Orange County Register

The bad news: The drop in charitable giving last year - some $6.4 billion - was the largest in the 54 years that Giving USA has tracked the data.

The good news: People and businesses still saw fit to donate more than $300 billion to causes near and dear to their hearts.

But… this year?

“We are fearful that giving will continue to be down this holiday season as it was last year,” nonprofit watchdog Charity Navigator says. “The recession has hindered Americans’ ability to support their favorite charities …. Even if the economy continues to improve, it will likely take many months for charitable giving to rebound. That is bad news for the charities that largely rely on the year-end generosity of donors.”

So, on this Happy Thanksgiving, we’d like to offer some advice from the experts for those of you getting ready to open your wallets and spread some holiday cheer, however much or little that may be.

THE BIG PICTURE

First, you might want to consider these findings from the GivingUSA report:

• Two-thirds of public charities receiving donations saw decreases in 2008.
• The exceptions were Religion, Public-Society Benefit and International Affairs.
• Compared with 2007, 54 percent of human services charities saw an increase in need for their services in 2008.
• 60 percent of the surveyed human services organizations were cutting expenses, including cutting services or staff, due to funding shortages.
• The type of human service agency most likely to be underfunded was youth development/serving children and youth.
• Of this type of group in the study, 74 percent said they are underfunded or severely underfunded, meaning that current available funding was insufficient to meet current demand; and
•  Among organizations working to meet people’s basic needs (food, shelter, clothing, etc.), more than half (53 percent) said they are underfunded or severely underfunded.
• In the context of Gross Domestic Product (GDP), giving is still strong. The estimates for 2008 indicate that giving was 2.2 percent of GDP. In 2007, giving was 2.3 percent of GDP.

The report is prepared annually for the Giving USA Foundation by the Center on Philanthropy at Indiana University. To read the full press release on the report, and order the report itself, click here.

GIVING WISELY

The following advice on how to give with your head as well as your heart is drawn from the folks at Charity Navigator and Guidestar.org, which posts a wealth of financial information at your fingertips:

• Identify your preferences. Ask yourself: “What is important to me?” The environment? Education? Hunger? Animal welfare? Helping sick children? Where should the charity do its work - in your neighborhood, region, the nation, or internationally? Do you want to support a large or small charity, a new or an old one?
• Get the biggest bang for your buck: Give to charities that maximize the use of every dollar. The most efficient charities spend at least 75 percent of their budgets on programs and services, with the remaining 25 percent spent on administrative and fundraising costs. Focus on supporting charities that can meet this benchmark. You can check out many charities at the Charity Navigator site.
• Marry philanthropy and gift giving: Do double duty with ”philanthropic shopping.” Buy gifts directly from well-run charities, rather than purchasing stuff from retailers.
• Give to charities that help the less fortunate: As the economy tanks, human services charities report increased demand for their programs and decreasing donations. Food banks, rescue missions and utility assistance charities need contributions this holiday season.
• Choose charities where the CEO is reasonably compensated: Just as Wall Street salaries have come under fire, nonprofit CEO compensation has become a lightning rod issue. CEO pay averages $150,000, Charity Navigator says, or 3 percent of expenses.
• Donate online: Contributions by Internet are one of the cheapest ways for nonprofits to receive donations. You can donate online at many charities’ web sites; and Charity Navigator and GuideStar offer that option, too.
• Avoid charities that won’t share information or pressure you. Reputable nonprofits will discuss their programs and finances freely; don’t use pressure tactics; are willing to send you literature about their work or direct you to a Web site; and will take “no” for an answer.
• Trust your instincts. If you have doubts about a charity, don’t contribute. Instead, find another nonprofit that does the same kind of work and with which you feel comfortable, then make your donation.

You must give by Dec. 31 to deduct contributions on your 2009 tax return. Keep those receipts!

And happy holidays.

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