Think about Giving

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Right now is a great time to be thinking about giving to others. There’s a number of reasons for that.

We are coming into the last month of the tax year and any donations made this month will be eligible for a tax refund of one third of the donation when it comes to sorting out your year end tax. There are a couple of catches to be aware of. To be eligible for a tax refund, the organisation you give to must be a registered charity. There is a list of them on the Charities Services website. Also, you can only receive a tax refund on donations up to the amount of your annual income. For most people that is not a problem!

While there is personal benefit in making donations now, there is another very good reason, and that is the state of the economy. You might well say it is hard to find money to given the current environment, and that is true. Everybody is struggling with high interest rates, high inflation and for some, the prospect of job loss. The fact is, when the economy is tough, charities struggle to find enough money to do their work, and yet they face higher than usual demand for their services. An economic downturn is tough for everybody, but toughest for charities and those who are in the lowest socio-economic groups.

Charities are finding it increasingly difficult to fundraise. Collection days are made harder by the fact that many people no longer carry cash with them. There is also a decline in the amount of money available from gambling outlets, as many local authorities are adopting a sinking lid policy for the number of outlets in their district.

Rather than giving as a result of someone asking for a donation, it is better to do conscious giving – that is, to think ahead about who you want to give to and how you want to give. Some charities use telemarketing companies to bring in donations. These companies charge high fees, so a big chunk of your donation doesn’t go to the charity – it goes to the telemarketing company. Giving directly is a much more effective way to give as 100% of your donation goes to the charity.

Choosing which charities to give to can be problematic. Which charities are trustworthy? Which ones are doing a good job in the community? Which charities are in the most need of funds? If you are not sure of the answers to these questions, contact your local Community Foundation and ask for help in choosing the charities to give to. They know the charities in your local area.

Most people who give have a giving budget. Think carefully about how much you want to give on a regular basis and how many charities you want to give to. It is better to focus your efforts on one or two charities than to spread your donations too thinly.

Giving directly can be done in a number of ways:

  • A one-off donation
  • A regular donation set up by automatic payment from your bank account
  • Payroll giving (if you are employed)
  • A bequest from your estate, made through your Will
  • The establishment of an endowment fund

Tax time is a good time to make one-off donations as you won’t need to wait long to receive your tax rebate. Regular donations are easier to budget for and, if you are working, you can take advantage of the payroll giving scheme. With this scheme, your employer deducts your donation from your pay and gives you the tax rebate for the donation at the same time, so you don’t have to wait until the end of the tax year to get your rebate. Not all employers are participants of this scheme however – it is voluntary on the part of the employer.

While it’s great to make a bequest in your Will, bequests do not attract tax rebates, so you will get much more mileage out of your donation by giving during your lifetime if at all possible. This is much easier to do with certainty closer to the end of life when you have a better idea of your financial needs for your remaining years.

If you wish to give a substantial amount, think about setting up an endowment fund. Your money will be invested in perpetuity with the investment returns being distributed (in perpetuity) to the charities of your choice. Your initial donation to set up the endowment fund is tax deductible if done in your lifetime, however you can also establish an endowment fund through your Will. Your local Community Foundation can assist you with advice on endowment funds.

As you can see, there are many ways to give. The clear message is to think carefully about the timing of your donations, who to give to and the best way to give. Research shows that giving creates happiness for both the donor and the recipient, so have a happy day!

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