Charitable giving: beyond Samoa

Submitted by Diana Clement on Thursday, 8 October 2009 | Category: Managing your money

The disaster in Samoa has got many New Zealanders digging deep into their pockets.

Even loose change adds up, says the New Zealand's International Aid & Development Agency (nzaid) and I especially like those ad campaigns that are encouraging us to forgo our morning lattes and give that money to Samoa appeals instead.

Whilst we're all fired up to give money now, it's worth giving a thought to the best ongoing ways to support charities and disaster appeals.

You can make your money go further if you plan your charitable giving. From this financial year you can claim back 33% of all donations over $5 from our friends at the Inland Revenue Department. Or, as many philanthropists are doing, you can donate 1/3 rd more to your favourite causes. That is providing they're on the IRD's "donee organisations" list. The rebate adds gloss to giving.

The rebate isn't automatic. You need to get and fill in an IR526 from the IRD's website. You can claim your refund for the previous tax year any time from April 1.

People with money smarts tend to give to charities in the last few days of the financial year and then claim immediately at the start of the new tax year. That way they can be earning interest or dividends on the money for most of the year.

The only limit on how much you can give is your full annual income. So someone earning $100,000 can in theory donate $100,000 and get $33,000 back. The IRD will typically make the refund direct into your bank account unless you owe tax or other monies such as child support.

Companies can also donate up to the amount of their net income. But they cannot claim GST on the donation. They may also provide sponsorship or free or discounted goods or services to charities. Details of the donation need to be returned on the company's IR4.

There are many other ways for individuals to support charities. They include:

organising fundraisers or attend charity events such as the annual Pink Ribbon Breakfasts.
donating your time as a volunteer. That's especially useful if you have skills that an organisation may need such as public relations and marketing, event management and many other skills.
giving bequests in your Will.
set up charitable trusts during your lifetime or in your Will. The Public Trust alone manages more than 450 of them.

Finally the government has just introduced a payroll giving system, which comes in next year and will deliver payday relief on payments, meaning you don't need to wait for your refund.

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