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Mellody Hobson is president of Ariel Investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts.  Additionally, she is a regular financial contributor and analyst for CBS news.

Mellody: This morning i want to talk to you about a money matter, but it is a little different from our usual topics: this morning i am here to talk about charitable giving.

Tom: Sounds great! What specifically do you want to talk about?

Mellody: Well, first of all, it is fitting that we talk about philanthropy and charitable giving this week, ahead of Independence Day. We live in a country of massive generosity. American’s give more to charity, per capita and as a percentage of gross domestic product, than the citizens of any other nation. Based on charitable contributions, American’s give 1.85% of GDP, first among all nations, and American’s rank third in terms of the amount of time volunteered. And among American’s, black American’s tend to contribute more as a percentage of their income than American’s of other ethnicities.  Those are statistics to be proud of as the fourth approaches.

Tom: What is the current state of philanthropy in America?

Mellody: Just like every other sector of American life, charitable giving and philanthropy took a hit during the recession, and like the economy it has been slow to come back. However, the non-profit sector has finally returned to prerecession levels. According to the giving USA numbers released this month, the total estimated charitable giving in the United States rose 4.4% between 2012 and 2013, to $335.17 billion in contributions. Giving by individuals totaled an estimated $240.60 billion, rising 4.2% in 2013.

Many of us could be forgiven for thinking that American philanthropy is mostly the wheelhouse of corporations, foundations or other ‘big money’ sources. It is not! not only does individual giving comprise over 70% of total charitably giving in the country, the percentage of contributions are rising. We have seen clear increases in the total amount given by individuals in the last couple of years. In particular, the rise in contributions by individuals between 2011 and 2013 represents 73% of the growth in total giving during that time frame. All of this is to say that the state of charity in America has rebounded, and is once again in a strong position.

Now, I have a few tips for our listeners who may want to give, or continue to give!

Tom: Alright! What should we know?

Mellody: First things first – try to give to charities or organizations that you are familiar with, or better yet, have worked with. It’s not always possible, of course, but experts say it’s the best thing to do. If you know the organization, this is the best way to be confident your contribution will be put to good use.

If you don’t have a specific organization that you are familiar with in mind, there are a few steps you want to take. First, ask if your contribution is tax deductible. Some nonprofit organizations that solicit gifts are not charities or may not have the proper tax status, meaning that you can’t deduct your donation at tax time.

Secondly, make sure the organization is who it says it is, and doing the work they say they do. The first place to investigate is their website. Some groups may not be serving local needs, and others may adopt names that are similar to well respective organizations to help them redirect money to their coffers. The internal revenue service maintains a list of all organizations registered as charities. You can also check out the national association of state charity officers, to find your local official. Another great way to learn more about an organization is to volunteer. This can be a great way to get information about a charity before giving money. Working with the group and gaining that experience will give you a sense of how the organization is run and how much impact they have on the issue they are trying to address.

Be willing to investigate a charity’s expenses. In general, efficient groups will spend at least 65 percent of their funds on the causes they support, according to the American institute of philanthropy, which rates charities for donors. You can ask the charity for this information, which it is required to provide, or search the internet. A great resource is guide star, which posts copies of charities’ federal tax filings.

Tom: Always great to have you on! Anything else we should know?

Mellody: One last thing, Tom: be careful about how you give. Don’t give out credit card or personal information in response to phone, e-mail or door-to-door appeals. These requests could be scams. If giving online, locate the charity’s web site yourself rather than linking through an e-mail. Also, don’t give cash. A check is probably the best way to ensure that you are protecting yourself from fraud.

That said, I do hope that everyone considers giving a little something back this year, whether it is by making a financial contribution or showing up and volunteering. Every little bit counts! And as I mentioned, giving back really is one of the things that American’s do best!

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MONEY MONDAYS: Charitable Giving In America  was originally published on