Year-end donations

Year-end donations, Sometimes a person wants to donate to charity but isn't quite sure which charity. There's a solution to this problem, and it involves parking money in a donor-advised fund.

"Donor-advised funds are charitable giving accounts offered by a sponsoring organization that are designed as an accessible, simple, and less expensive alternative to private foundations," explains Joanne Fritz, About.com's expert on nonprofits.

Essentially, donor-advised funds function like a mutual fund. You can put money into a pooled fund, with the money permanently earmarked for charity. Once it goes into the fund the person can take a deduction for the amount of the contribution. Later on, once a person has selected their desired charity, they simply instruct the fund to send the money to the charitable organization. In the meantime, the funds can be invested for earnings, and those earnings can go to the charity as well.

Donor-advised funds can be used to bulk up on charitable donations at the end of the year, and then decide later to which charities to send the money. Donor-advised funds can also keep the identity of the donor anonymous to the charity.