Glad rags to riches

Proceeds from the Zodiac range go to the Max Foundation. Photo / Supplied

Top-four accounting firm Deloitte reports corporates and wealthy people are increasingly asking how to take advantage of a new law change rewarding charitable activity with tax benefits.

"Organisations and high net worth individuals are being encouraged to set up trusts to support charitable initiatives," says Deloitte partner Steve Thompson.

"It is now easier to give sizeable sums. You can either give money to an existing fund or be responsible for establishing one."

Before April last year, large companies could give up to 5 per cent of their taxable income as a charitable donation and get a tax deduction for doing so. That 5 per cent cap has now been removed and corporates can make unlimited charitable donations as long as they have a taxable income.

"It's much more attractive," Thompson says. "It is moving the way other tax jurisdictions have moved, for instance in America."

Max Foundation, one of Thompson's clients, was set up more than a year ago by the fashion retailer Max, owned by multi-channel company EziBuy. Max has 38 stores, a database of more than 70,000 women and has just launched its online operation in Australia.

"We were looking at our corporate social responsibility and sponsorship," says Max marketing director Sandy Burgham. "Companies like Max get approached sometimes daily, definitely weekly, by people who want us to sponsor them. We were looking strategically for some way of aligning all the sponsorship we were doing."

"We aligned [it] in a way that makes sense for the overall brand - customers, stakeholders, VIPs and staff, who are pretty much all women."

The foundation aims to support individuals or groups whose actions enhance the wellbeing of New Zealand women.

In the foundation's first year, it has distributed $68,000, with Max's assistance, including an initial starter donation of $25,000, to a variety of individuals and organisations that meet the criteria. Ideally it will have an annual pool of $75,000. For this first year, Max also covered most of the administration costs to maximise the money available for distribution.

Money is raised through merchandise in Max stores.

One successful initiative has been the Zodiac T-shirt collection, created by one of the women the foundation has helped, a young graphic designer. From each sale, $10 goes to the foundation.

Other organisations are welcome to contribute to the Max Foundation if they don't want to set up their own charitable trust. It has made grants to a number of causes, including the Taonga Education Centre Teenage Parent Unit and Pink Pilates, a charity that gives rehabilitative exercise classes to women after cancer.

Burgham warns there are considerable expenses involved in setting up a foundation, including website, legal and marketing costs.

In time, the foundation should operate with minimal assistance from Max, relying on its own profits.

"We won't be employing someone to administer the Max Foundation," Burgham says. "EziBuy chief executive Mary Devine and I as trustees take on this responsibility with an able marketing co-ordinator donating her time as administrator.

"Everybody is talking about triple bottom line. You are in business to make a difference and this is an opportunity.

"The best part of my job is when you ring people and say: 'We would be delighted to give you funding'."