NEW YORK (CNN/Money) -
'Tis the season for giving. And, for many people that means more than just buying presents for friends and family -- it means giving to charity.
In fact, last year the money given to charities rose slightly from a year earlier to $241 billion, following two years of declines, according to charitynavigator.org.
So what do you need to know before you dig deep into your pockets? Here are today's five tips.
1. Give with confidence.
Picking a charity can be tough -- even if you know the cause you're interested in. That's because there are one million non-profits in America, many of which have similar names and address the same issue.
For example, more than 650 groups were founded to combat breast cancer. You may have a hard time choosing between The Breast Cancer Fund and the National Breast Cancer Coalition. But www.charitynavigator.org sees big differences in the way these two organizations spend money. Log onto its Web site to see ratings on individual charities, as well as information on how efficiently they raise money for their cause.
Both the Federal Trade Commission and the Better Business Bureau say to beware of high-pressure appeals that bring tears to your eyes but tell you nothing of the charity or what it does. In other words, don't let emotion get the better of you.
2. Wise up over the phone.
The holidays are prime time for scammers seeking to squeeze money out of unsuspecting consumers. One of the big weapons? The telephone.
While the hotly-debated "do-not-call" legislation is bringing peace to many dinner tables, many charities are exempt from these restrictions. Therefore, you can count on telemarketers seeking more business for charities, which means more phone calls soliciting support.
There have been reports showing that charities that have recently used telemarketers to solicit donations on their behalf have often received less than half the funds raised, while the rest went to solicitors to cover fees.
Our advice? Don't give money over the phone to solicitors you don't know first-hand. Check to see if a charity is legitimate by logging onto charitynavigator.org and www.guidestar.org, where you can find out about its financial situation.
Charitynavigator.org can tell you how much the organization spends to raise a single donation dollar. If you are solicited over the phone, understand that Federal Trade Commission rules require telemarketers to promptly identify the charitable organization they represent and disclose the purpose of the call is to ask for a contribution.
If you think a charity pitched by phone is worth of your dollars, have the solicitor send you a copy of the charity's annual report or brochure. Many states have their own regulations regarding charitable solicitations over the phone. To learn about the law in your state, check out www.nasconet.org, the National Association of State Charity Officials.
One last thing to keep in mind is to call your local Better Business Bureau if a fundraiser uses pressure tactics such as repeated calls or threats. Check out the BBB's Web site, www.give.org and www.ftc.gov if you have further concerns.
3. Beware of mail tactics.
When sorting through the holiday cards in the mail, there's a chance you'll come across appeals from charities. These mailings should clearly identify the charity and describe its goals.
Again, if you are interested in giving money to it, first check it out online or call it directly to see what it's about. Also, keep an eye peeled for mailings from charities disguised as a bill or invoice demanding payment. Such tactics are illegal.
Finally, don't get wrapped up in the hype of being a potential sweepstakes winner. Appeals that include sweepstakes promotions should disclose that you do not have to contribute to be eligible for any prizes.
4. Be in it for the long run.
Once you feel confident with a charity make sure to pay by check, never cash. This is for security and tax purposes. Make the check out to the organization, never an individual. Also avoid giving a credit card number over the phone.
Like investing, when you give to a charity you should be thinking long-term. If you feel serious about the charity, establish in your mind what you hope your giving will accomplish and develop a plan to reach those goals.
You may also want to concentrate your giving. Sometimes larger gifts to one or two organizations will go farther than a wide array of smaller gifts. And of course you'll want to follow your investment. Contact your charity every few months to find out how it is using your hard-earned money. As someone who donates, you want to know what kind of results it created from your investment.
5. Get the tax deduction.
Giving a charitable donation to a qualified organization is a great way to cut your tax bill by reducing your taxable income. If you were in the 33 percent tax bracket in 2003, the actual cost of a $100 donation was only $67 dollars ($100 less the $33 tax savings).
Check out the calculator on charitynavigator.org to compute your net cost of donation and tax savings.
Also, make sure you know the difference between tax exempt and tax deductible. Tax exempt means the organization doesn't have to pay taxes, whereas tax deductible means you can deduct your contribution. Look for a 501(c)(3) designation from the IRS. This typically means donations to that organization are tax deductible. And when giving, take the time to figure how much you can afford to give.
Gerri Willis is a personal finance editor for CNN Business News. Willis also hosts CNNfn's Open House, weekdays from Noon to 12:30 p.m. (ET). E-mail comments to 5tips@cnn.com.
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