The dos and don'ts, goats and guns of giving to charity at Christmas

Handing cash to carol singers or buying a card for a cause may make you feel good, but there are better ways to help

But before reaching into your pocket, check whether you are donating in the way that most helps the causes you want to support.

Giving cash to carol singers raising money for a local charity is worthy, but they would be better off with a donation via Gift Aid.

Here's our guide to generous giving.

Christmas cards

Don't enjoy too much of a glow buying charity cards from high-street and mail-order shops. The sum that actually goes to charity can vary hugely, with some retailers giving only a fraction of every pound spent to good causes, according to new research from the Charities Advisory Trust (CAT).

While the average is just 7.5 per cent, the worst culprits include department stores John Lewis and Fenwick, which give just 4 per cent and 1.5 per cent respectively to their chosen charities, says CAT. "How can you call these 'charity cards' when such a negligible amount goes to charity?" says Hilary Blume from the trust. "We believe they should only be given this title if retailers give at least 10 per cent - and we want shoppers to boycott any card that goes below this."

CAT recommends buying cards from charities directly or through temporary shops such as Card Aid, where at least 35 per cent of the price goes to charity.

Credit cards

Many charitable shoppers will do their bit by putting all their festive purchases on an affinity card that raises money for a good cause.

"Most will donate a specific amount when you first use the card, followed by a further percentage afterwards - linked to the amount you spend," says Andrew Hagger from financial analyst Moneyfacts.

However, the annual percentage rates (APRs) on charity credit cards can be high, so they are really only suited to those who pay off their debt in full each month.

Among the better cards on offer are those benefiting Cancer Research UK, Mencap and the NSPCC - all issued by the Halifax. Each charity gets a £20 donation when the card is issued or first used, and 0.25 per cent of anything you spend thereafter. They each have an interest-free deal for two months, after which the APR is 16.9.

Elsewhere, the Comic Relief card from Nationwide donates £5.85 on first use, but then a higher 0.5 per cent of anything you spend.

Stuart Glendinning at the price-comparison website www.moneysupermarket.com says that although charity credit cards are getting better, they are still disappointing. "Customers have to compromise on the rates to some degree, while the rewards for the charities are not overly generous."

Go for gifts

Goats, beehives and mangrove seedlings form part of the selection in the Good Gifts catalogue run by CAT (www.goodgifts.org). This uses your cash to meet the needs of impoverished countries: a goat for farming will cost you £20, while £27 will pay for the restoration of a child's sight through an operation to remove cataracts.

Alternatively, for £25, you could buy a Kalashnikov rifle in Sierra Leone; it can be turned into vital agricultural tools such as hoes and axe heads.

The charities that deliver the products have all guaranteed the money will be used solely for the purpose stated, CAT insists.

Oxfam offers a similar range of gifts in its Unwrapped catalogue (www.oxfamunwrapped.com).

Gift Aid

Any donation to a UK-registered charity can be boosted by Gift Aid.

As long as you're a UK taxpayer, you can give £1 and the charity can reclaim 28p tax and receive £1.28.

If a higher-rate taxpayer donates £1, he can also claim an additional 18 per cent personal tax relief.

"All you need do is provide a declaration stating your full name, address, details of the donation and charity," says Bernard Oster, managing director of consultant Tax Watchdog.

You can make this in writing, by phone or online.

Gift Aid generated £586m in tax relief in 2003-04, according to the latest figures from the Charities Aid Foundation (CAF).

Payroll giving

Currently, 578,000 workers participate in payroll giving via more than 9,400 employers, the CAF reports.

Your donation is made from your salary to the nominated charity tax free.

A monthly £10 pledge would cost a basic-rate employee £7.80.