I was shocked recently when I discovered that when I hand over a tenner to charity, sometimes the charity ends up with just £8. This seems outrageous and I bet that like me, loads of others don't realise this goes on. For my work with my website letssavemoney.com I decided to have a look to see if there is a way to guarantee that the charity really benefits. Here is what I found out...
How to donate
There are three big factors that affect how much a charity will get when a donation is made. Some online donation sites charge an admin fee which can be as much as £2 per donation. If the site relies on lots and lots of small donations, then this can really put a dent in their earnings. Some sites may also charge a fee if you donate using a credit or debit card, which will again reduce your donated amount. A great way to increase any donation is to make sure you have the option to add Gift Aid. This allows charities to claw back your tax from the HM Revenue & Customs on either one-off or regular donations, meaning your donation gets increased by at least 25%. All the charity needs is your name, address and a declaration that you're a UK taxpayer, which can even be done over the phone.
Direct debit
The easiest way to donate regularly is to set up a direct debit mandate with the charity of your choice. They will then handle the admin and make sure they maximise your donation. Another option is to donate using a salary sacrifice scheme. This Payroll Giving lets you donate a regular amount directly from your salary through your employer's payroll. The donation is made before tax (but after National Insurance) is taken off, so the charity automatically gets more, regardless of what level of tax you pay. Ask your employer if they have a scheme in place or would consider setting one up. Sadly sole traders can't donate this way.
Charity account
I have a number of friends who have Charities Aid Foundation accounts which let you pay money into a special account directly through either Gift Aid or payroll giving. Then whenever you want to make a donation you use a special chequebook to donate from your account, or make payments online, to a charity of your choice. The big advantage is you can donate tax-efficiently on impulse, even putting the special cheques in collection tins to ensure the charity gains the maximum amount. They are also GREAT to give to people asking for sponsorship. Using this kind of tax break makes a huge difference to the size of donations - for example, giving a charity £240 in a year would only cost a higher rate taxpayer £160 and an additional rate taxpayer just £153.60.
Online giving accounts
The most popular way these days for people to give to charity is on an online giving site. However, they are NOT all the same and some are MUCH better than others. Some might have a larger proportion of UK charities listed but then charge them a higher admin fee and others might be much smaller but give EVERYTHING to the charity. The most well-known site is Just Giving but on a £10 donation (with gift aid) they only give £11.74 to the charity compared to Givey who give the full £12.50 and MyDonate who give £12.35. It is definitely worth looking around before you set up your fundraising page.
Even in tough economic times we know that people still want to donate to good causes so let's make sure that they get ALL of the money they are entitled to!