Personal Finance

Thursday 10 July 2014

Ask questions if you intend to give cash to those in need

Published 15/12/2013|13:00

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It's known as the time for giving -- yet the recent revelations about salary top-ups at the Central Remedial Clinic (CRC) mean that many of us will think twice before donating to charity this Christmas.

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The use of donations to bump up the pay packages of some CRC executives, rather than to help children and adults with physical disabilities, has angered many of those who donated to the charity. It has also alarmed many of us who give to charity regularly -- the thought that our hard-earned money could be used for anything other than to progress the altruistic goals of a charity is staggering.

The CRC has done some excellent work for disabled children -- and the controversy over salary top-ups shouldn't take from that.

The controversy, however, does highlight the importance of being careful who you donate your money to -- and making sure your donation is put to good use.

So how would you do that?

STEP 1: Choose a good charity

"To assess whether a charity is a good one or not, there are a number of questions you should ask," said Deirdre Garvey, chief executive officer of The Wheel, which represents more than 900 charities around Ireland. "Does the charity communicate clearly what it is and what it does -- or does it leave you wondering where the money goes? Does it have its accounts published on its website? For those who don't understand financial accounts, does the charity have user-friendly charts and graphs on its website showing where its money has come from -- and what it is spent on?"

When examining a charity's expenditure, check how much is spent directly on charitable work -- and how much goes towards administration costs. It is not unusual for a charity to spend between 5 and 10 per cent of its money on administration costs. For example, Trocaire spends about 92 per cent of its money directly on charitable work, and 7.5 per cent on fundraising and publicity expenditure, according to its latest annual report. Concern spends about 90 per cent of its money on relief and development work, 7.4 per cent on fundraising, 2.3 per cent on development education and advocacy and 0.5 per cent on governance.

"Running an organisation professionally costs money and that will be reflected in its management and administration fees," said Garvey. "The percentage of money being spent by an organisation on overheads and administration is not the best way to judge if a charity is effective or not."

All the same, if a charity is spending a lot more on administration costs than others do, you need to find out why -- and if the extra expenditure is justified.

The amount of progress a charity makes improving the lives of others is probably the best way you can judge its effectiveness. "Does the organisation tell you about the progress that it is making -- such as through a newsletter or email?" said Garvey.

Hans Zomer, director of Dochas, the association of Irish Non-Governmental Development Organisations, said that good charities "have clear indicators to measure progress toward the achievement of agreed goals".

"The ultimate judges of an organisation's effectiveness are the people who are the intended beneficiaries," added Zomer. "It is important to ask how a charity knows those people's real needs and how they relate to other charities or government programmes in the countries they operate in."

STEP 2: Check if the charity has standards

Find out how professional your charity is -- and what kind of standards it follows. One way to do this is to find out if the charity has signed up to reputable fundraising principles, such as those drawn up by the Irish Charities Tax Research Group (ICTRG), an umbrella group for charities. These principles, which were developed in conjunction with the Government, set out what you should expect from a charity when you make a donation. For example, the principles state that "donors have the right to be assured that their gifts will be used for the purposes for which they were given" and that a charity "will ensure that any donations received will be used solely to further the organisation's mission". The principles also set out how charities should approach and organise fundraising -- and have rules to ensure that charities are financially accountable.

You can get a list of the companies which have signed up to these principles on the ICTR's web site (www.ictr.ie). Only about 100 charities have signed up to the ICTR principles so far -- and there are more than 8,000 registered charities in Ireland. Some of the charities who have signed up include Aware, Bothar, Concern, Focus Ireland, the Irish Cancer Society, the Jack and Jill Children's Foundation, Trocaire and the Society of St Vincent de Paul.

If your charity of choice hasn't signed up to the ICTR principles -- or the principles of another reputable organisation, ask it why it hasn't done so -- and if it is taking steps to do so.

Another good benchmark for a worthwhile charity is whether or not it has signed up to a reputable governance code, as this should ensure that a charity is transparent and well run. The Wheel, the ICTR and other groups, have drawn up a governance code for charities. You can find a list of the charities which have signed up to this code -- or have committed to do so -- on www.governancecode.ie.

STEP 3: Make sure the collector is authentic

Be careful how exactly you give your donation to charity. If donating through a website, make sure it's through the charity's official website and that the site is secure.

If you're providing your bank account or credit card details to a representative of a charity so that you can make a one-off or regular donation, ensure the person is authorised to do so on behalf of the charity.

If you donate through street collectors, check that the name and number of the charity is clearly displayed on the collection box. "The collector should have an ID card or letter of authorisation proving there is a link between them and the charity they say they are collecting for," said Garvey.

"If you get any kind of hesitant or aggressive response when you ask for that information, walk on by. When a charity is collecting in a shopping centre or street, we sometimes get reports of people sitting 50m down the road and shaking a bucket.

"These are just people who are chancing their arm -- they're not bona fide charity collectors."

Irish Independent

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