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How to make the most of your charitable donations

As the season of giving approaches, why not make sure you, as well as those worthy causes, are getting the biggest possible bang for your charitable buck?

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    Salvation Army Lieutenant Bill Brutto stacks food at the Salvation Army in Michigan City, Ind.
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Giving to charity is almost always a win-win situation: a cause you care about gets some extra funding, and you can feel good knowing your hard-earned money made that happen. So as the season of giving approaches, why not make sure you're getting the biggest possible bang for your charitable buck?As experts on shopping and finance, we thought we'd share our best tips for making the most of your donations this holiday season.

Find the right place to donate (and don't get scammed).

Let's say you want to make a charitable donation, but you never have before. Where do you start? First, you should think about the issues that you're truly passionate about. Maybe you love animals, or want to assist refugees, or maybe you want to save the environment --whatever it is, make sure it's a cause that you care deeply about. And then do your research.

This is a very important step that a lot of well-meaning people miss, and sadly, this means a lot of money that could have actually made a difference ends up stuffing the pockets of corrupt charity founders. How? Consider the case of the Cancer Fund of America. After being forced out of the American Cancer Society for using donations to fund his extravagant lifestyle, James Reynolds founded a new charity, which he called the Cancer Fund of America. In May of this year, the Federal Trade Commission charged the Cancer Fund of America, along with three other charities also owned by Reynolds, with stealing more than $187 million dollars from unsuspecting donors who thought they were giving money to help fund cancer research. From the FTC press release:

"The defendants told donors their money would help cancer patients, including children and women suffering from breast cancer, but the overwhelming majority of donations benefited only the perpetrators, their families and friends, and fundraisers. This is one of the largest actions brought to date by enforcers against charity fraud."

While this is an extreme case, there are unfortunately a lot of big-name charities out there that give only a fraction of the donations they receive to the cause they claim to champion. So before you donate, do your research. Sites like Charity NavigatorCharityWatchGuideStar and the BBB Wise Giving Alliance rate charities on things like how their donations are being used, how much the charity leaders are making, and how well they protect donor privacy. Consumer Reports put together this chart based on 2014 ratings from these watchdogs, and I'm including it here because it's a good educational jumping off point for new donors:

Cause High-rated Low-rated
Animal welfare PetSmart Charities, Phoenix Red Rover, Sacramento SPCA International, New York Tiger Missing Link Foundation, Tyler, Texas
Blind and visually impaired Guide Dog Foundation for the Blind, Smithtown, N.Y. Foundation Fighting Blindness, Columbia, Md. Heritage for the Blind, Brooklyn, N.Y.
Cancer Cancer Research Institute, New York The Multiple Myeloma Research Foundation, Norwalk, Conn. American Breast Cancer Foundation, Baltimore Cancer Survivors’ Fund, Missouri City, Texas
Child protection Children’s Defense Fund, Washington, D.C.Prevent Child Abuse America, Chicago The Committee for Missing Children, Lawrenceville, Ga. Find the Children, Santa Monica, Calif.
Environment Earthworks, Washington, D.C.Environmental Defense Fund, New York None
Health Michael J. Fox Foundation for Parkinson’s Research,
New York Crohn’s & Colitis Foundation of America, New York
Defeat Diabetes Foundation, Madeira Beach, Fla. Childhood Leukemia Foundation, Brick, N.J.
Human services American Red Cross, Washington, D.C. Catholic Charities USA, Alexandria, Va. Shiloh International Ministries, La Verne, Calif. Children’s Charity Fund, Sarasota, Fla.
International reliefand development Grameen Foundation USA, Washington, D.C. Lutheran World Relief, Baltimore The Aidmatrix Foundation, Irving, Texas Children’s Lifeline, Clay City, Ky.
Mental healthand disabilities Alzheimer’s Foundation of America, New York American Foundation for Suicide Prevention, New York Autism Spectrum Disorder Foundation, Schererville, Ind. National Caregiving Foundation, Alexandria, Va.
Police and firefighter support New York City Police Foundation, New York FDNY Foundation, Brooklyn, N.Y. Disabled Police Officers Counseling Center, Niceville, Fla. Firefighters Charitable Foundation, Farmingdale, N.Y.
Veterans Homes for Our Troops, Taunton, Mass. Operation Homefront, San Antonio National Veterans Services Fund, Darien, Conn. National Vietnam Veterans Foundation, Fort Lauderdale, Fla.

Pick what you want to donate.

There are more ways to give to a cause than just writing a check. If you're a little short on cash but still want to make a difference, consider another kind of donation: a charitable gift-in-kind.

The FTC defines gifts-in-kind as: "any non-cash donation from individuals and businesses to a charity. Common examples are food, clothing, prescription drugs, equipment and medical supplies."

You can donate food to a shelter or food pantrydonate old electronics to a battered women's shelter, or donate gently-used professional clothing to a program like Dress for Success, which helps disadvantaged women dress professionally for job interviews.

You can also donate your time: volunteer at a soup kitchen, help out at your local animal shelter, or spend a few hours a week tutoring kids at the library. Whatever the cause, doing the work yourself is the best way to know whether your contribution really made a difference.

Donate the right way (and keep your receipts!).

First and foremost, if you're going to donate to charity, make sure there's a verifiable record of your donation. That means you should probably avoid donating in cold, hard cash, and instead stick with writing a check or using a credit card. In fact, many credit card companies offer the ability to donate to various charities using points or miles, and some will offer a spending bonus when you use their card to charge a charitable donation. For example, the Barclaycard Ring MasterCardoffers cardholders the ability to turn points into donations, and Bank of America will donate 0.08 percent of all purchases made with the Susan G. Komen Credit Card to the organization, as well as $3 for every new card member and annual renewal.

Many companies offer donation matching as well, so if yours does and you want to boost your financial impact on the cause of your choice, donate through work instead of individually.

If you find yourself donating a few bucks to whatever charity is being advertised during checkout atWalgreensWalmartPetSmart or your local grocery store, remember to save those receipts! It might not seem like you're giving a lot, but if you're mindlessly forking over $5 every time you hit the supermarket, your donations can really add up. If you keep the receipts, then when April rolls around you can...

Reap the tax deductions!

Giving to charity can help make the world a better place, and as an added bonus, there are also a number of great tax benefits in place for those who donate.

Charity Navigator has a pretty good plain-English summation of the benefits of donating to charity, which I've summarized below:

If you itemize your deductions, you may be entitled to a charitable contribution deduction.From Charity Navigator:  "If the gifts are deductible, the actual cost of the donation is reduced by your tax savings. For example, if you are in the 33% tax bracket, the actual cost of a $100 donation is only $67 ($100 less the $33 tax savings). As your income tax bracket increases, the real cost of your charitable gift decreases, making contributions more attractive for those in higher brackets. The actual cost to a person in the lowest bracket, 15%, for a $100 contribution is $85. For a person in the highest bracket, 35%, the actual cost is only $65. Not only can the wealthy afford to give more, but they receive a larger reward for giving."

You can deduct a contribution to a qualified charity only during the year in which it's paid. For checks, this means the date it went in the mail, and for credit card payments, it means the date it's charged, not the date you paid your credit card bill.

The limits to how much you can deduct are pretty astronomical for normal people. You don't need to worry about deduction limits unless you're contributing more than 20 percent of your adjusted gross income to charity.

Be aware of the rules that are in place for non-cash charitable contributions. You can deduct the market value of any non-cash items you donate to charity, but they need to be in good condition. "If you bring $1,000 in clothes or furniture to Goodwill or the Salvation Army, make sure that you get a receipt. Never throw such contributions into a bin where no receipt is available. If you are in the 25% bracket, that receipt may be worth $250 in tax savings to you. And remember that the IRS requires a qualified appraisal to be submitted with your tax return if you donate any single clothing or household item that is not in good used condition or better, and for which you deducted more than $500."

You can't deduct a separate contribution of more than $250 unless you have documentation. So save those receipts! Save them I say!

Keep in mind that while MOST charity donations are tax deductible, if you're planning on deducting donations on your taxes, you should double (and triple) check to make sure the organization you're planning on giving to is actually deductible. Check the IRS guidelines on charitable contribution deductions before you donate if this is something that's important to you.

This article first appeared in Brad's Deals.

The Christian Science Monitor has assembled a diverse group of the best personal finance bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link in the blog description box above.

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