Budgeting

Been tossing up whether to give to charity? Hefty mortgage repayments and the kids’ school fees – not to mention economic uncertainty – might make generosity a painful prospect this year.

But for a guaranteed guilt trip, you might want to review the findings of Credit Suisse’s 2011 Global Wealth Report, which finds Australia has the second highest average wealth in the world (behind Switzerland) at $397,000 per adult. We also have the highest median wealth in the world, at $222,000.

We can afford it

“Australians, almost more than anyone else in the world, can afford to give,” says World Vision’s head of public affairs, Martin Thomas.

Having said that, he says reassuringly that it’s “not wrong to approach giving in the same way as your investment decisions”.

“When you think that just a few dollars can buy a vaccine that can save a child’s life, you want to make sure the money gets to those in need and makes a difference.

“So look at [a charity’s] work, consider their overheads and fund-raising costs, as well as how effective they are at what they’re trying to do.”

A charitable dilemma

That’s often easier said than done. Gina Anderson, philanthropy fellow at the Centre for Social Impact, University of NSW, says: “Even those of us working in the not for profit (NFP) sector know it’s hard to determine the very best charities. People always ask: ‘How do I choose the best charity – the one that won’t waste my money?’”

At present, Australia’s $70 billion charity sector contains something of a black hole in that it lacks a central data base by which you can compare the financial statements and funding structures of various charities. The Charity Commission for England and Wales, which regulates all UK charities, has such a tool.

Comparisons made easier

From July 1, 2012, the Australian government will fund a national charity regulator, the Australian Charities and Not-for-profits Commission. The ACNC is tipped to work a bit like the My School website, making it easier for people to check the performance of individual charities, including comparing how much each spends on fund-raising.

Robert Fitzgerald, who will chair the advisory board of the ACNC, has complained publicly about the growth in charities bearing the name of famous sporting stars, which some appear to use also partly for self-promotion.

The Institute of Chartered Accountants in Australia has also long lobbied for uniform regulations, including fully disclosing fund-raising costs so benefactors can see where their dollars are going.

Until this is up and running, Anderson recommends potential donor review websites such as Philanthropy Australia, Pro Bono Australia, and social enterprise sites like ourcommunity.com.au – all of which provide useful information on a range of charity issues.

The PricewaterhouseCoopers Transparency Awards – introduced to Australia in 2007 to recognise the quality and transparency of reporting in the not-for-profit sector – is another useful, independent guide.

The human touch

The chairman of The Nature Conservancy, Australia, and director of the Centre for Independent Studies, Rob McLean, adds: “Just don’t forget the human touch.”

The biggest challenge anybody involved in charitable organisations has to redress is helping donors feel confident they will truly make a difference.He says potential donors should read the case studies and testimonials. They have to watch the DVD presentations and talk to the people they are trying to help. “You have to do that work – that is the thing that will give you confidence,” he says. “That is the thing that melts you and makes you feel the way you want to feel – willing to help.”