When you want to give to charity.

Charitable giving in America is as diverse as the lives of the millions of individuals who give to more than one-half million charitable organizations. Individual philanthropy takes many forms, from a quarter casually tossed into a bell ringer's kettle at Christmas, to a line of limos delivering guests to a charity ball, to the creation of complicated philanthropic vehiles--foundations, trusts, annuities-designed to maximize the size of the gift and the tax benefit that you, the giver, receive.

The American Association of Fund-Raising Counsel (AAFRC) estimates that in 1991 Americans donated nearly $125 billion to charitable organizations. Approximately 82 percent of this total was donated by living individuals, while another 8 percent was left to charities as individual bequests. The total represents a slight increase when adjusted for inflation from 1990's total, indicating that the nation's economic recession didn't have a significant negative impact on personal giving.

However, a more recent survey by the Gallup Organization for Independent Sector, a coalition of charities and grant makers based in Washington, D.C., shows otherwise, with respondents reporting that economic insecurity caused them to cut back on the amount they gave in 1991.

It's not surprising that two major studies should provide somewhat conflicting results; charitable giving, with or without a recession, is as complex as it is diverse. For example, not unexpectedly, the wealthiest Americans give the most to charity. But the very poor, those making under $10,000 a year, give a higher percentage of their income than those in the middle-income brackets.

BECOME CHARITY-SAVVY

The demands on your charitable dollars can seem overwhelming, and you're constantly looking for ways that your philanthropy can make a real difference. How do you choose whom to give to ? And how can you be sure the charities are doing what they claim with your money?

The public's confidence in the nonprofit sector was shaken a bit in the wake of last year's allegations of financial improprieties at the United Way of America. Fortunately, information about charities and their finances is available. The Tax Reform Act of 1969 requires all nonprofits and foundations to file an Annual Form 990 with the Internal Revenue Service, although it specifically exempts churches and religious organizations.

Also, many charities will willingly provide copies of their most recent 990 forms, which list executive salaries, administrative expenses, sources of income and so forth. You can also obtain the forms directly from the IRS for the cost of copies and, in many states, from the state attorney general or register of charities.

And two national watch-dog groups, the Philanthropy Advisory Service of the Council of Better Business Bureaus, based in Virginia, and the National Charities Information Bureau, based in New York, keep data on many large national charities. The PAS and the NCIB evaluate charities on such criteria as the frequency of their board meetings, whether they provide financial information on request, the percentage of their total income they apply to programmatic activities and the truthfulness of their solicitations. They'll provide these evaluations upon request for a small charge.

Your gifts to charitable organizations are tax-deductible under Internal Revenue Code 501(c)(3). However, you should be aware that many nonprofit organizations aren't deemed charitable by the IRS, and while they themselves are tax-exempt, donations to them aren't tax-deductible. These include such groups as lobbying organizations, political parties, many labor unions and fraternal organizations. If you have any questions about an organization's tax-exempt status, you can call the IRS or ask the organization to provide a copy of its IRS determination letter ruling.

YOUR GIVING OPTIONS

While writing a check is probably the most common method of giving, many other options exist, and they all offer a variety of tax benefits. Here are some alternatives:

* Appreciated Securities--In 1988, a donation of $10,000 in cash made by a couple in the 28-percent income tax bracket actually "cost" that couple $7,200 after the deduction. If the same couple donated $10,000 worth of appreciated securities that had a cost basis of $2,000, their "cost" of the gift would still be only $7,200, but because donations of appreciated securities are deductible at their full fair-market value without accruing any capital gains taxes, the couple would also have avoided paying capital gains taxes on the stock's $8,000 appreciation.

* Private Foundations--Many individuals eager to create a philanthropic legacy have created private foundations. These are separate legal charitable entities that receive donations, usually from the founder and his or her family members, invest the money largely tax-free to build an endowment (there's a small excise tax on private foundation income) and distribute the income for charitable purposes.

While the rewards of giving through a private family foundation are many, establishing a foundation and meeting all the legal and financial obligations can be expensive and time-consuming.

* Donor-Advised Funds--With an irrevocable contribution to a donor-advised fund, you receive an immediate tax deduction. The money is then pooled with other donor assets and distributed to charities upon your recommendation. Donor-advised funds provide many of the advantages of private foundations, but they're simpler to use, often less expensive and don't have tax and distribution payout requirements. Many community foundations and other public charities provide this service.

* Planned Gifts and Bequests--Many nonprofits, especially universities, hospitals and large cultural organizations, have been able to successfully increase their donations by helping you, as a donor, establish planned gifts that provide you both tax breaks and some income.

With a planned gift, you take a tax deduction upon making a donation to a charity of cash, securities or real property. You receive income generated from investing the gift in your lifetime, but the charity keeps the remainder of the gift after your death or the death of your beneficiary. These planned gifts include pooled income funds, charitable remainder annuity trusts and unitrusts.

Income gifts such as charitable lead trusts are another planned option. With a charitable lead trust, assets are placed in trust with a specified amount of income from the trust distributed to charity, while you leave the property to a family member or other noncharitable beneficiary.

THE HAND OF POLITICS

How will philanthropy change as we march toward a new millennium? The predictions have been coming fast and furiously. Recent studies have shown that giving among millionaires declined in the 1980s, presumably because the tax windfalls of the Reagan era reduced the tax incentives. Conversely, President Clinton's proposed plan to increase the top income tax rates for wealthy people from 31 percent to 36 percent could make philanthropy more attractive. If approved by Congress, the plan includes a surtax on the very richest Americans, which shouldn't hurt giving.

Another provision of the president's plan would permit you to claim the full charitable deduction for all gifts of appreciated property, including art and collectibles, which aren't currently fully deductible. This would be a real boon for universities, libraries and museums, which often receive donated works of art and equipment. An additional item in the Clinton plan would mean you also could make appreciated gifts without triggering a provision of the alternative minimum tax.

However, unless the recovery picks up steam, higher taxes on the middle class could further reduce giving in that sector by shrinking individual disposable income. And cutbacks designed to reduce the federal deficit can be expected to increase the need for many of the services once provided by government, but now provided to a greater extent by public charities.

Ms. Jaffee is executive director of Fidelity Investments' Charitable Gift Fund, a donor-advised fund.