes, which could have motivated people to "get their tax deductions now while they can," Blank said.
If you're in a giving mood, here's some advice:
Be a savvy donor • We're bombarded with charitable appeals this time of year. Instead of donating to everyone who asks, think about which cause matters most to you: Is it neglected children? Animal welfare? Cures for cancer? Bettering the environment? Improving schools?
"Do this before you open your checkbook, volunteer your time, or look at that letter from a charity," said Charity Navigator, a charity review website.
Consider targeted giving: Rather than writing dozens of $25 checks to individual charities, make one big donation to a single cause. In some cases, the charity's cost of processing small amounts can negate your intended generosity.
Do some homework • It's easy to feel confident donating to well-known charities, such as United Way or the American Cancer Society. But what about lesser-known groups that tug at our heartstrings with letter, TV, phone or email campaigns?
To ensure that donors don't get burned, a number of organizations review charities, based on standards such as fundraising expenses, transparency, etc. Look at sites such as the Better Business Bureau's Wise Giving Alliance, Charity Navigator, Great NonProfits and GuideStar. They let you type in the name of a charity to see how it's rated.
Another way to be a more effective donor: Ignore telephone solicitors. Many charities hire commercial fundraisers who take a hefty cut of every dollar they bring in. Eliminate the middleman by donating directly through a charity's website.
When giving, don't be fooled by copycat or similar-sounding names. For instance, the Children's Defense Fund sounds a lot like the Children's Charity Fund. But, according to Charity Watch's rating system, the former gets three out of four stars, while the latter rates a zero.
Note that you are not obligated to donate if you get free gifts from a charity mailing labels, calendars, holiday ornaments, etc.
Beware of scammers • Among the millions of legitimate charities, there always are some bad actors. To avoid them:
• Don't give cash. When paying by check, write it to the charity, not the individual soliciting the donation.
• Be wary of phone solicitations, no matter how sincere-sounding the cause. If you're uncomfortable or feel pressured to donate, hang up. And never give credit card information to a phone solicitor.
• If a group claims it's collecting donations for police or firefighter groups, call the law enforcement agency to verify. The same goes for donations on behalf of military veterans.
Texting for dollars • Lots of charitable causes are using text-message appeals on cellphones. To ensure that texted donations are safe, the BBB this year teamed up with the Mobile Giving Foundation.
Use MobileGiving.org to confirm donations and get a tax receipt. (MobileGiving works only with one-time donations that appear on your cellphone bill.)
Keep records • If you want a tax deduction, keep a receipt, credit card statement or canceled check. Donations of $250 or more require an official receipt from the charity.
Be aware of the difference between "tax-exempt" (which means the charity doesn't have to pay state or federal taxes) and "tax-deductible," which means your donation can be deducted. If a group says it has "tax-exempt" status or a "tax ID number," that doesn't mean your donation is deductible.
Give from the heart • A donation doesn't have to come straight from your checkbook. Charities need your time, too. Volunteer at a food bank, dishing out meals. Give books to your local library or seniors' home. Donate new diapers or formula to a crisis nursery.
There are so many reasons for seasonal giving. Find the cause that fits your budget and passions, then give what you can.
Websites with tips on charitable donations
Mobile Giving Foundation • A Better Business Bureau partnership, it gives consumers how-tos on safe, secure donating via mobile phone texts, at http:/// http://www.mobilegiving.org
GivingTuesday • A campaign by the United Nations Foundation and 2,500 community groups to inspire consumers to donate time and money to local/national nonprofits, at http://www.givingtuesday.org
Donor tips and charity reviews/ratings • CharityNavigator.org, CharityWatch.org, GuideStar.org, GreatNonProfits.org and BBB Wise Giving Alliance (http://www.bbb.org/us/Wise-Giving)