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Research report
6 December 2017

Donating to a charity

How much of your donation goes to the actual charity?

“I regularly get calls asking me to donate to one charity or another. How do I know how much of the money I give goes to the actual charity?”

If you’ve given to a charity over the phone, it’s likely the person asking for your money was employed by a professional fundraising company. If so, part of your donation is likely to have gone to the fundraising company for its services.

The same is true if you’re stopped on the street by a charity fundraiser who wants you to sign up to become a regular donor. These clipboard-carrying fundraisers have become a regular sight, with their persistent sales patter earning them the dubious title of “charity muggers” or “chuggers”.

Charity fundraisers can be paid an hourly rate as well as a success fee depending on how many new donors they sign up. They don’t have to tell you how much of your donation goes towards paying them – although there’s nothing stopping you asking.

If you want to avoid fundraising companies taking a cut of your donation, your best bet is giving directly to the charity.

You can also ask any charity how much of your donation is used to support the cause and how much is spent on administration and fundraising. You should bear in mind some charities have higher overheads than others due to the type of work they do: a charity running a tree-planting programme won’t have the same outlays as one running a foodbank.

If you want to dig deeper, head to the Charities Services website. All registered charities must provide annual returns and financial statements to Charities Services. Bigger charities (with expenses more than $30 million) have to provide more information than the little guys.

There is a proviso: charities don’t have to be registered and, to avoid the extra administrative costs, some smaller players choose not to be. However, provided they’re doing good works, they can still be approved by the IRD as “donee” organisations. Donations of $5 or more to a donee organisation qualify for a 33.33% tax credit.

You can check an organisation’s donee status on IRD’s website.

If you’d prefer not getting constant phone calls from charity collectors you can add your name to the Marketing Association’s “do not call” list. It also runs a “do not mail” list. Association members use these lists to find out who doesn't want to be approached. However, it’s no guarantee your phone will stop ringing. You'll still get calls from charities that aren't members and it won’t stop scammers.

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