How to Choose a Charity for Holiday Giving

Being generous is great, but being smart can make those dollars go further.

A young boy makes a donation into a Salvation Army kettle outside a Giant grocery store in Clifton, Va., Nov. 24, 2012.
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'Tis the season for giving: Soup kitchen volunteers, Toys for Tots, and bell-ringing Santas abound. Goodwill toward humanity is widespread during the holidays, but before emptying their change jars and drawers of used clothing, donors might want to do some cost-benefit analysis. Below, experts explain six ways to make holiday donations more cost effective.

1. Donate like an investor: "Can you imagine if you were an investor in Apple, and you said, 'Well, look, I'm going to invest in your company, but only if you use my funds for the next iPad release'?" says Katherina Rosqueta, executive director of the Center for High Impact Philanthropy at the University of Pennsylvania. That would mean that if Tim Cook woke up tomorrow with the next big idea, the investor's money would be walled off for use in a potentially less profitable project.

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Likewise, donors' restrictions on how their money can be used create inefficiency for charitable organizations. Rosqueta explains that a donor might, for example, tell an organization that his or her donation can only be used for fighting illiteracy in North Philadelphia.

"What happens if another program is serving those kids better in North Philadelphia, and the real need happens to be in Southwest Philadelphia?" The lesson is that donating to a charitable organization may best be done like a small stock transaction (albeit without the personal gain aspect): The donor buys into a trusted company hoping for a good return on investment, but the organization does as it chooses with the money.

2. Consider cash instead of used goods (or at least call ahead): Often, money can go farther than donations of goods, particularly when a donor doesn't know exactly what a charity organization needs.

"You certainly want to check with the charity first," says Sandra Miniutti, vice president of Charity Navigator, an organization that evaluates charities. While organizations sometimes do ask for donated goods, she says, people often want to give used items, such as furniture and clothing, for which the charity has little use. That can mean extra time and money spent finding a place for those items (or getting rid of them).

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"We get clothing donations that we can't use at that time," says Kristin Valentine, chief development officer at Bread for the City, a nonprofit that serves the poor in the Washington, D.C. "It's December and folks are donating their shorts and T-shirts, and it would be really great to get winter coats and sweaters. We have a small room and nowhere to put this, and it actually costs us money to figure out what we then can do with this."

Many organizations have lists on their websites of the types of items they are seeking. And for people who simply prefer giving goods over cash, some charities have wish lists on sites like Amazon, allowing donors to purchase entire cases of needed supplies. And, Valentine points out, her organization has received many useful donations, such as subway farecards with value still on them, but those gifts have been especially welcome when donors asked first if Bread for the City could use them.

3. Don't purge your pantry: The money-versus-goods conundrum is perhaps nowhere more apparent than in the area of food donations.

"We can just purchase so much more food, and healthy food, at the time when we need that food, if someone gives us a dollar versus if they go to Giant [or another grocery store] and spend a dollar," Valentine says.

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Food pantries often can buy surplus goods from the food industry for pennies on the dollar, meaning that a $10 donation can buy 20 times that amount of food.

In addition, food pantries are often looking for donations that cater to their clients' health needs; high-sodium or high-sugar offerings may not fit that bill. Valentine stresses that her organization is pleased at people's generosity, but donations are often the kind that the pantry cannot accept.