Giving feels good, plain and simple. Whether it’s a large or small donation, the act of stepping beyond our daily lives and affecting–sometimes profoundly–the lives of others reminds of us of our own good fortune and gives us a way to show our gratitude through action.

With all the economic upheaval of the past few years, many charitable organizations are feeling the pinch. Cash contributions are down, and organizations are counting on the holiday season to increase their coffers. I’ve noticed a definite increase in direct mail solicitations this year, some from organizations I’ve donated to in the past, and others from some I’ve never heard of. It can be almost overwhelming at times, because I want my somewhat limited donation funds to be used for the most good possible. How do I choose?

Well, if we’re fortunate enough to have a few extra dollars to contribute, there are steps we can take to ensure we choose charities that will responsibly use those dollars. Here are a few:

TIPS FOR CHARITABLE GIVING

Know who you’re giving to. The best way to do this is by contacting the charity directly and requesting a copy of its most recent annual report (audited), its mission statement, and a roster of its board of directors. Responsible charities will most likely have a packet of this information readily available.

There are also a host of websites that provide information about charities:

• The Better Business Bureau
• Charity Navigator
• Guidestar

Evaluate where the money goes. When looking at the financial statements, you’ll specifically want to know the percentage of donated funds tat are used for actual program services vs. how much is used for fundraising and overhead or administrative expenses. Generally, at least 60% of donations should be directed to program services, with 75% being a more optimal number. (Some smaller or newly-formed charities may lean more toward the 60% mark while they develop their contributor base.) If an administrative expense seems unusually large, contact the charity for specific information. Annual reports should also include details of program accomplishments and how needs of its beneficiaries were served.

Take your time. Don’t be pressured into donating on the spot, or simply as a result of an emotional appeal, especially if it’s to a charity you’re unfamiliar with.

Beware the gifts with donations. Or more specifically, “gifts before donations”. By law, charities are prohibited from demanding payment for unordered products, but many send address labels, booklets, calendars, or other freebies because they know some people feel they have to make a donation, no matter how small, in order to keep the gift. Keep in mind that the cost of these products may (likely) contribute to higher fundraising expenses.

Keep good records of your donations. Don’t give cash. Also, be very wary of giving your credit card number to a telephone solicitor or via a weblink that was sent in an email. If you receive a call or email that intrigues you (they’re not all scams, after all), look up the direct website or phone number for the charity and proceed from there.

Notes for US Residents:

1. For tax purposes, you will need to keep a record of all your contributions of any amount, but for contributions of more than $250, the IRS requires that you have a receipt from the charity. For contributions under $250, a cancelled check or letter from the charity with the date and amount of contribution is sufficient.
2. There is a difference in “Tax Exempt” and “Tax deductible.” Just because an organization has “tax exampt” status (meaning, they don’t pay taxes) doesn’t mean your donation to them is tax deductible. Political/lobbying groups, for example, are not allowed to accept “tax deductible” donations. Most large charities broadcast their tax exemption status, but smaller organizations may not. Still, they should have a tax exempt letter and be willing to provide you with a copy. Or, the IRS has a handy dandy (and obscure) tool for looking up tax exemption status. Publication 78 has a search feature of eligible organizations and the appropriate percentage of deduction (click on the ‘Code’ field.)

Of course, there are ways to donate besides financial. Most organizations welcome volunteers and many have “wish lists” for household goods, office products, or other items they can put to use. (Humane Societies, for example, often put out requests for old (but clean) towels and blankets to line animal cages.) It feels just as good to donate time or goods as it does to give cash, and it’s also just as appreciated!