'Tis the season for charitable donation

It is that time of year. The bells are ringing, the cards need writing and charitable requests keep coming.

But financial advisers say individuals shouldn't make a single donation without first considering their philanthropic goals and the most tax-advantageous ways to give.

Because charitable giving offers benefits for donors as well as recipients, philanthropy should be incorporated into a person's regular financial planning, advisers say. For those who have, say, sold a business or are expecting a hefty bonus, this might be the year to speed up an existing charitable pledge to optimize tax savings.

For others, the goal of giving may be to teach children and grandchildren about values and money by involving them in philanthropic decisions.

"It could be a valuable tool from a lot of angles," says Ann Boyce, president of the T. Rowe Price Program for Charitable Giving, an independent donor-advised fund. She advises people to take the time now to estimate their 2007 income and taxes and then think about what causes they want to support and how to get the best tax deduction for the donation.

Amid a dramatic growth in wealth in the U.S., Americans are donating more than ever and, unlike previous generations, giving away more while alive than through their estates. According to a report published by the Giving USA Foundation, a nonprofit group that supports research and education in philanthropy, U.S. donors gave $295 billion directly to charitable causes last year, up 4.2 percent from 2005.

About 65 percent of households with incomes of less than $100,000 gave to charity last year, with the average American giving 2 percent of income and the wealthiest as much as 8 percent to 10 percent, the report found.

"Giving has become a cultural norm," says Paul Schervish, director of the Center on Wealth and Philanthropy at Boston College.

Hundreds of thousands of Americans of all incomes have discovered donor-advised funds, vehicles for charitable giving that have surged in popularity as many financial-services firms reduce fees and make them easier to use.

A lower-cost alternative to establishing a foundation, donors can now buy into some of these funds with an initial deposit of as little as $5,000 to $10,000 in cash, stock or other assets; take a tax deduction; and then advise at a later date on where the money should go.