Saturday, June 28, 2008

Tough times hit charities, By Kate Perry - - 27th June 2008

# Donations to winter appeals are down for some charities
# Local causes can find it tougher to attract funds

There's increasing competition for the 'donor dollar' among the 700,000 registered charities in Australia as rising rates, petrol and general living costs put the squeeze on hip pockets.

Some major charities are reporting a drop-off in donations during a time when donations are usually flowing in.

The end of the financial year traditionally attracts more money for charities, as donors rush to qualify for tax breaks before the end of the financial year. Waiting until now to donate means you only have a short wait until you get back any deductions.

To be able to claim back any tax on donations, you need to make sure the charity or not-for-profit organisation you’re giving money to is registered as a Deductible Gift Recipient (DGR) with the tax office. A list of eligible DGR’s can be found on the ATO website.

There are conditions on what you can claim. Donations must be over $2 and you need a receipt. Some gifts to DGRs — such as tickets to a charity dinner or ball — aren't eligible.

Pulling the heart strings

Charity begins at home, according to the old saying. But in reality it’s often the large scale international disasters that get a lot of media play , and it's the high profile incidents which generally prompt Australians to put their hands in their pockets. Ongoing local work tends to be lower profile and can be harder to get people excited about.

A Red Cross spokeswoman said there had been an amazing response to recent appeals launched after the Burma cyclone and earthquake in China. But in terms of the organisation’s annual winter appeal, donations are down and the total collected is expected to fall short of last year.

“At this stage, it’s hard to know exactly why that is, but we’re keen to get the message across that whilst people have been very generous for those two international appeals our work in Australia and with our Asia-Pacific neighbours continues to need support from the public.”

The Smith Family is another not-for-profit organisation doing it tougher this year.

Despite a media blitz earlier this month donations to its annual winter appeal are still down about 10 per cent on the same time last year. This means the group could end up as much as $500,000 short of its $4.5 million fundraising target.

Acting chief executive of the Smith Family, Paul Henderson said the frustrating thing is that in tough times charities are hit with the double whammy of donations slowing down, but demand for their services picking up.

He agreed that international appeals usually get a lot of attention, but urged Australians to look at local needs as well.

“When evaluating the options, let’s not forget about the home front.”

Putting a face – be it human or furry – on a situation can motivate donors. An RSPCA spokeswoman said it’s the newsworthy cases of animal mistreatment that inspire people to dig into their pockets.

“A high profile cruelty case will inspire people to take action, whether that’s action to donate, to adopt an animal from a shelter or to report a suspected case of cruelty in their neighbourhood, she said.

According to a large scale study into the charitable sector conducted a couple of years ago concluded there are three kinds of donors: people who believe strongly in a cause; proactive donors who make regular donations such as through child sponsorship, and reactive donors who respond to tin rattlers in the street.

Where does it go?

Clearly, not every cent you donate is going to make it through to your chosen cause – some will get eaten up with fundraising or administration costs. These can range from charities buying ribbons or raffle prizes, to paying guest speakers for a charity ball, or even employing outside contractors to knock on doors or stand in shopping malls to collect donations.

In Australia it can be difficult to tell how much of your donation is making it through to your chosen cause, and how much is being eaten up by these costs.

A study this year by consumer watchdog Choice found that some systems used by not-for-profits seemed to downplay administration costs, making it seem like a higher portion of donations were reaching the needy.

Some states have rules for cost ratios – or the amount of raised funds that can be put towards covering fundraising activities. In New South Wales the maximum that can go towards covering costs is 40 per cent, and in Victoria registered fundraisers have to donate at least 50 per cent of funds raised or explain where the money’s gone and why.

Choice wants to see a single regulator of the charity sector and a standard reporting system.

"While the charities' accounting methods are quite legal, CHOICE thinks donors have a right to clear, consistent information that enables them to make an informed decision about which charity or charities to support," CHOICE media spokesperson Christopher Zinn said when the study was released.

Charity facts
• Individuals donated about $5.7bn to charity in 2005
• Donations were made by 13.4 million Australians, or 87 per cent of the adult population
• The median donation was $100 per person; the mean was $424 per person
• Religious organisations got the largest number of individual donations - 36.1 per cent; followed by health (14.2 per cent), international aid (13.3 per cent), community/welfare organisations (12.8 per cent), education (6.6 per cent), environment and animal welfare (4.8 per cent), sporting and recreational groups (3.7 per cent) and arts or cultural associations (2.3 per cent). Other not-for-profit sectors make up 6.2 per cent of total donations.
Source: Philanthropy Australia: Giving Australia Report 2006

Readers' Comments

There's almost too many worthy causes, however having variety also means that there's a charity for just about everything, especially here in Australia. Just like the corporate word and brands, there's only so much room at the top, and an elite few dominate the news headlines, and the others remain pretty much on struggle street. Via websites like mine, numerous charities can at least share equal space via the new media, however print and TV coverage is what makes the masses aware. The Just Enough Faith situation has helped put accountability of charities under the microscope, and that's a good thing, however there was also PR damage to the philanthropic sector in the process. It's a numbers game, and the numbers are down at the moment. Perhaps this coverage may assist.

Posted by: Greg Tingle of Bondi Beach, Sydney

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