Money has only a few uses - spending, saving and giving. And this is the time of year, full of holiday cheer and New Year's resolutions, when many people think about the last use of money, sharing it.
Individual donors will give $100 billion to charities this holiday season, estimates Charity Navigator, a group that evaluates charities.
The nobility of giving money to charity, however, doesn't absolve you of spending your money smarter.
Here are tips on giving your money to charities:
Get informed. Spend at least as much time researching your charities as you do your cell phone plan. Charity Navigator (www.charitynavigator.org) is one place to start. Others are GuideStar (www.guidestar.org), where you can check information on 1.5 million nonprofits, and the BBB Wise Giving Alliance (www.give.org). All are free. Charities themselves are required to provide you with a Form 990, which details their finances.
Give on purpose. Yes, you gave at the office, but is that because you wanted to or just because you were asked and couldn't think of an excuse to say no? Evaluate what you are already giving, whether to a church or United Way at work, for example, and ask yourself whether that is really where you want your money to go. It may well be. But make a majority of your giving intentional, with a little wiggle room for spontaneous donations.
Consider what is important to you. Worthy causes abound, and you can't support them all, so pick one that is meaningful to you. Giving money to disadvantaged children, poor or homeless people or disease research are a few ways. If you think financial education is important, find a group to support. If you think cleaning up lake pollution is an effort worth supporting, do that. Or you can give to charities with a particular philosophy. If you believe, "Give a man a fish, he'll eat for a day. Teach a man to fish and he'll eat for a lifetime," consider giving to charities that support training of people and investment in communities.
Other people might prefer charities that give money and necessities directly to people. Maybe you prefer to donate to an organization that works locally. Others may like to support nationwide and worldwide efforts.
Don't spread the love. Concentrate your giving on one charity or just a few. A big portion of small donations - $25, for example - gets devoured with administrative costs and the fundraising expense of cultivating you as a donor. Giving bigger checks to fewer charities will mean more of your money will go to the cause you are trying to support. Also, charities are likely to sell small donors' names and addresses to databases instead of keeping you to themselves. That leads to an overload of pitches from all kinds of charities.
Check administrative costs. Make sure at least 65 percent of the money you donate goes toward good works, as opposed to administrative and fundraising expenses.
Don't just give when you can. Set up a systematic program, so you are not aimless and irregular with giving.
Hang up on phone solicitations. Responding to a telemarketer may be one of the worst ways to give to charity because for-profit fundraisers, those often used in charitable campaigns, may keep 25 cents to 95 cents of every dollar they collect, according to Charity Navigator.
If you're interested in the charity, hang up, research the charity and cut out the middleman by giving directly. At the very least, avoid making a donation by phone - tell them to send you information by mail. If a charity insists on having your answer immediately, it may not be legitimate. Never feel pressured into making a donation. Door-to-door solicitors should at least show you identification or credentials. And be highly skeptical of e-mail solicitations.
Keep your cash. Giving cash to a charity, such as at checkout counter collection jars, is generally a bad idea. You might be contributing to a scam or to someone who might actually donate the money but take the tax deduction for himself. Instead, write a check made out directly to the charity.
It's better to give than to receive. Giving does provide a tax break, but don't make that your motivation. Qualifying charitable donations offer a tax deduction, meaning you can lower your taxable income by the amount of your gift. But your donation is not always fully deductible. If you pay $50 to attend a special film screening that would otherwise cost $8 somewhere else, you can deduct $42, according to Charity Navigator. Keep all receipts from donations you expect to deduct.
Gregory Karp writes for The Morning Call in Allentown, Pa.