NEW YORK (Money Magazine) - When Liza Prior Lucy, a quiltmaker and author in New Hope, Pa., writes checks to charities every December, three groups are top on her mind.

They are: Beyond Pesticides, an organization that monitors pesticide misuse, because her first husband's death was tied to the chemicals; the National Coalition for Cancer Survivorship, which helps patients find the best care, because members of her family have faced down the disease; and National Public Radio, because, said Lucy, "it increases the quality of my life."

In other words, the decision where to give is distinctly personal. "There are just so many opportunities to give that you have to do some editing," she said. "So I only give where I have been affected. It's a way of focusing."

These days, that sort of focus is a necessity. More charities are vying for your dollars, and chances are you have less to give. There are some 850,000 charities in the United States, nearly three times as many as there were in 1980. Another 30,000 receive tax-exempt status each year. And many can expect a leaner holiday season. During the late 1990s, giving rose to 2.1 percent of personal income, but in 2001 the percentage fell to 1.8 percent.

This year, tough times are leading charity experts to anticipate a decrease in giving. Fidelity Investments expects a 3 percent drop in donations to its Charitable Gift Fund, the umbrella group for its donor-advised funds that has become the country's second-largest charity.

What does this mean to you as a donor? If you have less money to give this year, you'll want to put more care into making sure the charities you support meet your goals and spend your money well. You may want to compensate for smaller cash gifts by volunteering more. Or perhaps you're more inclined to donate your old computer, clothes or car.

This guide can help you give wisely. Plus, we review the tax rules for each type of donation. Even though taxes are not the primary reason we give, research shows that once we decide to do so, tax breaks influence how much we give, whether we donate cash or stock and, in particular, when we give. Dec. 31 is closing in fast. Here's what you need to know.

We've broken up the guide into three sections: giving money, giving time and giving stuff.

What's your mission? Figuring out what motivates you should be your starting point. With nearly a million charities to choose from, chances are you can uncover one that will fulfill your goals. "One of the benefits of American philanthropy is that whatever your point of view, you'll find an organization that matches it," said Bennett Weiner, chief operating officer of the Better Business Bureau Wise Giving Alliance.

But making that match can be daunting. If you know that you want to support an Alzheimer's charity, for instance, you have at least 172 choices, from the Alzheimer's Association, a national network that funds research, public education and caregiver support, to Oasis, a Fresno Calif.-based nonprofit that supports community-based programs, including a day-care center to give caregivers a break.

At the Web sites listed below, you can search for charities by cause -- the broad search engine at GuideStar can best help you isolate groups in your area -- and read about what they do. Once you develop a shortlist of charities that do work you're interested in, evaluate their programs and finances. How you should go about that depends, in part, on how much time you can devote.

Turn to the pros. If you have no personal contacts at a charity, the Web is a good resource. GuideStar posts the tax returns (Form 990) for some 250,000 nonprofits, and Give.org and Charity Navigator rate charities on how well they spend donations. If an organization on your shortlist isn't rated -- Give.org covers just 518 -- the community foundation in your area may be able to give you insight into the work a group does and how highly regarded it is. The Council on Foundations site has a foundation locator that can direct you to the one nearest you.

Understand the limits of numbers. The problem with much of the advice on how to select a charity is that it begins and ends with one number: the program ratio, which is the percentage of the charity's income that goes to its underlying cause rather than to administrative or fund-raising costs. It is unquestionably an important figure. In order to pass muster with the BBB Wise Giving Alliance, groups need a program ratio of at least 50 percent. To get the highest four-star rating from Charity Navigator, that ratio has to top 75 percent.

But the program ratio is not the only piece of information you need, said Eugene Tempel, president of Indiana University's Center on Philanthropy. Nor should it be used in a vacuum. What's realistic for each charity depends on how large it is, how old it is and how it raises money, said Tempel. "If an organization processes a large number of small gifts," he said, "it's going to cost more to run than an organization that has large regular donors." When you look at a program ratio -- and you should look at it -- it's better to consider whether it's rising or falling. Likewise, it's useful to compare apples with apples -- food banks with food banks, for example.

If you have more time to devote to researching a charity, here are some other points to consider.

Look for results. Sir John Templeton, founder of the Templeton Fund, gives away $40 million each year through his personal foundation. When he evaluates grant proposals, he said he looks for groups that have developed internal benchmarks that measure how well they're doing their work, and you should look for those kinds of results as well. For a homeless shelter, that could be the number of people served. For a charity that funds cancer research, it might be how many studies it has supported. Unfortunately, effectiveness ratings are still only on the drawing boards at many groups. But they're coming: New guidelines from the BBB Wise Giving Alliance suggest an internal effectiveness review every two years.

Check the assets. Another number to look at is the end-of-fund balance (line 18 on Form 990). This is the charity's net assets at the end of each year -- what it keeps in reserve. Certainly, you should be concerned if the balance is in the red. But you should also question a balance that's too large -- enough unrestricted funds (line 67) to cover five or more years of expenses. If a charity has that much money, it's reasonable to wonder why it needs to raise more.

See who's on the board. The board of directors ultimately decides not only where the money is going but who's running the show. Check out their professional affiliations, available in the charity's annual report. (Full disclosure: I sit on the board of the March of Dimes.) Ellen Remmer, director of family practice at the Philanthropic Initiative in Boston, also suggests looking at who supports the charity -- a list that may include community foundations as well as the United Way. (Supporters may be listed on the Web site or in other literature or you may have to ask.) "You're looking for a trusted intermediary who has already done some of the due diligence for you," she said.

Ask for privacy. Donor privacy is a hot topic these days. The BBB is recommending that charities give you the opportunity once a year to opt out of having your name and other personal information shared. Unfortunately, this is not yet routine. If you don't want your data circulated, be sure to inquire about a charity's privacy policy before you give.

Join others. If you're still wary of picking a charity on your own, find a giving circle. These are like investment clubs for philanthropists. Each member kicks in an average of $1,000 a year, and together the group evaluates charities, sometimes asking for grant proposals and at other times inviting a representative to make a presentation. Like investment clubs, giving circles have proved to be particularly popular with women. The best way to track one down is to do an Internet search under "giving circle" and your city or state. Or create one. You can find a free starter kit at www.givingnewengland.org.

Tax rules: In order to write off your donations, you need to itemize and keep immaculate records. If a single gift is less than $250, you have several options: a canceled check, your checking account statement, a copy of your credit-card bill if you put the donation on plastic or a receipt from the charity. Give away $250 or more, and you need a letter or receipt from the nonprofit.

If you contribute through payroll deductions and have more than $250 taken out of a single paycheck, you need a pay stub or W-2 verifying the amount. Otherwise, a receipt from the charity will suffice. If the charity gives you something in exchange for your gift -- a ticket to a benefit, say -- your deduction is limited to your donation minus the value of what you received. (The exception is when the value is "insubstantial," or less than $8 this year.)

If you donate appreciated securities that you've owned for at least a year, you can deduct the stock, bond or fund's market value on the day of the donation. One note: If you're considering donating stock that has dropped in value, you're better off selling it, claiming the loss and then donating the cash. That way the charity gets the same donation but you gettwo tax breaks.

More than four out of every 10 American adults volunteer, two-thirds of them regularly. Unfortunately, when the economy is suffering, those numbers may shrink. If people are forced to take second jobs, notes the Independent Sector's Shiras, they simply have less time to give. To make the most of what limited hours you have to offer -- and make volunteer work fulfilling for both you and the charity -- follow these steps.

Think about your skills. There are three ways to approach volunteering. You can offer up the skills you have -- lawyers, doctors, accountants and publicists are in high demand. You can also use volunteering as a way to develop skills -- event planning, say, or fund raising. Doing it for free is a way to polish your resume.

Or maybe you see volunteering as a break from your daily life. That's how Karen Caldwell, who owns a hair salon in the Georgetown section of Washington, D.C., feels. She used to volunteer by donating free haircuts at fund raisers. But recently her husband, an accountant for nursing homes, suggested she take their dog Mindy to visit the residents. "It got to be that they were really looking forward to seeing her," said Caldwell. "When she walked in, they just opened up and started talking about their families and their past." Caldwell has found this much more enjoyable than simply extending her day job. "It's a great change of pace," she said.

Consider what else you want. It's fine -- in fact it's smart -- to think about what, other than altruism, motivates you. Are you looking to meet others? Do you want to be outdoors? Are you teaching philanthropy to your kids? Knowing that will help guide you to the right job.

Be realistic. According to the Independent Sector, the average volunteer gives 3.6 hours of time per week. You may have more. You may have less. No matter. Some 85 percent of nonprofits rely on volunteers for at least some of their labor, so they need you. What they don't need are people who make a commitment they can't keep. If a weekly stint is too much, participate in one-time events like breast-cancer walks or beach cleanups. Or look for groups like soup kitchens or food banks that welcome drop-in volunteers.

Find a good fit. Once you have a grip on what you want, call charities directly or head to the Web. Try VolunteerMatch (www.volunteermatch.org), which has filled 900,000 volunteer jobs since 1998. Another good site is CityCares (www.citycares.org), the umbrella group for CityCares affiliates in 30 cities. Attend the volunteer orientation, says Jason Willet, communications director for VolunteerMatch, and "if you feel like you're on the wrong page, don't hesitate to try something else."

Tax rules: Although the Independent Sector places a value on a man-hour of time spent volunteering ($16.09), you can't deduct what your time is worth. What you can deduct are any expenses you incur, provided you're not reimbursed. This includes mileage (the 2002 deduction is 14[cents] a mile) as well as out-of-pocket expenses like parking fees and tolls. Keep records noting for whom you were working and when.

A few times a year, Suzanne Weidie, an elementary school art teacher in Washington, D.C., takes several bags of clothes to the mission on her corner. The volunteer behind the counter hands her a receipt. Then it's up to her to ballpark values. A pair of pants, $3. An old jacket, $5. "In general, I don't feel like my secondhand stuff is very valuable," she said. "It isn't valuable to me."

Donating old belongings is so simple and appealing (you get the bonus of clearing out old junk) that many of us simply toss bags of hand-me-downs in the car and deposit them in the first collection box we spot, forgetting that they could be worth lots more to others. That may be a big mistake.

Another gaffe: not finding the organization that will make the best use of our junk. Here are tips for handling all types of stuff.

Used cars. If the weather didn't signal that the holidays were fast approaching, the barrage of donate-your-car ads on the radio certainly would. Car programs would prefer that you donate cars that still run, but they'll take many that don't. "If a car needs a transmission but it's only five years old, we can get money for it, so we'll take it," said Carl Erikson of the Volunteers of America, which received 40,000 car donations last year. The Salvation Army and Goodwill also have well-established programs.

What you may not realize is that charities seldom pass donated cars on to the needy. Instead, they sell them, at times relying on for-profit middlemen to tow and dispose of the car for a slice of the proceeds. The result is that as little as 5 percent to 20 percent of the car's value may go to a good cause. Ask how much of the sale price will go to the charity. If that sounds low, shop around.

Computers. Not all charities will accept used computers, and others won't take a machine older than a Pentium II. Your best bet is to look for a group that not only accepts computers but rebuilds and redistributes them as well. You can find a list of schools, charities and others looking for equipment at TechSoup (under Featured Resources) and Share the Technology. Before giving away a machine, delete personal information, including cookies, but leave the operating system and license intact (and try to find the user's manual).

Clothing and household items. In general, organizations like Goodwill and others that run thrift shops will take anything that's in good enough condition to resell. What they don't want are heavily damaged items (stained mattresses, say) or things that have been recalled. Charities may reject old baby merchandise, including car seats and high chairs, because of safety concerns. (You can get information on recalls from the Consumer Product Safety Commission. Be sure that toys are operational and have all their parts.

Tax rules: When you give away stuff, you can, in most cases, deduct its fair market value -- in other words, the amount you could sell it for. The major exception is tangible personal property that has increased in value -- commonly artwork or collectibles. In that case, you can deduct the fair market value only if the charity uses your donation as part of its mission (for instance, if a museum displays the artwork). Otherwise, your tax deduction is limited to the price that you originally paid.

Just as we tend to underestimate the value of small-ticket items, many of us get too aggressive with the biggies like cars. For used cars, use the value in the Kelley Blue Book (www.kbb.com). If your car is in terrible condition, knock it down a bit. If the car's worth more than $5,000, you need an appraisal.

To value clothing and other household items like lamps, computers and sporting equipment, you could visit thrift shops or peruse auction sites like eBay. But both take time. A good single stop is the Salvation Army's Web site, which has a helpful section on valuations. If you give away hundreds of dollars' worth of stuff and want a more comprehensive source, pick up ItsDeductible, a $24.95 book and a $29.95 software program that's updated annually and sold online at www.itsdeductible.com. You'll find the value of thousands of items, adjusted for poor, fair and good condition. Old stuff can turn out to be fairly valuable. How does $58 for a designer-label women's sweater in good condition sound? How about double that for a Brooks Brothers men's suit?

As with cash gifts, recordkeeping rules depend on the value. For gifts worth less than $250, no receipt is necessary if it's impractical to get one (at a street-corner drop box, for instance). Simply keep a written record of the date, location and what you donated. At $250 and above, you'll need a receipt from the charity noting the name of the organization, the date and location of the contribution, and a reasonably detailed description of the property.

Once you hit the $500 level, your records must include details of how you got the property (an inheritance, gift or purchase), the approximate date you acquired it, its original cost and any money you spent maintaining it. Finally, for goods worth over $5,000, you must have an appraisal.