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'Tis the Season: A Guide to Charitable Giving

It's that time of year again when your mailbox overflows with greeting cards, glossy catalogues and solicitations from nearly every charity under the sun.

According to Charity Navigator, a watchdog group in Mahwah, N.J., charities raise more than half of their annual donations during the weeks spanning Thanksgiving and Christmas. This year, reeling from cuts in government funding and a struggling economy, groups are making an aggressive grab for your dollars.

And chances are you'll give, according to the American Association of Fundraising. Of the $212 billion given last year, almost $162 billion came from individuals — compared with just over $9 billion from the corporate sector. And despite reports, charitable giving hasn't declined over the past two years but has remained flat.

"Giving has rarely fallen dramatically and we don't anticipate a huge downturn for 2002," said Kyle Waide, deputy director of Charity Navigator. "It is the most resilient component of our economy."  

But how do you choose between starving children and endangered animals, cancer research or an AIDS cure, the Salvation Army or the United Way? Is it better to send one organization a large check or small amounts to several groups? And how do you know how the money is actually being used?

Identify Groups You Want to Support and Make a Donation Before They Solicit You: Organizations spend big bucks attracting new donors. The American Institute of Philanthropy (AIP) estimates that the donations groups get in response to new campaigns just cover the cost of the mailings. They don't make money off of you until subsequent years. An added bonus: if you give regularly, you can reduce the number of solicitations you receive.

"Charitable givers can be more effective if they take a long-term approach," Waide said.

Do Your Homework: Determine how trustworthy the organization is and how your money will be used. Watchdog groups like Charity Navigator, Guidestar.com, the AIP's Charity Watch.org and Ministry Watch.com do a lot of this work for you.

If you want to check out a charity yourself, most are required to file a 990 form (for tax-exempt organizations) with the IRS and to make that information publicly available. Only groups that earn less than $25,000 are exempt from IRS disclosure. And just because a group is tax-exempt doesn't mean your donation is deductible. You should be able to get this information from every organization. Beware of groups that balk at disclosure.

"If an organization is not willing to share with you how they're going to use your money, that should raise questions," Waide said.

In addition, you want to see a 60-40 split in the ratio of money spent on actual programs versus that spent on administrative costs. Watch out for groups that claim zero fund-raising expenses, the AIP advises.

Determine How You Want Your Money Used: After your research, you still may find yourself deciding between a few groups. Whether to give all to one or spread the wealth is a matter of personal choice.

But this year experts say small, community-based groups are suffering most, because the individual donors who keep them afloat are struggling.

"Many community groups are really hurting," said Laura B. Schwartz, director of the Child Abuse Prevention Center in White Plains, N.Y.

So experts recommend considering giving to reputable local organizations this season.

Beware of 'Sound-Alike' Charities: Some groups intentionally select names or design logos that are similar to those of more established charities. This can fool donors into sending checks they may intend for another organization. Make sure you're giving to the correct group.  

A Note About Churches: A growing concern among watchdog groups is the status of churches and religious organizations, who are not only tax-exempt, but aren't required to provide information about their finances to the government, the public or to their members. The exemption is to protect churches from government oversight or having to disclose their membership.

But just because they don't have to provide information doesn't mean they won't. Check to see if the organization is a member of the Evangelical Council for Financial Accountability, which requires members to disclose financial statements.

MinistryWatch.com provides a "transparency rating" that reflects the organization's willingness to share its financial information.

"We encourage people to look at how willing a group has been to share information," said Chris Hempe, president of MinistryWatch.com. "I would definitely wonder why an organization wouldn't provide me with this information."

But the bottom line this season, say experts, is to be smart about your donations but to give during the holidays.

"Americans are very generous people," Waide said. "Americans have always been very willing to support charities and organizations."