Giving to Charities
Most research suggests that retirees are very significant contributors to Australian charities, and indeed contribute more than any other age group - which makes sense from both a community and financial perspective. The chart below, sourced from NAB's Charitable Giving Index Report of February 2018 (it is difficult to find more recent data), illustrates just how charitable giving generally increases with age.
The downside is that many retirees are the focus of incessant charity marketing, by telephone, door-to-door callers and by charity marketers in shopping centres. Many of these activities are carried out by professional marketing companies, and many individuals provide donations without being aware that a substantial proportion of the funds collected are paid to the marketing company, to individual collectors and indeed shopping centres that charge access fees to collectors.
Presently, only in NSW and Victoria is it required that face-to-face collectors who door knock or collect in shopping centres display badges which indicate they are "paid" volunteers. If unclear, ask the collector directly about their status.
Many charities take the view that individuals will not donate without being first "asked to give", and that collecting any money, even if only 50% or less of the amount collected, means that they still receive money they would not otherwise have generated. We don't concur and believe that raising money in this fashion is undermining the public's confidence in charities in Australia and that it leads to situations where individuals are unfairly pressured to make contributions.
Our view in this situation is that retirees should:
- Not make any contributions - particularly in cash - to charity marketers unless they are willing to state that they are "volunteers" and are not remunerated in any fashion through your donation.
- Never make a donation to a charity - particularly a large bequest - without first researching the history, objectives and financial performance of the charity. There are simply too many charities in Australia and too many paying remuneration packages - including religious groups - to management teams which are inconsistent with a "charitable purpose". The argument that these are big business is sometimes correct, but much of their revenue is often from Commonwealth and State government and they are not true commercial ventures. Avoid contributions to charities paying significant executive remuneration - it is a red flag.
- Never participate in offers by charities to assist you in drafting a will. Regardless of whether they explicitly or implicitly request a "bequest or legacy" you should not have any potential beneficiary involved in the drafting of a will; we believe there is an innate conflict of interest. The drafting and maintenance of a will requires unbiased professional advice and we strongly recommend the involvement of a solicitor whom you appoint and remunerate.
In other words, by all means continue to donate to charities or expand your charitable giving, but seek to do it in a more targeted and effective fashion with less of your donation money going to commercial fundraisers.
We also believe that there is an inadequate amount of information provided by charities to the public and to the ACNC (Australian Charities and Not-for-profits Commission) - comparisons are always difficult but many charities provide very little substantive information regarding, for example, executive remuneration. There is just inadequate transparency within the not-for- profit sector and it will eventually erode public trust; so take your time and choose who you support carefully!
If you would like to arrange professional advice in relation to the above matters, please complete the Inquiry form below providing details and you will be contacted accordingly. You will receive a fee quotation in advance of any advice or services being provided.