Charity donations often fall off the cliff during recessions. Yet economic downturns are when some charities find their services most in demand.
Charitable organisations really do need our help. Imagine a society without the Royal New Zealand Foundation of the Blind, hospices, the Cancer Society of New Zealand, SPCA, Barnardos, Arthritis New Zealand and many thousands of others that do vital work in our community.
Donations may have taken a hit in the recession but, from this financial year, the tax man has got a whole lot more generous with rebates. For all donations over $5 for registered charities you get a third back as a tax rebate.
The rebate is generous. An individual can donate up to the level of his or her salary each year and get a third back. Charities themselves are trying to encourage individuals to see the rebate as an opportunity to give a third more to their favourite cause or causes.
The rebate is already starting to help, says James Austin, chief executive of the Fundraising Institute of New Zealand. Another tax-efficient government initiative - payroll giving - is also set to help.
The payroll-giving scheme is in the starting blocks, having already received royal assent. It will mean that anyone who donates direct through their employer before receiving their pay packet will receive the tax rebate immediately. That means, for example, a $30 monthly donation to your favourite charity only takes $20 out of your take-home pay.
The catch is that employers have to agree to payroll giving and it might be administratively difficult if large numbers of employees choose different charities. Employers might, says Guardian Trust's manager of philanthropy, Chris Blincoe, choose a single charity or a small number and offer payroll giving for only those.
If payroll giving isn't available at your place of work, then another tax-efficient alternative is to make annual donations at the end of the tax year and file a refund claim on April 1. The refund is usually paid to your bank account, unless you owe other tax or child support.
Charities need regular donations in order to plan, says Rachel Roberts, strategist at the Generosity Hub, an umbrella project run by Philanthropy New Zealand, Volunteering New Zealand, the Office for the Community & Voluntary Sector and other groups. They have operating costs which must be met.
The Generosity Hub is working to find out more about how and why we give to charity and also looking for ways to formalise our giving. Although we're a generous nation, says Roberts, we're not good as individuals at thinking strategically about how we give our money away.
Another aim, says Roberts, is to get us to change our behaviour. "A lot of people want to give, but they don't know the best way to do that," she says. Payroll giving will in part help to change our approach to regular giving.
Automatic payments help as well. It is easier, says Austin, to give a small amount each month than pay out a large sum once a year.
Top charities have a number of income streams that contribute to their operating expenses, says Austin. Each charity is different but, in general, charities get around a third from donor appeals, including mail-outs, unaddressed mail, automatic payments and telemarketing, a third from organisational giving and sponsorship, and the rest from events.
It's the organisational giving from trusts and other philanthropic organisations which has been hit hardest by the recession, says Austin. Individual giving has remained steady, but the philanthropic sector is really hurting.
The ASB Community Trust, for example, froze grants for six months earlier this year, after its investments plunged in value. It is now giving again, but at a reduced rate.
As a result of this contraction in organisational giving, many organisations have taken advantage of the government's Community Response Fund, which has up to $104 million available over two years to aid critical social services facing a significant increase in demand or severe financial difficulty as a result of the economic downturn.
Some of the bigger more professionally run charities have survived the recession with their income intact by becoming nimble. They are also becoming more professional in their approach.
Austin says the typical giver is a woman in her 50s, 60s, or 70s. She may have a handful of favoured charities that she gives to each year. Those charities need to work to remain in her favoured list.
Major international charities such as Unicef and Greenpeace are also working hard at recruiting younger donors. One hugely successful way is the street-corner clipboard approach where 20 to 30-year-olds are being signed up in their droves to donate by automatic payment.
These Gen X and Y donors tend to turn over more rapidly than their older counterparts, because they move house or country and the charity loses track of them. Nevertheless they are a valuable new source of income.
Bequests from individuals provide 10 to 20 per cent of charities' revenues, but they don't necessarily budget for such money, says Austin, using it instead for major building or other projects. We're relatively unsophisticated when it comes to bequests, says Austin, although some charities are targeting this income source increasingly. The average bequest is around $20,000 in New Zealand, compared to $50,000 in Australia, Austin says.
In today's environment leaving a bequest in your will isn't the most tax-efficient way to give money to charity. It comes from post-tax income, whereas gifts in your lifetime up to the level of your salary each year have the 33 per cent rebated - coming effectively from pre-tax income.
Some individuals don't want to part with the money until they die. They may consider it to be rainy day money, or it's the capital from which they earn income in their retirement.
If, however, you set up a charitable trust in your life or on your death through your will, or a shell trust, the income from those trusts will be tax-free, says Blincoe, providing the trust is registered with the Charities Commission.
The Guardian Trust manages about 450 charitable trusts and distributes around $26 million a year. These trusts cost money to run and individuals need to be leaving at least $250,000 to $300,000 to make a charitable trust worthwhile.
Volunteering is hugely important for charities. According to Volunteering New Zealand 67 per cent of the non-profit workforce, equivalent to 133,799 full-time positions, is made up of volunteers. More than 1 million Kiwis volunteer for one or more of 97,000 non-profit organisations.
But don't limit yourself to painting-the-fence-type volunteering says Roberts, where you pitch in at a local kindergarten working bee, say.
Instead, if you approach organisations such as Volunteering New Zealand, they can assess your skills and may find a better fit, offering you as a consultant or to provide regular assistance in administration, marketing, human resources, or other parts of the organisation.
Web designers, for example, are gold dust for charities, which these days need to maintain good websites to market themselves. Such a person would be far more valuable doing site development for an organisation than painting the fence.
Another way for individuals to support charities is to organise fundraisers or attend fundraising events. These events both raise money and raise charities' profiles.
Businesses can also make charitable donations, but don't qualify for the 33 per cent rebate.
They will often have one or a small number of favoured charities and may also encourage volunteering by staff, as the BNZ is doing very publicly with its Closed for Good volunteer programme, which will culminate on November 4 with BNZ branches closing for the day and staff volunteering for good causes.
Organisations can also give free or discounted goods and services to charities and return the information on the company's IR4.
In order to qualify for the charitable giving rebate, you must complete an IR526 each financial year.