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Australians have come together in the wake of this year’s bushfire disaster, donating half a billion dollars to bushfire brigades and charities. But how do you make sure your donation makes the difference you intend?
This year’s bushfire disaster has been met with incredible compassion, kindness and generosity, as Australians across the country rush to help those in need. But it has also raised some important questions.
With so many charities appealing for help, how do you ensure your donation goes to the right cause? How can you make every dollar count, without being eroded by tax or administrative overheads? And if you are one of the increasing number of affluent Australians seeking to make a lasting difference, how do you go about creating an enduring legacy for the future?
Check before you donate
Before you donate, it’s important to do some basic checks to ensure your money will be used as you intend:
Check that the charity is registered with the Australian Charities and Not-for-profits Commission (ACNC). Most registered charities display the Registered Charity Tick on their website – which means they must keep good records, comply with governance standards, and report to the ACNC each year.
If you are donating to an overseas aid organisation, check it’s a member of Australian Council for International Development (ACID), which sets out a code of conduct for members to follow.
Ensure that you are donating at your chosen charity’s official website or authorised point of representation. You can check the ACCC’s Scam Watch site and make a report if you suspect that you have been approached by a scammer pretending to represent a charity.
For a donation to be tax deductible, it must be made to an organisation endorsed as a deductible gift recipient (DGR), and must be a genuine gift, with no benefit for you.
Driving your dollar further
Here are two key ways to maximise the impact of your donation.
1. Choose a deductible gift recipient
The less tax you pay, the more you have to donate – so it can make sense to ensure your gift is tax deductible. For a donation to be tax deductible, it must be made to an organisation endorsed as a deductible gift recipient (DGR), and must be a genuine gift, with no benefit for you. You can search a list of DGRs on the government’s ANB Lookup site. Don’t forget to keep a receipt and remember that some popular expressions of generosity aren’t tax deductible – including buying tickets to a charity event or raffle, buying an item at a charity auction or participating in a crowd-funded appeal.
2. Check the overheads
If you are making a significant donation, consider choosing a charity with low overheads and fund-raising costs, so that more of your money is used as you intend. Many charities publish expense ratios or administration costs on their websites or in their annual reports. Remember that running a charity does cost money, and the more complex or geographically dispersed their work, the higher their administration costs are likely to be. However, if you are choosing between two charities that do similar work, a lower expense ratio may indicate a more efficient operation or a higher level of volunteers and sponsorships – helping to drive your charitable dollar further.
Leaving a lasting legacy
One of the most effective ways to support causes that you care about is to create a trust so you can continue to have a lasting impact, even when you’re no longer around. You can set up a testamentary charitable trust in your Will using specific assets or a portion or your estate, with a life of up to 80 years.
You can also set up a trust while still living using a charitable trust deed. Administered by a trustee, your capital is invested to create an ongoing income that can be distributed according to the guidelines set out in the trust deed. You specify the causes that are to benefit from your trust’s distributions, as well as the frequency of the distributions.
Charitable trusts are generally exempt from tax on the income and capital gains generated by the investment portfolio, helping to ensure your legacy makes a lasting impact. And because beneficiaries don’t have to be registered deductible gift recipients, you have more flexibility in using your money to support the causes that matter most to you.
A charitable trust enables you to share the experience of giving with your family and establish a tradition of social responsibility for future generations. It can operate as an enduring memorial in your name or be used to honour the name of a family member.
How we can help
As generous givers, many Australians are looking beyond occasional charitable donations towards more strategic and structured giving.
As your wealth grows, you may be considering a legacy approach to your giving. We can help you consider your options in the context of your overall financial goals and can help you put cost-effective plans in place.
Book your free initial financial planning consultation online or call Verve Group on (08) 8120 4877.
This document contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. This document has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count). Count is 85% owned by CountPlus Limited ACN 126 990 832 (CountPlus) and 15% owned by Count Member Firm Pty Ltd ACN 633 983 490. CountPlus is listed on the Australian Stock Exchange. Count Member Firm Pty Ltd is owned by Count Member Firm DT Pty Ltd ACN 633 956 073 which holds the assets under a discretionary trust for certain beneficiaries including potentially some corporate authorised representatives of Count Financial Ltd.
Count and Count Wealth Accountants® are trading names of Count. Count Financial Advisers are authorised representatives of Count. Information in this document is based on current regulatory requirements and laws, as at 5 February 2020, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document. Count is registered with the Tax Practitioners Board as a Registered Tax (Financial) Adviser. However your authorised representative may not be a Registered Tax Agent, consequently tax considerations are general in nature and do not include an assessment of your overall tax position. You should seek tax advice from a Registered Tax Agent. Should you wish to opt out of receiving direct marketing material from your adviser, please notify your adviser by email, phone or in writing.
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