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.

She emphasizes that this is "a mind-set, more than a pocketbook" issue. Once you feel confident about your financial plan for the future, you can "afford" to give on a regular basis, even if only in small amounts.If you really want to structure your giving, you can create your own "foundation" through donor-advised funds, such as those offered by

Vanguard

,

Fidelity

and many other financial-services firms. These funds allow you to take an immediate tax deduction for your contribution.

Then the money can grow over a period of years in a selection of special mutual funds, until you give instructions for distribution to a registered 501(c)(3) charity.

If your investments prosper, your foundation could grow, even as you direct disbursements to qualified charities. Families can set up these accounts, encouraging children to make annual, deductible contributions -- and then you can craft a plan for future distributions to worthy and official charitable causes.

There is one drawback: While others may contribute to your foundation and take a deduction, the money can only be distributed to registered 501(c)(3) charities, not to an individual.

New Tax Rules for Charitable Contributions

A significant amount of contributions are made in cash, whether through dropping money into the collection plate or the Salvation Army kettle during the holiday season. But the new Pension Protection Act of 2006 tightened the rules.

Now, if you want to deduct a cash contribution of any amount, you must have written confirmation that the charity actually received that amount from you.

For charitable contributions of less than $250, you must keep a canceled check, credit card receipt or electronic funds transfer receipt. Or you must have a letter from the charity acknowledging receipt of the contribution and stating its date and amount.

For charitable contributions of $250 or more, you'll also need a written receipt from the charity substantiating the amount of cash contributed and a description (but not the value) of any property -- other than cash -- contributed.

And you must disclose whether the organization provided any goods or services (such as a theater ticket or dinner) in return for the contribution.

If you donate property, such as clothing, valued at less than $250, you must keep a receipt from the charitable organization showing the charity's name, contribution date, physical location of the contribution and a detailed description of the property (but not its value).

For larger donations, you'll need even more documentation, including a description of how you acquired the property (purchase, gift, inheritance), the date you acquired the property and the original cost of that property. Donated property worth more than $5,000 requires a qualified appraisal, as do lesser-value objects that aren't in "good" condition.

The IRS used the Pension Reform Act to strengthen the requirements for charitable giving, even as it was making it easier for seniors to make charitable contributions directly from their Individual Retirement Accounts.

That giving opportunity is available only for 2006 and 2007, and only for those 70-1/2 years old or older. These seniors can exclude up to $100,000 of otherwise taxable distributions, including mandatory distributions, from an IRA -- as long as the money is paid directly to a qualified charity.

A final thought: Although the IRS does not allow you to deduct the value of services or time you give to a charity, Judith McGee points out that these nonmonetary contributions also express our need for relevance and impact the communities in which we live, two important factors to consider.

Says McGee: "Money or stocks have no use or energy, until you send them on a mission. Do that while you're alive -- or one day your heirs will spend it, or the government will do it for you!"

And that's The Savage Truth.

Terry Savage is an expert on personal finance and also appears as a commentator on national television on issues related to investing and the financial markets. Savage's personal finance column in the Chicago Sun-Times is nationally syndicated, and she released her fourth book,

The Savage Number: How Much Money Do You Need?

in June 2005. Savage was the first woman trader on the Chicago Board Options Exchange and is a registered investment adviser for stocks and futures. A Phi Beta Kappa graduate of the University of Michigan, Savage currently serves as a director of the Chicago Mercantile Exchange Corp. She also has served on the boards of McDonald?s and Pennzoil.