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MICHEL MARTIN, Host:

And now we shift to talk about a very different kind of security, the security of spending your money wisely. All this month, we've been airing a series called conscientious shopping. We've talked about everything from buying green goods to buying - trying to find humanely slaughtered foods, to conflict-free jewelry.

For our final installment of the series, we're going to take a look at conscientious giving. By definition, charities help those in need, but not all charities are efficient at doing so. So to help us figure out which charities are spending their donations in the wisest ways, we've called upon Daniel Borochoff. He's president of the American Institute of Philanthropy. That's a watchdog group that investigates charities and how well they fulfill their missions. Also with us, our regular TELL ME MORE contributor on matters of the economy and personal finance, Alvin Hall. Gentlemen, thank you both so much for speaking with us.

DANIEL BOROCHOFF: Thank you for having me this morning.

ALVIN HALL: Glad to be here.

MARTIN: Daniel, tell us about your organization. Why is there a need for a group like this?

BOROCHOFF: Oh, well, there's incredible need because Americans give billions of dollars every year to charities. But unfortunately, a lot of times, now, they don't know who they're giving to. In fact, people have even given to terrorist groups - which happens to be illegal, by the way - because they don't know. And one way of avoiding giving to a terrorist group, since that's been in the news right now, is make sure that the need that they're actually describing is real, actually describes the real conditions, because people raising money falsely, looking to divert it to something else, in many cases won't even bother to be exact about what actually they need the money for - and that's really important to know.

MARTIN: On your Web site, you mention the case of a charity called Feed the Children, which you call the most outrageous charity in America. Why?

BOROCHOFF: This group has had forged audits, allegations of stealing donated goods, family members taking advantage of the charity, just on and on. Only about 20 percent of the money, of the cash budget, actually goes to programs. We've been giving them an F grade for about 15 years. They're on TV all the time. They're a famous charity.

People get it mixed up with Save the Children, which receives an A grade or Feeding America, which is a group that actually distributes food to the food banks, a really valuable organization right now. We give them an A. Whereas Feed the Children, food isn't even described as a donated good in the actual audits of the organizations. And if it is, it's really a teeny, tiny amount. Most of it's medicine, and what these groups can do is they can buy medicine from places like India for pennies, inflate it hundreds of times on their books.

So it's so important that you as a donor find out what's happening with the cash, the dollars that you give, because any group can get all kinds of donated goods and put whatever value they want, practically, on it.

MARTIN: Sure. So we've only got a couple of days left before the end of the year. So presumably, people are going to want to make those donations and have to decide in a hurry. So Alvin, how do you decide to whom to donate?

HALL: Well, I think people need to come up with a strategy, really, about how they're going to allocate the limited funds that they are going to give to charities.

The way I do it, I sit down and make a list of all the charities I want to give money to, or organizations. That ranges anywhere from Alvin Ailey, an organization which I really like, to Friends International, an organization which I came to be aware of during my trip around the world filming this new series. It helps children in Cambodia.

So I looked all those organizations and tried to figure out where could my money help the organization the maximum amount. And in the case of Friend International, they were in the midst of a matching grant. Somebody said if you raise X amount, I will triple that amount. And so I gave a substantial amount of my money to them.

The benefit to me is that it's tax deductible, and most people don't even give enough to go up to the threshold.

MARTIN: What is the threshold? What is the top?

HALL: The threshold is at 50 percent of your adjusted gross income is the maximum amount that you can give to a charity. So if you're earning $50,000 as an adjusted income, then you can give up to $25,000. Most people never get up to that point.

MARTIN: True. Daniel, how do you decide to whom to donate?

BOROCHOFF: First is if they're accountable, if they're willing to disclose what they're actually accomplishing, what they do with the money. Most of the groups are able to get 75 percent or more of their cash budget to actual bona fide programs. But see, what's a bona fide program?

A lot of times, that call that interrupts your dinner is labeled as a program if they tell you to fly the flag or pray for something. So actually you've got to figure out what's the bona fide program and find that out. It shouldn't cost them more than $35 to raise $100. The better groups spend $25 or less to raise $100. Cold-call solicitations, very expensive. It's better that you find the charity rather than they find you, because it's very expensive for them to find you, and you can really waste your money responding to cold-call telemarketing.

Also, how much money does the charity already have? Some groups, such as Research to Prevent Blindness, has over 13 years' worth of their budget in reserve. Air Force AIDS Society has over 10 years. Guide Dogs for the Blind has over eight years' worth of their budget. So find out how much money the charity already has.

Also, don't get tricked up by the names. Some of the names of these groups sound really like - for instance, World Emergency Relief gets an F grade from AIP, whereas World Concern gets an A grade. Veterans area is something really needed right now with these wars going on, but if you give to Help Hospitalized Vets, AMVETS or Paralyzed Veterans of America, you know, they're F-graded groups, very little to the program, high fundraising costs. But if you give to Fisher House Foundation, Intrepid Fallen Heroes Fund or National Military Family Association, you're giving to an A+ group that's getting nearly all their money to actual program services.

MARTIN: And Alvin, finally, we're going to give you the last word. There are - are there other ways to be of service to charitable organizations without writing a check? Many people are short on cash this year, but they still want to do something to be helpful. Are there any other ideas?

HALL: You can volunteer your time and commit to that pattern of volunteer over the next year. You can give - if you have some equities or stocks or bonds you want to give instead of reaching into your pocket for the cash, you can give those. I think they're deductible up to 30 percent of their value.

And you can give things that you own that can be used for auction. For example, one organization has approached me about giving a piece of art or something in my collection of stuff that I own to them so they can auction that for money.

There are other ways to help without reaching into your pocket and coming up with cash.

MARTIN: But presumably, you want it to be something of value, and the same rules still apply.

HALL: Exactly.

MARTIN: No matter what you're donating, you want it to be to an organization that is worthy and worth doing - worth the time.

HALL: Exactly. It's not something that you would sell at a yard sale, for example, and the amount of money they get must be going toward something that you really think is important.

MARTIN: Alvin Hall is our regular contributor on matters of personal finance and the economy. He joined us from member station KRTS in Martha, Texas. We were also pleased to be joined by Daniel Borochoff. He's the president of the American Institute of Philanthropy, and he joined us from Chicago. We'll have links to the information provided by both of our guests on our Web site. Just go to npr.org. Go to the programs tab, and click on TELL ME MORE. Gentlemen, thank you.

HALL: You're welcome.

BOROCHOFF: Thank you.

(SOUNDBITE OF MUSIC)

MARTIN: In a moment, our moms talk about the year's new stories that made parenting a cinch and a challenge.

Unidentified Woman: Ted Kennedy, when he died, just an absolutely beloved person, and yet he spent most of his life atoning for one night where he made some really bad choices.

MARTIN: Our weekly conversation with our moms is just ahead on TELL ME MORE from NPR News. I'm Michel Martin.

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