Charity Donation: How to Give It Away Without Losing It All

VIDEO: Mellody Hobson reveals how to give without breaking the bank.

The holidays are right around the corner and charitable giving has always been an important part of the season.

Americans donated more than $303 billion to charity last year, with a quarter of that coming between Thanksgiving and New Year's.

However, with so many people facing financial hardships, it is getting more difficult for many Americans to give.

Mellody Hobson, "Good Morning America" financial contributor and president of Ariel Investments, has five tips to make the most of your donations this year.

1. Make a Budget

Charitable giving has taken a hit due to the recession.

A survey by the Giving USA Foundation found that charitable giving was down 3.6 percent in 2009.

The good news for charities this year is that Consumer Reports found in their annual shopping poll that most adults expect to spend more on charitable donations and gifts to others and less on themselves.

The most important thing you can do when determining your charitable donation is to determine what causes you would like to support and make a budget.

Hobson said the bottom line is that you should never give more than you can afford.

Also remember if you are giving to a charitable organization, you do not have to give it all at once, especially if you cannot afford it.

For example, if you want to give $500 to the American Red Cross for the year, then make 12 equal monthly payments.

Finally, do not go into debt giving charitable donations, or you may find yourself needing help yourself.

With more than 2 million charities to choose from, it can be difficult to determine the best charities for you to send your money.

There are horror stories about charities spending more on paying their CEOs than actually giving money to the causes that they say they help.

According to the AARP, most charities spend less than 35 percent of their donations on fundraising and administrative costs.

Fortunately, there are websites that rate the efficiency of charities. and provide stats on thousands of charities to help you determine which ones are the best.

Hobson recommends the website:

Public school teachers post requests on the website ranging from pencils to music instruments.

You can browse the requests and donate as much as you want towards the goal.

The American Institute of Philanthropy also publishes a charity rating guide on more than 500 charities.

It costs $3 and ordering information can be found at

If you are donating to a local charity you may also want to visit the organization's headquarters.

Hobson said don't be shy asking the charity potential questions.

3. Look for Alternative Ways to Give

During the holiday season we usually think of giving gifts to our friends or relatives.

Instead of receiving gifts from your friends or relatives tell them to give to your selected charity in your name.

There are gift cards that you can give to individuals which they can then direct to charities.

For example, the Good Card from allows the card's recipient to give to more than 1.2 million charities.

You buy the card from the website for $5 and you can put between $10 and $250 on the card.

The one downside is that these cards expire after six months.

Credit card companies are also making it easier to donate to worthy causes, without hurting your budget.

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