NEW YORK -- It's the time of year when a lot of Americans like to play Santa Claus, not only by making sure there are plenty of gifts for friends and family but also by opening their hearts -- and pocketbooks-- to those less fortunate.
"Charitable giving is about the love of others," said Eugene R. Tempel, executive director of the Center on Philanthropy at Indiana University. "It can be used to reduce human suffering, to enhance human potential, to build community."
There are thousands of charities in the United States and myriad different ways to contribute to them. The bonus, aside from making you feel good, can be a nice deduction at tax time.
Tips for giving
Here are some tips from the Better Business Bureau for charitable giving:
-- Make your contributions by check
-- Make your check payable to the charity, not the individual or entity collecting the donation.
-- Keep good records so you can document your gifts at tax time.
-- If you're unfamiliar with a soliciting group, check it out with the local charity registration office.
-- Don't respond to appeals disguised as bills or invoices; they're illegal.
-- You are not obligated to pay for -- or return -- unsolicited items such as key rings, stamps or other merchandise.
-- Don't be pressured; legitimate charities will welcome your contributions as much next week as today.
Spurred by the nation's strong economy and stock market run-up, philanthropic giving has hit record highs. Americans contributed more than $190 billion to charitable causes in 1999, and experts expect the figure to rise further this year.
The biggest recipients are religious groups, educational programs and health and human service support organizations, followed by the arts, the environment and international affairs, according to figures compiled by the AAFRC Trust for Philanthropy.
Tempel, whose center studies philanthropy and nonprofit management, says that the best way to choose where to put your money is to seek out programs that reflect your own values.
"What are the issues or causes of most interest to you?" he asked.
If it's education, for example, you can look for groups that help students who are falling behind or that sponsor reading programs. "If you know somebody at the organization, ask them about it. Or, even better, get involved yourself as a volunteer," Tempel advised.
You can always ask a charitable group for its annual report to see how it spends its money and what activities it supported in the past year. There are also several places to look on the Internet. The Internal Revenue Service (www.irs.gov) maintains an online list of charities that qualify for tax-deductible donations, as does www.guidestar.org, operated by the charitable group Philanthropic Research Inc.
U.S. tax law has historically rewarded charity.
Karen Goodfriend, a certified public accountant at Goldstein Enright Financial Advisers in Palo Alto, Calif., says would-be donors should first decide whether to make their contributions now or in the new year.
"If you'll be in a higher (tax) bracket next year, just wait a few days and make the donation after the first of the year," she suggested.
You'll need to do some paperwork, she notes, even for relatively simple donations:
-- For contributions of more than $250, you need to get a written receipt from the charitable group to file with your tax return.
-- If you're donating used clothing or other goods to a group like the Salvation Army, make a list of all items you're giving and the "fair market value" of each. That value is basically what a thrift shop would be able to sell the items for.
-- A number of charities have begun soliciting used cars. You can probably take the "blue book" value as a tax deduction, especially if that's supported by a detailed receipt from the charitable group. But if you think the car is worth more than $5,000, get it appraised before you donate it.
-- If you are considering a gift from your investment portfolio, it's often better to donate the actual stock or mutual fund rather than selling the security and donating the cash. That's because you may be liable for capital-gains tax if you sell stocks or funds, but not if you give them to a charitable group.
"It's a win-win situation for you and the charity," Goodfriend said.
Donor-advised funds are increasingly popular vehicles for charitable giving, but they generally require an initial contribution of $10,000 to $25,000. They can be set up through community foundations or brokerages, including Charles Schwab, Fidelity, Oppenheimer and Vanguard.
Ben Pierce, executive director of the Vanguard Charitable Endowment Program, said that "they're a very efficient way to consolidate one's giving."
The way they work is that a family gives $25,000 in cash or stock and mutual funds to the program. It then names its account, designates family members as advisers, gives instructions on how it wants the money invested and then selects which charities the proceeds will go to and when.
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