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Money Tip: Give Wisely

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Most of us have a cause that's close to our heart. It's that story we can't say no to, the event we donate our time or money to, the fundraiser we pour our talents into. Like all of us, you probably do it because this particular thing is important to you. Whatever amount you give, every cause you donate to says a lot about who you are. Why not share this vital part of yourself with your child?

Donating to charity or an important cause together can spark togetherness and bring up all sorts of important discussions. Children can learn about the importance of giving, the way they influence their world and the vital role they play in the community. It can also, surprisingly, serve as a valuable financial lesson. And we're not necessarily talking about making a donation tax deductible.

It's also important that your child learn about donating wisely. Your donated dollars should do what the charity promises they'll do. You want it to be spent on cancer research, feeding the poor or saving the environment. You certainly don't want the money you are giving to feed a hungry family or rescue a polar bear cub to be mismanaged.

Do your homework before you give, and make sure your chosen charity will change the world in the way in promises. All kids love playing detective. Get your Sherlock Holmes hat on, tell your child you are investigating and see what you can uncover together about how the cause you are donating to manages its money.

You can do this by a little Web sleuthing or calling the cause in question. Find out exactly what your money will be used for and then discuss with your child if this is the best place to give to or whether there might be an organization that will use the funds better. Four big things to look into are:

1. Advertising – Nothing is meant to state one's goals better than direct advertising, and you should check to make sure their actions match their words. To get the info, check their publicly available IRS 990 form. On page 2, Part III in the Statement of Program Service Accomplishments, charities report what their latest programs are and what funding has been allocated to those programs. See if those numbers seem to line up with their stated goals.

2. Plausibility – Trust your own instincts. Does the charity provide any data on results or information that makes their approach seem effective and logical to you?

3. Feedback – Nobody knows better than the recipients whether or not a difference was made in their lives. Check to see if the charity provides any feedback from or about their beneficiaries.

4. Third Parties – Is the charity endorsed or objectively reviewed by unbiased and trustworthy third parties? What do they have to say about them, and what has the charity done with this information?

Investigating this together can lead to many discussions about what is and isn't a good way to manage money. If you really do your homework on this, you'll do both yourself and your child an invaluable favor. You'll make sure you are truly making a difference. And not only will you be teaching your child to give, you'll teach them to give wisely.