Spending money for good
With thousands of charities competing for your donation, it's important to do some research to make sure your money is being used for the cause you want to support. It is also essential to make sure the charity is actually receiving your donation.
Here are some things to think about before you donate.
Choosing a charity
Your decision to support one charity over another is usually based on your interest in the cause the charity supports. You may also choose a charity as a way of remembering a deceased relative or friend. Whatever your motivation, it's important to make sure you are comfortable with the charity's activities and how it plans to use the donations it receives.
Donating directly to an overseas-based charity can be risky as it may be difficult to verify the information found on websites or social media sites.
You may prefer to donate to an Australian charity that supports the cause or project you're interested in. Many Australian charities operate overseas but are based in Australia.
Ways to donate
There are a number of ways you can donate.
One-off or ongoing
You may decide to make a regular, set donation or you may prefer making a one-off donation following a particular fundraising campaign or an urgent need, like a natural disaster. Sometimes a charity will approach you directly for a cash donation or to participate in a fundraiser such as a raffle. This can happen on the street, over the phone or at your front door.
If you've donated to a charity before, the charity will keep your contact details for future campaigns. If you want to stop being contacted you can ask to be removed from their list.
You can also support a charity through automatic deductions from your salary. If your employer has a workplace giving scheme your donation can be deducted from your pay and sent directly to your preferred charity.
You will gain tax benefits at the time of donation and receive a summary of payment at the end of the year.
To participate in any workplace giving program, the charity must have deductible gift recipient (DGR) status.
For more information about setting up a workplace giving program, see the Australian Taxation Office's information on setting up a workplace giving program.
Bequest in your will
Another way of donating is to leave a bequest in your will. Contact the charity directly to discuss your plans.
Donating to charity doesn't necessarily mean a cash donation. You can contribute to your favourite charity by making a donation of goods, your time or even your skills or expertise.
Check it's a legitimate charity
Questions to ask
If the name of the charity is unfamiliar, you should ask for more information about the charity, for example:
What cause do you support?
Where is the charity based?
What are donations used for?
Are you affiliated with any other charities or organisations?
Are donations tax deductible?
It pays to be careful, even if you get a satisfactory response to these questions.
Even if you've heard of the charity, you should check that the person who contacts you is authorised to represent the charity.
If you've been approached face-to-face, ask to see some identification and a copy of the charity's pledge form. These should contain:
the full name of the organisation
the corporate registration number such as an Australian Business Number
the business address
the organisation's logo
You should also call the charity directly to verify their contact details. Be sure to cross check their phone number in the telephone directory.
Charities must also be registered with the Australian Charities and Not-for-profits Commission (ACNC). You can check the ACNC website, to see if the charity is registered. Alternatively, the charity may display a Tick of Charity Registration (from the ACNC) to show they are a registered charity.
Be wary of giving credit card details
If you've been contacted by phone do not give out your credit card or banking details. There will be other ways of donating if it's a reputable charity.
Ask about these options and make sure you check the validity of any website or social media page you're directed to.
To find out about the latest charity scams see the ACCC's SCAM watch charity scams webpage.
Check if it's tax deductible
A donation is only tax deductible if it is given to a charity that has been endorsed by the Australian Taxation Office (ATO) as a deductible gift recipient (DGR) organisation.
To receive a deduction the donation must be two dollars or more and must be claimed in your tax return for the income year in which the donation was made. In some circumstances, you can elect to spread the tax deduction over five income years. For more information visit the ATO's gifts and donations webpage.
You can check if an organisation is a DGR by visiting the Australian Business Register or phoning the ATO on 13 28 61.
Complain if you have a problem
You can complain about a charity to the relevant state or territory regulator. To find the regulator in your state visit the ATO: State and territory government requirements - fundraising. You can also complain to the Australian Charities and Not-for-Profits Commission if the charity is registered, see the ACNC: Raise a concern about a charity webpage.
Australian charities working in the area of overseas aid, who get funding from AusAID, are required to be members of the Australian Council for International Development (ACFID), and must adhere to the ACFID Code of Conduct. For more information about the code, including its signatories and how to register a complaint, see the ACFID: Code of Conductwebpage.
Donating is a great thing to do but you should always check the legitimacy of a charity before you donate.
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://www.moneysmart.gov.au/managing-your-money/donating
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