Halacha in a Nutshell is a series that does not aim to actually teach you halacha. The goal is to acquaint you with the general ideas of a halachic issue so that you can follow conversations without looking like a total n00b.
Just in time for the US tax deadline!
Tzedakah is normally translated as "charity," but there really is no English equivalent. It would be more accurate to translate it as "justice." Because of this, most Jews of all movements say tzedakah. And yes, this will be one of the harder words for you to learn to pronounce.
As you will hear from 4 million sources, charity comes from the Latin word caritas, which means "love." The Christian (and thus, Western) understanding of charity is that it is a voluntary action because of a feeling in the heart. Tedakah comes from the same root as tzaddik (righteous person), and that shared root word is the word for justice. Tzedakah does not come from a feeling of love; it is part of an obligation to pursue justice. And tzedakah is the source of the Christian idea of tithing. Tithing is basically a Jewish idea, but the Christian perspective on tithing is an oversimplification of tzedakah.
How much to give is a question for your rabbi. There are many opinions, and it matters what your income is. As a general rule, if you're making enough money to get by reasonably well, you should give at least 10% and not more than 20%. Yes, there is a halachic ceiling on how much you can give! (Note that the amount of your income for calculating that percentage may not be what you think it is-again, ask your rabbi.) You shouldn't drive yourself into the poorhouse by helping the poor! In fact, the great rabbis have repeatedly said that you will not go poor because of giving tzedakah. For the rest of you, if your means are limited, that ceiling may also be the minimum you are required to give. And as you will hear fairly often, even recipients of tzedakah are often obligated to give tzedakah from their tzedakah. Again, all these points are halchic questions for someone familiar with your circumstances.
There is a preferential order of who should receive your tzedakah. Some scholars arrange it differently, but this is representative of a lot of the opinions I've read. Ideally, you will be able to help all these communities.
1. Redeem captives and save lives.
2. Poor relatives.
3. The poor who are not related to you (both Jews and non-Jews), Torah scholars, and Torah institutions in your community.
The opinions divide at this point, though there is also some disagreement in #3.
The Talmud gives a kind of ranking order for how to give tzedakah, though all the levels are a mitzvah. Rambam organized them into 8 levels from most meritorious to least meritorious. This is the "ladder" of tzedakah that you will often hear people reference.
1. Giving to someone to make them self-reliant, and thus, avoid having to seek tzedakah. For example, giving someone a loan to enable them to avoid becoming needy. Another example is giving someone a job or arranging for them to be employed.
2. Giving where neither person knows who the other is.
3. Giver knows who is receiving the money, but the recipient does not know who gave the money.
4. Recipient knows who gave the money, but giver does not know who will receive the money.
5. Giving before being asked. Both parties know who the other is.
6. Giving after being asked. Both parties know who the other is.
7. Giving less than you should, but giving it cheerfully. Smiles and kind words to the needy person count here. If you have nothing else, you should give them that.
8. Giving begrudgingly. This includes giving with a negative facial expression (if the recipient is seeing you).