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Research charities before making donations

Make sure at least 75 percent of a charity's budget is going toward its mission; be wary of scam artists.

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By Gerri Willis, CNN

NEW YORK (CNNMoney.com) -- Despite the credit crunch, Americans will donate more than $100 billion to charities. Here are the best ways you can make sure your donation is going to the right place.

This year, human services charities are expected to be the most in need, according to Charity Navigator.

Groups like food banks, homeless shelters and utility assistance charities are in high demand given the toll the credit crisis is having on the overall economy. Generally these types of charities are some of the least-funded.

1: Get the bottom line

Take the time to find out how much of your donation will go to the charity's mission.

Most charities are able to spend less than 10 percent of their budgets on fundraising and less than 15 percent on administrative costs. Make sure at least 75 percent of a charity's budget is going toward the mission.

To get the report card, go to the Better Business Bureau's Web site at give.org. You can also check out charitynavigator.org.

2: Be wary

Sadly, there are a lot of scam artists that take advantage of people during the holiday season. Get the full name and address of the charity if you are approached.

Don't be fooled by names that look impressive or that closely resemble the name of a well-known organization.

You should also watch out for statements like "all proceeds will go to charity." This may mean that the money left after expenses (like fundraising or administrative costs) will go to the charity. These expenses can make a huge difference.

It's also not a good idea to give money to a charity that solicits money over the phone. The calls are generally conducted by professional fundraisers. And they can keep up to 95 cents for every dollar raised.

3: Get your deduction

If you want to deduct your charitable gift, you'll have to make a donation before Dec. 31. If you donate online, you can get an instant receipt that you can file away until tax time.

As you know, you'll need receipts for every charitable deduction you take. And keep in mind, you'll want to find a tax-deductible organization if you want to take the deduction.

If an organization says "tax exempt" it just means the organization won't have to pay taxes.

4: Search for dollars

You can give to charities not only by the gifts that you purchase, but by changing your daily practices.

One way you can do this is to raise money for charities by browsing the Web. Here are some sites that will donate a percentage of revenue to charity if you use their search portal: Goodsearch.com, Magictaxi.com and Searchkindly.orgTo top of page

Gerri's Mailbox: Got questions about your money? We want to hear them! Send e-mails to toptips@cnn.com or click here - each week, we'll answer questions on CNN, Headline News and CNNMoney.com.
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