New law makes giving easy

AMANDA MORRALL finds out how the new payroll giving scheme makes it easier to give and receive.

According to studies on the elusive yet desired state of being called happiness, the act of giving is a highly effective way to raise one's spirits.

Scandinavian researchers found that it took as little as $5 a day spent on others to add a little wind to the sail of one's soul. It's a small price relative to the standard stock of retail pick-me-ups and consumable mood enhancers, and yet the collective purse strings are snug.

About 33 per cent of the population aged 10 and over are estimated to donate regularly.

Statistics New Zealand figures show that householders give a weekly average of between $2.40 and $4.90, or $124 to $254 a year.

When it comes to one-off donations, Kiwis are a more giving bunch. In 2008, the most current data available, 49.6 per cent of the population or 1,808,000 people aged 10 or over made an ad-hoc donation.

With a negative savings rate (that is we spend more than we earn), giving away money hardly seems the sensible thing to do. However, there is a theory - that has not unsound evidence - that those who do will unwittingly attract greater wealth as a result. It could be those who donate pay closer attention to their personal finances than most and therefore make better savers than spenders. Others chalk it up to mysterious laws of the universe.

Whatever the case - or the consequence - the tendency is to hesitate when charity comes calling.

Why? For one, we have become a cashless society, so the likelihood of having spare change or even a chequebook on hand is increasingly slim. Then there is the other paper problem. Keeping track of all those tax receipts until filing time is challenging at best. Finally, nagging suspicions about where those donated dollars are going can be hard to quell.

Sure, they are all understandable reasons for restraint when the collection box is rattled, but recent regulatory changes have made it easier to give and satisfy questions about where the money is going.

Under tax amendments introduced in January, you can allocate part of your pay cheque to charity on a regular basis. The new framework also means that donors will get an immediate 33 per cent tax refund, instead of having to claim it at tax time and wait for a rebate. So a $5 a week donation is reduced to $3.30 when the automatic return is factored in. Changes to charitable tax laws have also removed the cap on how much can be claimed.

Charitable organisations are hoping the payroll giving scheme will put more Kiwis in a mind and habit to give.

James Austin, chief executive officer of Fundraising New Zealand, says growing demand necessitates it.

Austin says the sector is realistic that the advent of payroll giving "is not going to create a tidal wave of overnight change", but charities are nonetheless optimistic about its potential to secure a more steady revenue source.

Tax accountant Geordie Hooft, with Grant Thornton in Christchurch, is not so sure. He believes the added administrative burden for employers could be a deterrent to the uptake of payroll giving on a bigger scale. "I don't think it is something that employers will necessarily want to promote with their staff because it just means extra administrative work for them."

But Grant Bayldon, a spokesman for Oxfam New Zealand, believes progressive employers will regard payroll giving as an opportunity rather than a headache because those who adopt it will demonstrate good corporate citizenship.

"We're encouraging employers to form a wider relationship with a charity, rather than just seeing payroll giving as another administrative task," he says.

"By making it part of a partnership with their charity of choice, they can make it meaningful for their staff and customers, and show themselves to be a company that cares."

Research cited by New Zealand's Robin Hood Foundation shows that a good public image - backed by a sound track record - does rate with consumers. Almost 60 per cent of consumers surveyed indicated they thought more highly of companies that supported charities or donating and almost 40 per cent felt more loyal to companies that made charitable giving part of their mandate.

It is not known yet how many employers have taken payroll giving on board, but Inland Revenue will be tracking and releasing the data in a few months.

Yet, with only 30 per cent of employers in New Zealand processing pay electronically through the PAYE system, the pool of potential payroll donors is limited.

Observers such as Austin say the uptake so far is mostly Government departments that are trying to lead my example.

Austin expects the system will become more widely adopted once payroll departments have had a chance to adjust their payroll processes.

Meanwhile, charities nationwide are gearing up to promote payroll giving as an effortless way to make a difference. Dominique Leeming, who is co-ordinating efforts on behalf of Coastguard New Zealand, says the organisation's broad volunteer base could play a pivotal role in lifting donations around New Zealand. There is a proposal afoot to encourage its 2500 volunteers to apply gentle pressure on their respective employers to adopt the payroll giving scheme.

Leeming says the Coastguard is in the process of preparing information sheets and brochures that will explain the process of payroll giving and encourage volunteers to push the cause.

Inland Revenue and Fundraising New Zealand are also organising joint information sessions and workshops for employers to promote the scheme. The challenge for employers, beyond the implementation of the payroll giving process itself, could be narrowing the selection of charities, notes Austin.

The Charities Commission has registered more than 24,000 charities and non-profits since 2007, although that includes a large number of private trusts. Austin says it will be a daunting prospect for employers to have to elect eight or 10 charities from the thousands of eligible ones.

"So what we're encouraging is that employers ask their employees who they want to nominate. That will get a mix of regional, not-so- well-known and national charities."

The Charities Commission website is a helpful resource. You search for a particular charity by category or name and inspect their annual financial statements. This is useful to the extent that you can see how much a charity receives and how donations are spent.

WAYS TO GIVE

Share giving

Shares for Good is a charitable investment trust fund that provides a home for unwanted shares. When sufficient volumes of shares accumulate they are sold (free of brokage fees) and the proceeds donated to various New Zealand charities. Shares for Good is a joint initiative between Goldman Sachs JBWere and NZX that was established in 2006. Because small parcels of shares are often expensive to maintain or difficult to resell, this charity presents a cost-effective way for individual and corporate investors to save money and do good with minimal effort. For more information, see sharesforgood.co.nz

Texting has emerged as the latest form of philanthropy but mainly overseas. Donations via text messages raised more than $7 million for the American Red Cross's Haiti relief efforts. In New Zealand, text by donation is in the formative stages. Oxfam New Zealand says while it is looking into the option, the costs remain too high. Spokesman Grant Bayldon says, "text giving is good if it enables people to donate who wouldn't otherwise. But for people who can, it's more effective to give online or by phone."

Ad hoc

The one-off payment is one of the easiest ways to give but research has found that donors often give under duress or guilt. If you are uncomfortable giving on the spot, ask the solicitor if they have any take- home paperwork for consideration. That way you can make a calculated decision to give or not. You can also check the charity out online through the Charities Commission registry: charities.govt.nz (search the register)

Automatic payments

A deliberate, low-pressure way of donating as the money comes off the pay cheque, before you can spend it. It may seem like a big commitment at the time but if it is money you would otherwise fritter, you can at least feel good about it going to a good cause. Plus with the new payroll-giving scheme, you get the benefit of an immediate tax refund for a third of what you donate.

Phone

Most charities have a toll-free option for phone donating. It's a comfortable, quick and easy way to donate. The Charities Commission registry may be helpful for those wanting more detailed information before they donate.

Bequests

Charities are especially fond of this form of donation as it has the net effect of saving them money and time on fundraising initiatives. It also allows more money to be spent directly on projects. For the person donating by bequest, it can be a more convenient way to give, in that it does not interfere with budgeting and cash-flow.

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