The devastation of the Australian bushfires over the past few months has seen Australians come together to support each other.
An estimated 25 million acres of Australia’s bushlands have burned since September. Hundreds of thousands of people have had to evacuate their homes; cities have been blanketed in dangerous smoke and we’ve lost too many animals to even comprehend.
Through heroic efforts to extinguish fires, we have seen the best of people as the worst conditions have brought us together. A recent report from the Australian Financial Review showed that more than $200 million has been raised by businesses, celebrities, and philanthropists to date. Many small business owners also want to find a way to support those affected by the fires and many have questions about how to manage charity donations.
In this article, we will look at some key points to remember before you donate to charities now or in the future.
Know Where The Money Is Going
If you are considering donating to support the bushfires, be sure to check what the charity plans to do with the money. In a rush to help, many charities have not given clear information about how much will be given to those in need.
It is perfectly okay to delay the impulse to donate and do your research before donating. Know where the money will be spent (and how much will be used up in admin costs for the charity itself) so you can be confident your contribution is going somewhere.
Look for DGRs to Donate To
There is often a question of tax implications for those businesses who have donated. After all, any money spent by a business (before taxes) is supposed to be an expense.
A lot of business owners assume that all donations are tax-deductible, however, there are exceptions to the rule for some charitable contributions. Organisations entitled to receive tax-deductible gifts are called ‘deductible gift recipients’ (DGRs). You can only claim a tax deduction for gifts or donations to organisations that have DGR status.
Keep in mind that not all charities are DGRs. In recent years, crowdfunding campaigns such as GoFundMe have become a popular way to raise money for charitable causes. However, many of these crowdfunding websites are not run by DGRs. Therefore, donations to these campaigns aren’t tax-deductible.
Keep a Record of All Donations
If you decide to contribute, you should always keep records of all tax-deductible gifts and contributions you make. When you donate, the DGR will usually issue you with a receipt (although they are not required to). If you do not receive a receipt, you can still claim a deduction by using other records, such as your bank statements.
According to the ATO, if a DGR issues a receipt for a deductible gift, the receipt must state:
- the name of the fund, authority or institution to which the donation has been made.
- the DGR’s ABN (some DGRs listed by name in the law may not have an ABN).
- that the receipt is for a gift.
Look at Other Ways to Contribute
Although financial contributions are valuable, there are other ways to assist if you don’t have the cash flow in your business. Providing items such as clothing, food, basic living essentials such as blankets, toiletries, etc. can be another option. Keep in mind many of these items are non-deductible. If you are considering donating, be sure to check with the charity first, as often there is a surplus of goods donated to one area or they don’t have the staff to sort through and manage the influx of goods.
Another option is to volunteer your time or skills in some way (i.e., helping to rebuild homes or caring for wildlife) that can benefit the communities.
Although your desire to help is coming from a good place, it’s wise to do some research and think about the best way to help. This ensures the right charities get the appropriate funding and that the money filters down to the people that need it the most.
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