Charitable Gift Giving Tips for the Holiday Season

Come the holiday season, the spirit of giving often extends to charitable donations. While it's understandable to assume charitable donations might diminish when the economy is struggling, according to a 2009 survey from the American Red Cross, such an assumption is not necessarily true.

For those who remember the 2009 holiday season, much of the talk concerned saving money. Forecasters predicted far less spending than in more robust economic years as headlines across the nation continued to inform readers of the nation's unemployment rate. In spite of that, 90 percent of Americans admitted in the Red Cross survey that they planned to donate to charity last holiday season, a quarter of which planned to donate more than $100. What's more, 39 percent of respondents indicated they were willing to forego another holiday gift and have that money donated to charity instead, while 80 percent said that, if asked, they would be happy to make a donation to charity instead of buying a gift for someone.

These statistics indicate that, even in difficult financial times, the spirit of giving synonymous with the holiday season can still prevail. But giving isn't always easy, and those looking to make a donation this holiday season should be careful before making their next donation. Charity Navigator, the nation's largest and most-utilized evaluator of charities, offers the following tips for prospective donors who hope to make the most of their donation this holiday season.

* Look at the leadership. A charity's success or failure often rests with its leadership. As a result, it pays to look into a charity's leadership before making any donations. A leader who is passionate about his charity and who has experience and a longterm vision for success is likely running a charity that's going to make the most of its donations. Check to see if the charity has a committee that reviews the CEO's performance and pay and whether or not that CEO's compensation is reasonable or outlandish. To learn more about charity CEO compensation, download Charity Navigator's annual CEO Compensation Study at www.charitynavigator.org.

* Investigate the charity's track record. A successful charity should have a successful track record. Peruse the charity's Web site to learn about the charity's past accomplishments, current projects and future goals. The Web site should paint an accurate picture of the charity's history as well as its future, including its chances at sustaining its success. Charity Navigator notes a charity's ability to bring about meaningful and longterm, positive change should be key factors in a prospective donor's decision about whether or not to make a financial investment in that charity.

* Research the charity's reputation. The best charities are often transparent. Unfortunately, many charities are not, and some have even found themselves in legal hot water. Charities with a reputation for questionable ethics or ones under investigation should concern prospective donors. If a charity's Web site appears vague about its accomplishments or financial records, investigate the charity further before making any donations. Scan through media archives, be it online or at the local library, to see if the charity has run into legal trouble in the past or is currently under investigation. Even if the financial records appear sound, the charity's reputation might reveal otherwise.

* Consider donating to human services charities. According to Charity Navigator, human services charities have suffered greatly during the recession. That's troubling to many, as such charities are the ones that experience the largest increase in the demand for their services when the economy starts to struggle. Human services charities are those that provide direct services to people in need, be it feeding the hungry, providing shelter for the homeless or caring for the elderly, among other services. Prospective donors might be tempted to make a donation to charities with a more nationwide impact, but it's important for donors to remember the less fortunate in their own communities as well. A donation to a local human services charity could very well go a long way, helping them to avoid cutting services that members of a donor's own community desperately need.

* Let the charity decide what to do with donations. Charity Navigator notes that a charity that's been well vetted and still proven worthy of an informed donor's money has earned the right to do what it wants with that donation. Avoid donating money for specific activities, as that can actually make it more difficult for a charity to accomplish its overall mission. Unrestricted gifts give a charity more flexibility and the room to allocate funds wherever those funds are most needed.