Nine out of ten Australians donate to charities however the majority of donors are unaware of exactly where their money is going. Almost half of donations to some popular charities are spent on fundraising.
89% of Australians are approached by at least one charity call during any six month period. You may feel the desire to donate, but you don’t want people to take advantage of your good nature.
There is understandable cynicism regarding the charity industry with reports of a number of charities failing to pass on funds, and others exposed as unmitigated scams. So how can you tell whether or not a charity is legitimate? How do you find out if your donation will passed on to those in need? What proportion of your donation will be consumed in ‘administrative costs’?
Here are five tips to make sure your money is well spent:
- Find a cause that matters to you. As a general rule, approach the charity yourself rather than have a representative approach you or call you. The large majority of telephone callers who seek donations are employed by commercial marketing firms. The revenue of these companies relies on getting people to donate. You should never feel pressured into donating.
- Do your research into the charity. Download its website and find out as much as you can about the organisation. Ideally, speak to volunteers at the coalface of the charity.
- Check out the charity’s annual financial report. If the report is not available online, contact the organisation directly and ask for its financial statements. A trustworthy charity will be transparent with its finances. Make sure you’re happy with the proportion of donated funds that are incurred for administrative costs. Although there are some very worthy charities with relatively high overheads, you should be wary of any charity that spends more than 20 percent of its funds on administration.
- Make sure the charity is registered with the Australian Charities and Not-for-profits Commission (ACNC) acnc.goc.au . This is the national regulator of the Australian charities and other not-for-profit organisations. Only charities that are financially sound are registered with this Federal Government body. Since its inception in 2012, nearly 15,000 organisations have been deregistered for failing to meet minimum standards. The ACNC website is a free and searchable online public register. The site is a handy tool for consumers who want to be savvy with their donation.
- Check to see charity is registered for Deductible Gift Recipient (DGR), i.e., whether your donation is tax-deductible. All DGR organisations are listed on the ABN lookup website: http://abr.business.gov.au/
The majority of Australian-based charities are sound and responsible. Be mindful that a number of charities are poorly governed and that fraudulent organisations do exist. But in this Information Age where so much data is available at our fingertips, a few minutes in front of a computer should give you every confidence you need to donate to a trustworthy cause.
- Australian Charities and Not-for-profit Commission (ACNC). Media Release, 5th August 2015. Available at: http://acnc.gov.au/ACNC/Comms/Med_R/_Nine_out_of_10_Australians_donate_to_charity_.aspx
- Where is your charity donation going? Cause for concern? Choice, 3rd Sept 2014. Available at : https://www.choice.com.au/shopping/everyday-shopping/charity/articles/cause-for-concern
- Revealed: the high costs of being charitable. The Sydney Morning Herald, Dec 21 2013. Available at: http://www.smh.com.au/national/revealed-the-high-cost-of-being-charitable-20131220-2zqvc.html
- Charity donations guide. Putting charities to the test. Choice, 17th March 2017. Available at: https://www.choice.com.au/shopping/everyday-shopping/charity/buying-guides/donating-to-charity