With all those people trying to stop you on the street, cold-call you, and knock on your door, it’s hard to know which charities to support. Here’s the lowdown on what to look for.
Is it legitimate?
The Charities Register provides a list of all registered charities. These have been vetted by the Charities Commission to make sure they have a charitable purpose and also a proper constitution. Registration isn’t compulsory and, to avoid the extra administrative burden, some groups may not register. Provided they’re doing good work, non-registered groups can still be approved by the IRD as “donee” organisations (see Tax Breaks below).
How much is given?
Ask what percentage of your donation is used to support the cause and how much is spent on administration and fundraising. Bear in mind that some charities will have higher overheads than others, because of the nature of their work.
For example, a trust running a museum will have insurance and security costs that a charity running a tree-planting programme won’t have.
What does it do?
Financial information is one indicator of what a charity is doing with your money. You also need to know what it’s actually achieving. Ask to see the charity’s annual report – most of the big charities provide these. Visit the group’s website if it has one. Talk to family and friends, and find out what they think about the charity’s work.To get some first-hand insight, you could work as a volunteer. Over one million of us already do voluntary work for charities.
How will you give?
If you want to cut out the middleman, the fundraising and event management companies that clip the ticket give directly to the charity. Payroll giving lets you donate via your wages. You automatically get a tax credit on your donation, without having to file a claim form (see Tax Breaks).
Smell a rat?
If you think a charity is doing something wrong, make a complaint to the Charities Commission. They can investigate any charity or person engaged in activities that may breach the Charities Act, or constitute serious wrongdoing. Penalties can include fines and the charity can be struck off the register.
You can claim a 33.33% tax credit on any donation of $5 or more made to an organisation with “donee status”. To qualify, IRD determines whether a group is entitled to this status. The group must
be an entity or trust whose activities aren’t carried out for individual profit and whose funds are used for charitable, benevolent, philanthropic or cultural purposes.
Sue Chetwin, CEO Consumer NZ
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