Personal Finance

Beyond the ice bucket: how to maximise charity donations

Few people with an internet connection remain unaware of the ALS ice bucket challenge. Every news site and social network is full of videos of celebrities and ordinary people throwing iced water over their heads, and £60m has been raised for the ALS Association, an American motor neurone disease charity.

However, a survey has revealed that almost half the people who have taken part in the ice bucket challenge haven’t donated to charity. While campaigns like this can be hugely beneficial – many UK-based organisations are now encouraging their supporters to take the ice bucket challenge to raise money for them – it is regular, thought-out donations that provide the lifeblood for many charities.

In the UK we donated £10.4bn to charity in 2013, with an average individual donation of £29, according to research by the Charities Aid Foundation. But, most of us make sporadic cash donations and only 43 per cent of us use Gift Aid. With a bit more thought we could all vastly improve the funding for charities.

Gift Aid is a scheme under which the government refunds to a charity any basic rate income tax paid on donations. So, by signing a quick form your donation is worth 20 per cent more to the charity. This is the simplest way to boost your donations.

Regular donations are particularly valuable, as they enable charities to budget for the future. If you want to give a set amount to charity each month, one of the best ways to do it is through an employer payroll scheme. This allows your donation to be taken from your salary before you pay tax. So, every £1 you give only costs you 80p if you are a basic-rate taxpayer, or 60p if you are a higher-rate taxpayer.

If your employer doesn’t offer a payroll charity scheme then you can give money to your chosen charity each month with a direct debit. Set this up via the charity and make sure you select the gift aid option. That way every £10 you donate is worth £12.50 to the charity as it reclaims your basic-rate income tax.

Finally, legacies play a huge part in keeping many charities afloat. These are donations that are left to them as part of your will. To leave a legacy you need to have a will and it needs to clearly state within it the name of the charity you want to donate to, plus its address and charity registration number. Don’t just put ‘cancer research’ or a similar vague term as this can lead to confusion over who should receive the money.

The most common form of will donation is a pecuniary legacy, where a simple stated amount is given to a charity. Alternatively, you can give a specific legacy, through which you donate a particular item, such as jewellery, stocks or a house. The final option is a residuary gift, which allows you to nominate a charity to receive part or all of the residuary of your estate – that is, what remains after all taxes and expenses have been paid.

But the first step to take is to make sure that if you’re planning to throw ice water over your head, or have already done so, make sure you donate to charity too. The UK charity associated with the Ice Bucket Challenge is the Motor Neurone Disease Association.


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