It is that time of the year again when many charitable organizations ask for your financial help. It breaks my number one rule regarding charity, which is that you shouldn’t wait for an organization to ask you for money. If you are charitable, then it makes sense to be thoughtful about your goals and your budget and have a plan for giving throughout the year that you have decided upon in advance. I find it is very easy for me to turn down requests for contributions throughout the year, but especially now, without feeling like a scrooge, because I have a goal for my giving, do it on a regular and planned basis, and only keep a small slush fund in my budget for unplanned charitable contributions.

There are many, many good charities that do good work and some not so good charities, when it comes to how they spend your contributions. I know I can’t give to all of them, so I think it is wise to sit down at the beginning of the year and decide how much and who you are going to give to. The other problem with giving to every charity that asks is that a lot of them are asking by phone. Telemarketers for charities are usually paid between 25 and 95 cents of every dollar that you give over the phone. As such, I think you should always eliminate the middle-man and give directly to the charity whether via check or online. Of course, if you want to deduct your charitable contributions, it is important to keep physical records like a check copy, charge receipt or other documentation. That way, if you are audited and asked to provide proof you will be able to do so easily. But prior to writing that check, I believe you have to roll up your sleeves and research the organization.

First, you should verify that the charity is a 501(c) 3 tax-exempt organization. If they are not tax-exempt, you wouldn’t be able to deduct any contributions you make and more importantly, they are probably not an organization you would want to give to as a charity. The easiest way to check this status is through Publication 78 available at the website of the IRS: http://www.irs.gov/app/pub-78/.

Next, you should look into reviews, ratings and their financials. Some of this information you can get directly from the charitable organization, but you can also conduct your own independent research online through websites like CharityNavigator.org or GuideStar.org. CharityNavigator.org has a variety of top ten lists and allows you to build a “My Charities” area to keep track of charities of interest to you. GuideStar has form 990 available for a variety of charities (for a fee). This form is essentially the tax return for charitable organizations and allows you to view their revenue, expenses and their net assets and you will find that some non-profits are turning a profit as their donations exceed their expenses. There is no magic rule when determining how much is too much when it comes to charities spending on marketing and administration, but it is my belief that those expenses should be minimal relative to how much they spend achieving their mission statements.

If you are looking to make an impact, it is important to concentrate your giving and make a commitment to the long-haul. When it comes to investing, diversifying your investments is critically important. With charity, diversification can actually work against your objectives. Giving to many different organizations frequently results in your mailbox filling up with even more requests for donations, but more importantly, spreading your giving across too many different organizations diminishes the possibility that the particular group(s) you give to will be able to make substantial changes or impact with their mission. Here again, a long-term commitment to a charity lets the charity know they can rely on your donations and they don’t have to waste precious resources by sending numerous solicitations.

One of the reasons I stopped giving to a particular charity several years ago, whose goal it is to provide a cure for a disease affecting a family member, was the almost monthly requests I received for additional donations. Even after I contacted them and told them I give regularly, but only once a year and that their mailings were wasting their financial resources, they continued to send requests.

Last, but not least, you should always check out the charity’s programs and dig a bit to look for evidence of impact and that their programs actually match your giving objectives.

I hope you enjoy the holiday season and give wisely!