Charity: Donating to make a difference

“The holiday giving season is in full swing,” said Tara Siegel Bernard in The New York Times. Determining how much to give and to which charities is highly personal, “often influenced by our financial circumstances, life experiences, or personal connections to a particular cause.” But ethicists and charity experts say that donating “more of your money to people in distant lands” is the best way to make the most difference. “I can send money to an organization in Uganda just as easily as I can to one in New Haven,” says Yale economics professor Dean Karlan. “But in Uganda, I can send the same dollar and do 10 times more.” Some experts suggest that well-off families give away 10 percent of their gross income, while others urge donors to just “start giving, even at a relatively low level,” and then try to give more next time. In any case, vet your recipients closely, says charity expert Katherina M. Rosqueta. “How well you give,” she says, “is far more important than how much.”

Take advantage of online tools to vet charities, said Mitch Lipka in Reuters.com. GuideStar, Charity Navigator, and the Wise Giving Alliance are all helpful sites, “but you can dive a bit deeper on your own, too.” Any charity’s website should link to recent tax returns and financial documents, including an annual report and auditor’s statement, which you can read to learn about a group’s finances, board members, mission, and accomplishments. Spending too much on overhead is “a red flag,” but on the other hand, “having a low ratio isn’t necessarily a green light.” Your primary goal should be to find a cause “you want to get behind” that is run by experienced people.

Charitable giving can pay off for you, too, said Kelly Greene in The Wall Street Journal. Thanks to the booming stock market, “many wealthy investors have significantly more taxable income this year.” And since income taxes are higher, they also “have a stronger incentive to lower their tax bill by giving some of it away.” This is already a big year of giving—$344 billion through October, or 12 percent more than last year. The simplest gift is cash, but you may be able to “squeeze a bigger benefit from a donation by giving highly appreciated stock,” for which you pay no capital gains tax. The point isn’t to save money, though, but to “do real good for favored causes.”

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