Tips for year-end giving -- 2011 edition

It’s a terrific time to be generous. With demand for charity services up, and donations to charity down, charities need our support now.

1. Stick with your budget. Philanthropy is wonderful, but first make sure to take care of yourself and those who depend on you.
2. Focus your giving on causes you care about. Don’t give to everyone.
3. Research before you give. Many charities do strong work with the moneys entrusted to them. Others, unfortunately, do not. Spend some time screening a charity before you give. You can check out their mission and largest program, and look at things like the percentage of spending that goes to programs, their cash reserves, their spending on top staff, and how much they spend to raise a dollar. Research a Charity.
4. Select fewer charities. Not only does this help you stick with your giving focus, it means you can make better use of your research time. Let’s say you’d spend 30 minutes screening a charity. Give to eight, and you’ll spend four hours. Focus on two or three, and you can research more deeply, get to know each of them better, and still save time.
5. Selecting fewer charities can also mean more of your dollars go to charity programs. Let’s say your budget is $200, and you might give $25 to each of eight charities. If the average charity spends just $10 to process a gift it receives, $80 (or 40%) of the $200 you’d give goes to processing costs. If you instead give $100 to each of two charities, only $20 (or 10%) goes to processing costs. That means 30% more available for programs.
6. Scammers increase their efforts when they see people are feeling generous. The holiday season is one of those times. Every dollar scam “charities” take in is a dollar that could instead have gone to a strong charity. More on scams.
7. Until December 31, 2011 (only), give to charities directly from your IRA (if you are at least age 70 ½). You’ll do good, and do it totally tax-free. A key benefit of an IRA is putting off income taxes on work earning. But, eventually, those work earnings (and what they’ve earned within your IRA) are hit with income taxes when you or your heirs withdraw.  Learn the details.