'Tis the Season for Giving

When you're devoting your attention to making money, saving money and investing for the future, it's hard to think seriously about giving money away. Yet individual Americans gave nearly $188 billion to charities and other types of organizations in 2004, according to the Center on Philanthropy at Indiana University. We're certainly among the most generous people on earth.

And we're officially entering the peak season of giving. In coming weeks, charities will send out reminders of their worthiness, along with envelopes for your contributions. According to the IRS, there are more than 1.8 million tax-exempt entities in the U.S., and that number is constantly growing. It's up to you to decide which organizations deserve your generosity.

And it's also important that you know and follow the appropriate tax rules if you want your contribution to be tax deductible.

It's easy to check on a charity's business practices to make sure the bulk of your contribution is going toward the cause you select, instead of being spent on fund-raising expenses or salaries. Web sites such as www.CharityNavigator.com and www.GuideStar.org allow you to search for a charity by name or cause, as well as view and compare their annual IRS filings under Form 78, which details their expenses and costs.

But finding a reputable charity is only the first step in the giving process.

Creating a Lifetime Giving Plan

Well-known Portland, Ore., financial planner and author Judith McGee has combined her passion for planning and giving into something she calls "strategic philanthropy." McGee says the challenge is to structure a financial plan that supports lifetime giving as well as the development of a tangible legacy.