CHARITABLE GIVING AND YOUR FINANCES
Giving to others
As Christmas approaches, many people’s minds turn to the needs of those who have to make do with less at this time of year. This can be a good time to make tax deductible donations to a charity. Whether charitable giving is already part of your monthly budget or still something you are weighing up, it’s important to approach with a clear financial plan in mind. Here’s our guide to the most effective ways to give.
How much should I give to charity?
Deciding exactly how much you can afford to give is a personal choice. A recent Giving Australia report suggests that Australians now give just over $750 per year on average and shows that while the number of people giving has decreased over the past 10 years, the average donation is higher.
No matter how much you decide to give, your own financial stability should be a factor, particularly if you plan to set up ongoing donations. Sustainability is important not only for your finances but also for the organisation that will be depending on your donation.
Which charity should I give to?
Choosing which charity to give to is once again a personal decision, but there are ways to find out how each charity uses your donation and compare their impacts. Online tools that look at the effectiveness of giving include:
GiveWell : An organisation that analyses and publishes research on the top charities for effectiveness worldwide.
Change Path : Looks at the transparency and financial sustainability of Australian charities.
The Annual Charities Report from the Australian Charities and Not-for-profits Commission.
What are the tax benefits of giving?
Many charities qualify for tax deductible donations. The Australian Taxation Office allows deductions for any charitable donation of $2 or more, as long as you have a receipt. (Donations up to $10 to support those affected by bushfires and floods do not require a receipt.)
In some cases the ATO may require that your deduction is spread over five income years. Talk to your Milestone financial advisor about your circumstances to make sure you are claiming the right deduction.
The family benefits of giving
If giving is personally important to you, involving family members in deciding how much and who to give to can be particularly rewarding. Children look to their parents for their financial attitudes from a surprisingly early age. So having this discussion as a family can be an example to them about the value of money.
Deciding the best way to give
Along with weighing up how much to give and which charity to support, deciding the best way to provide your donation is another key financial decision. You may decide to:
- set up regular direct debit donations so the amount is easier to factor into your monthly budget
- give a single donation at the end of the financial year, allowing you to utilise that money to offset your mortgage or build interest in the meantime.
Advice from an experienced financial planner can help you make the most of your charitable giving options. To get expert advice on any of these issues, contact the Milestone Financial team today on (02) 6102 4333.
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