Advice: Where to Give?

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When Terry Neese cuts her charity checks each year, she's thinking about more than a tax deduction. One beneficiary, the March of Dimes, has deep personal significance for her. Neese, 54, learned of birth defects firsthand when her grandchild Emily, 8, was born with one arm shorter than the other. "In addition to giving to nonprofits that have important meaning to me," says Neese, who sits on the local board of March of Dimes in Oklahoma City, Okla., "I've done my homework to make sure these groups were getting the job done."

Choosing a charity isn't simple these days. With scores of worthy causes seeking donations, baby boomers like Neese are hit up for cash virtually every day. Consider that there are 850,000 nonprofits, or 501(c)(3) organizations, across the country and that an estimated 40,000 new charities are formed each year, according to Bennett Weiner, chief operating officer of the BBB Wise Giving Alliance, an Arlington, Va., charity-watchdog group.

So how do you find the one that's right for you? While it's very much a personal decision, there are a few standard guidelines that everyone can follow.

For starters, a charity should provide you with basic credentials, such as proof of 501(c)(3) status (which the IRS gives to all nonprofits), an annual report and a copy of its bylaws. These documents should present a sharp picture of how an organization cultivates and spends its resources. As a rule, no more than 35% of total contributions should go toward fund raising and other administrative costs, Weiner says.

Once you have zeroed in on the right organization, decide which aspect of the cause matters most to you. Neese gives to the March of Dimes, but she has seen to it that her money goes toward helping people in her area--for example, a local hospital that needed an incubator for its neonatal unit.

Getting involved in your charity of choice is another way to watch your dollars at work. Ron Benza, 50, owner of a marketing-services firm in Tiburon, Calif., donates about $4,000 a year to two charities and participates in both. He has served on the board of the local chapter of the National Multiple Sclerosis Society and is an adviser to the Family Violence Prevention Fund. He has also volunteered for the fund, writing a brochure for a new program that was launched in June.

Sometimes you can have more impact giving to a smaller organization. But don't let a large nonprofit turn you off from a cause you believe in. If you're vigilant, you'll see your dollars do good in either case. And at the end of the year, that extra tax deduction will be a well-earned bonus.