Careful when donating to charities

How often do you see an advert for a charity or a person representing a charity when you go about your daily business? And when you do, what is your reaction to them?

Registering a charity in New Zealand under the Charities Act 2005 is entirely voluntary. However there are penalties for stating a charity is registered when it is not.  There are also financial benefits to be had from being registered such as qualifying for charitable tax status. It is important to know that not all charities have succeeded in registering as official charities. This may be for several reasons. Some might be too small to qualify for registration. Others might not be an appropriate nature, such as a political party. For a while the Charities Commission refused to grant Greenpeace a charity number because it was considered to be a political organization.

For some people donating to a charity can be a very off putting experience. It depends to some extent on how one was raised to view philanthrophy and its role in society. It also depends on the credibility of a charity and the kind of pitch it uses to persuade people to open their wallets. I find for example that people who make patronizing pitches are a major turn off – the ones who use phrases “I know you are ______”. Another problem which I have not personally encountered, but I know of people who have are pushy salesmen types who, clearly not versed in the art of persuading people to make a donation, come across as aggressive in pitching why a person should make a donation. Right there is a red card.

I donate to Amnesty International. It is an organization whose mission I believe in strongly, and am reasonably familiar with, as I have participated in their activism in New Zealand. It is also an organization where transparency is considered to be crucial. Every Annual Meeting that Amnesty International New Zealand have, there is a presentation of the state of the finances, how the previous year went and the goals for the current year. At the end of the presentation there is time for questions and debate.

As a nation donating to charity, New Zealanders are a generous bunch. In 2011 it was estimated that New Zealanders gave $2.67 billion. Across a nation of then about 4.2 million people that is about $619 per head, and compares quite favourably internationally. Of course that year, New Zealand was rocked by the Christchurch earthquakes, with their huge financial cost and accompanying death toll, but also this was then followed a few weeks later by the Japan earthquake/tsunami/nuclear meltdown.

Sadly not all charities are entirely forth coming about how they use the donations that are given to them by people thinking that they are credible. One example is Southern Cross Charitable Trust, which offered loans for risky buildings. It was struck off following a Government investigation following concerns at how it used donations. In this particular case, there was no obvious criminal intent involved and the Serious Fraud Office declined to investigate it. Other charities have been struck off because they failed to comply with statutory requirements to register their details or failed to provide adequate information about their purpose.

So, happy donating in the future, but just take the moment to find out a bit from the charity about their purpose. They should have no problem telling you and if they do, that alarm bell ringing in your head is for a good reason.

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