How to Donate to Charities Wisely

By eHow Culture & Society Editor

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Making a donation to a charity can be a smart move both from the standpoint of benefiting a worthy cause and as part of your overall financial planning by providing you with a tax deduction. Here are some steps that you can take to ensure that any donations you make will be money well spent.

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Instructions

Difficulty: Moderately Easy

Things You’ll Need:

IRS Forms
Ledger Books
Calculators
File Cabinets
File Folders
Tax Preparation Software

Step1

Review your income and expenses.

Step2

Set an annual charitable-donation goal.

Step3

Find one or more nonprofit organizations involved in an issue that you feel strongly about.

Step4

Make sure the nonprofit is classified by the Internal Revenue Service as a tax-exempt charitable organization that is qualified to receive tax-deductible donations (usually designated as a "501(c)(3)" organization) so that you can receive a financial benefit when filing your income taxes.

Step5

Ask a representative of the nonprofit for literature describing the nonprofit's scope of activities and for a copy of their latest financial statement (Form 990). (Note: The Form 990 must be provided immediately if the request is made in person and within 30 days if made in writing in accordance with federal law.)

Step6

Read the nonprofit's literature and financial statements, or Forms 990. (See "Evaluate a Charitable Organization," under Related eHows, for more details on finding and evaluating charities' Forms 990.)

Step7

Decide whether you approve of how the nonprofit is using donated funds.

Tips & Warnings

When financial planning, it's wise to meet with an accountant or tax adviser.
When reviewing a charity's finances, a good guideline to follow is that of the National Charities Information Bureau, which recommends that charities spend at least 60 percent of the donations they receive for program activities. Make your cash donation or donations by writing a check or using a credit card.
Donating cash, rather than writing a check or using a credit card, is usually not a good idea because it is harder to track, more susceptible to fraud and doesn't leave you with any records.

Comments

Anonymous said

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on 6/30/2006 From a collector's point of view (Red Shield Appeal - Salvation Army, Australia), one of my pet peeves is when people either hide behind the curtains or give me an earful.

Please bear in mind that most charities are there to save lives, or at least make life bearable. I always pray that those who I call on never have need of our services.

By all means, check out the charity of your choice. Bear in mind, too, that the exceptionally wealthy First World is doing far better, day-to-day, than most of the rest of the World.

Look around. Do you have a reasonably weather-proof abode, do you have a television, are you fed every day, have you had formal schooling? That's often more than the people for who I collect. Please think about giving generously, rather than just a bit of spare change. Imagine the lives you'll be changing.

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