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Smart Charitable Giving Tips for the Holidays

Use Your Heart and Your Head

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Holiday Giving
Matthias Tunger/Getty Images

At this time of year, we are all swamped with charitable requests for funds. It's natural. After all, people are likely to be at their most generous at the holidays. Not to mention that charitable gifts need to be clocked in by December 31st in order to receive a tax deduction.

It's no wonder that, traditionally, charities have received the bulk of their yearly donations during the last couple months of the year.

It's a great time to give. But it's also important to make sure that your hard earned dollars are donated well. That takes more than a generous heart. It also takes the rational thought of a hard-nosed consumer who can pick the best choices from a myriad of opportunities.

Unfortunately, many donors don't put that much thought into where their donations go. A survey found that "...only about a third of donors do any research when making a charitable gift. They're much more likely to spend time evaluating choices about jobs, business investments, or vacation plans with their family."

Here are four tips to help you become a smarter donor by making sure that your charitable contribution goes only where it is sure to do the most good:

  1. Check any charity against the "Consumer Reports" of the charitable world.

    Make sure that your charity of choice is strong financially. You want your gift to continue to make a difference, not prop up organizations that may or may not even be in existence next year. There are several organizations that keep tabs on charities:

    • Charity Navigator is probably the best known of the charity watchdogs. It rates charities on the basis of their efficiency, but also on their impact, transparency, and accountability. Charities can earn up to four stars from Charity Navigator. Sticking with the most highly rated ones will bring you peace of mind when making your year-end contributions.
    • GuideStar lists 1.8 million nonprofits in its database, all of which have met IRS criteria for exempt organizations. You can check here to make sure your charity is a 501(c)(3) charity, and examine a charity's latest tax form that it has filed with the IRS.

    • The Better Business Bureau's Start With Trust website keeps track of complaints against nonprofits, just as it does for businesses. A nonprofit that displays the BBB logo on its site has passed a rigorous screening process from the BBB.
    • Great Nonprofits actually provides user reviews of nonprofits, which can give you a more personal view of what real people, who either donate to or receive services, think about a particular nonprofit.
  2. Don't be a puppeteer.

    Don't put strings on your gift. Once you decide on a nonprofit that you like and trust, be generous enough to give an unrestricted donation. This means that the nonprofit can use the money where needed. This is the best gift you can provide to any charity. It provides the organization the flexibility to meet any and all of its needs.

  3. Add to your emergency giving.

    If you gave earlier in the year to an organization helping in a disaster (think of the Haiti earthquake, the famine in East Africa or Hurricane Sandy on the east coast), go back to that organization and give more. Much of the need from any disaster comes later, in the recovery period. Your continued support will mean so much to that nonprofit and the people it helps.

  4. Don't be a social dummy.

    In a world of Facebook, Twitter, and YouTube, it is easy to get carried away with the appeals coming your way. But stop and do your due diligence before giving. Check out each charity using one of the services listed above and make sure you know who is behind the appeal. If in doubt, just say no.

There is no doubt that giving makes us feel good. So go ahead, be generous this holiday season. If you do so with both your head and your heart, your giving will warm you and others for a long time to come.

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