MONROE - Some people may think it's unfitting in this giving season to plan a charitable gift to reduce next April's taxes, but that is exactly what non-profit organizations hope you will do.

All those donation requests that come at the end of the year could benefit you as much as the charities who make them.

Charitable contributions make up 20 percent of revenues and support for nonprofits, according to the Nonprofit Almanac.

But many education (56 percent), health services (47 percent), arts (44 percent) and religious (95 percent) organizations rely on private donations as their primary source of revenue.

Stock gifts

Linda Gebhardt, of donor service of the Community Foundation of Southern Wisconsin, said gift gifting of stocks is popular this time of year.

Gebhardt oversees several community and education funds in Green and Lafayette counties. Monroe Fund is a community fund, with 40 different fund entities within it.

"One man came in this year with a stock gift and just designated where he wanted the money to go," she said. "It's as simple as that."

By gifting stock, the donor saves capital gains taxes on the appreciated value from selling the stock and gifting the money. In essence, the fund received the full appreciated stock value.

Fidelity Investments® estimated the additional median federal tax savings from donating $10,000 in appreciated securities is $449. Securities can include stocks, bonds or mutual funds.

Gebhardt said community funds will normally turn gifted stock around and sell it immediately, but she advised donors not to wait until the end of the year because stock transfers take time to complete.

People age 70.5 and over have another method this year to help lower their taxes.

Gebhardt said those people may gift up to $100,000 directly to charities from qualifying IRA accounts. The donor is not taxed on that portion of money coming from the IRA.

Why donate now?

Why do donation requests come like a snow storm just before the new year?

Besides declaring the last chance for a tax advantage, donation requests play upon people's affections.

According to the National Philanthropic Trust, the top reason people say they give is because they are asked, or presented a giving opportunity. The second reason is compassion for those in need. If donors also believe in the cause or are affected by the cause, that helps too.

How money is used

While donations to any of the 1.4 million 501(c)(3) organizations are tax-deductible, how can a donor know which charities will use their dollars most effectively?

A Harris Poll released Dec. 13, 2006 showed that familiar charitable organizations are not always the ones people trust the most.

Know your charities, recommends the American Institute of Philanthropy.

Research into charities is the only way to reassure yourself that your money is being used in the way you expect. Charities vary greatly in how they distribute their money among direct assistance, administrative costs and other expenses, including more fundraising efforts.

Charities are obligated to provide detailed information to interested donors. Request literature and the charity's latest annual report, including a list of the board of directors, a mission statement and the most recent available audited financial statements with accompanying notes.

"We do our due diligence," Gebhardt said about the Community Foundation of Southern Wisconsin investigating funds under their direction. "And we can give you documents" about those entities.

Local charities are easiest to investigate, and donors have the added advantage of seeing their money at work in their community.