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The Path to Charity: How to Start Giving

Ready to put your money where your heart is? Here's how to get started, whether you can donate change from your couch cushions or a fat check.

1. Decide how much you should be giving.

Financial adviser Brent Kessel recommends 10 percent of your income or 1 percent of your net worth, whichever's greater. Philosopher Peter Singer advocates a slightly more complicated sliding scale, with folks making up to $105,000 giving something like 1 percent to 5 percent of their income, and the wealthier giving 5 percent to 33 percent. At Singer's site, thelifeyoucansave.com, you can click on "The Pledge," then enter your yearly salary to calculate the amount of your suggested donation.

2. Choose the recipients of your gift.

Kessel recommends starting with a list of causes you care about, determining how much you want to give to each, and then putting aside a bit more for "discretionary giving" (that direct mailing that touches your heart, say, or a school auction). It could be that you decide, as Betty Londergan did, to split your donations over a number of issues (global poverty, the environment, human rights, animal rights, politics, education, women's health) or that you decide, as Singer did, that you want to focus on one issue. (He gives 25 percent of his income; almost all of it goes to Oxfam, an organization that fights world hunger.) 

Either way, as you choose recipients, you can avail yourself of some great online resources: GiveWell (givewell.org), for example, is made up of a group of hedge-fund ship jumpers who subject organizations to a rigorous and holistic assessment of how your money gets put to use and how effective the work of the organization is. (Brace yourself, though: Of the hundreds of organizations they've reviewed, they recommend about a dozen.) Charity Navigator offers a more traditional evaluation of the financial efficiency of nonprofits (it looks for low administrative costs, for example) alongside various tips, top 10 lists, and tools to calculate the tax implications of your donation.

3. Make a plan for how you'll donate.

Kessel says this can be as simple as having a jar in which you drop the change you save by forgoing little extras. If you can spare a bit more, he suggests a donor-advised fund, held at a community foundation or other investment firm; it administers your donations and offers a federal tax deduction (up to 50 percent of adjusted gross income for cash contributions). Kessel recommends examining your donations at least once a year, to reassess your priorities and hold your charities accountable.

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