How To Make Money Work For Charity
For most of the year, our money should work as efficiently as possible to build our savings. Now is a good time to see how money can be used to benefit charities and good causes.
Charity credit cards, savings accounts and online giving probably make it easier to direct money into good causes than ever before. The credit card from the British Heart Foundation offers a £50 donation when the card is used for the first time, plus 35p per £100 spent thereafter. Spending £150 per month gives £56.30 to charity in the year, without anybody feeling a thing.
The Cancer Research UK card makes a £20 donation on first use, plus 0.25% of the value of purchases thereafter.
So far as building society accounts are concerned, it is interesting to see that while rates for savers have been pulverised this year, the amount which charity-linked accounts donate often holds firm.
The Cheshire BS Caring for Children account pays only 0.1% to savers, but retains its 1% contribution to charity.
The building society accounts listed on Moneyfacts.co.uk which make charity donations tend to be mainly the larger regional ones looking to give something back to local communities, plus the avowedly philanthropic Triodos Bank.
At unbiased.co.uk, the professional advice website which represents independent financial advisors, chief executive Karen Barrett stresses the importance of making charity gifts tax efficient.
"Nearly £1.2 billion goes to the taxman which could be easily avoided by using Gift Aid and other tax efficient methods," she says.
The website advocates payroll giving (Give As You Earn) as a tax-efficient way of donating. Employees contribute a regular sum, taken from their salary by employers for a chosen charity. It means a £10 donation costs a standard-rate taxpayer only £8, while those who pay higher rates are only £6 out of pocket.
It is calculated the Exchequer would have to give another £4b to charity if all employees signed up to payroll schemes. Details of Give As You Earn are found on www.cafonline.org/charityaccount.
Any taxpayer donating to charity should make a routine of ticking the Gift Aid box, which means the taxman adds an extra 28p to every £1 donated - but millions obviously don't.
As much as £750m of Gift Aid goes unclaimed each year - a massive loss for some of the charities hard hit by recession.
It was partly to boost earnings from Gift Aid that Virgin Money Giving launched in April as a not-for-profit, online fund-raising subsidiary of Richard Branson's empire group. It is designed to boost online giving by slashing fees and avoiding charges on Gift Aid donations.
The annual subscription fee to Virgin Money Giving is £115, with £100 going to charity. Virgin claims charities using virginmoneygiving.com can boost the value of online donations by 5%-plus.
Although there was little evidence of charity from the bosses of Britain's biggest energy suppliers in 2009, I greatly admire the stance taken by Phil Levermore - an energy expert who launched Ebico, the UK's only not-for-profit energy supplier, back in 1999.
He hates the way that big suppliers make poorer households pay over the odds for their fuel, and is appalled that so many people remain in fuel poverty today, spending more than 10% of their income on energy.
All of Ebico's 55,000 customers pay the same tariff, whether they pay quarterly, by monthly direct debit or with a prepayment meter. There are no standing charges either, and the company has twice been named this year in top one or two places in Which? customer satisfaction surveys.
Levermore doesn't claim to be the cheapest provider, but he does promise that any surpluses will help the neediest customers and tackle fuel poverty.
Only when you sign up with Ebico, I imagine, is it possible to feel a warm glow when you pay your fuel bills.
Of course, there are ideas galore on how your money can help good causes from The Charities Aid Foundation (CAF), which works with donors, companies and charities to encourage a culture of giving.
• Open a CAF Charity Account with a £100 lump sum or monthly direct debits from £10. It operates like a bank account, with payments only for charitable donations.
All money held in this account receives Gift Aid automatically, which can be donated to any charity by a special cheque book, charity card or online through the CAF website.
• Buy gifts from charity shops. Following the lead given by Mary 'Queen of Shops' Portas in her TV makeover of a Save the Children store, many now specialise in selling designer clothes or good-quality second-hand books.
To find charity shops in your locality, visit the Association of Charity Shops website on www.charityshops.org.uk.
• Give unwanted gifts to charity shops. Gift Aid can apply here too, providing that any shop which takes your gifts notes your details, and contacts you to ensure you are still a taxpayer when the donated item is sold.
Then 28p can be added to each pound raised. Most shops, of course, would consider that the extra administration work is only justified on expensive items.
• As charities call on the services of expert retailers, and improve their websites, the choice of items which can be given as Charity Gifts gets wider. Gifts which help to support various causes can be found on www.goodgifts.org.
If you don't know which charity the recipient of a gift might support, you could give CAF Charity Vouchers in denominations of £10 or £25 which can be donated to any charitable organisation in Britain.
• Give small batches of shares from your portfolio and you can claim full personal tax relief, and also relief on capital gains. Donating £1,000 this way could cut your tax bill by £220, or by £500 for higher-rate taxpayers.
• Make your time online work for charity. Websites including www.froggybank.co.uk, www.giveortake.com and www.ushopucare.co.uk are
among those which allow you to shop at larger online retailers, and pay a commission to the charity of your choice.
• Get fit enough for the London Marathon. Although the ballot for the 2010 race has closed, a website called Crunch offers places to anybody prepared to raise at last £1,200 for partner charities through sponsorship.
See www.crunch.org.uk/marathon.php for more information.