Don’t just donate, donate right

With about one charity organisation for every 400 Indians, we all get phone calls and door-knocks soliciting donations.

We all would love to give to charitable causes. But before giving, we would like to be confident that the money reaches the intended beneficiaries and is used well. These simple tips can help you donate right.

One way to find organisations that are credible is to check with your employer. Many large companies have an established corporate social responsibility (CSR) programme through which they work with non-Government organisations (NGOs).

As corporates typically do a lot of due diligence on the non-profits they engage with, you can be fairly confident about these NGOs.

Companies such as Intel, Microsoft and Facebook encourage volunteering hours by their employees, notes AL Rangarajan, Programme Manager of India Literacy Project, a non-profit organisation. Another way your employer can help is through matching grants programmes. Many large companies, particularly multi-nationals, match your financial donations to charities. This route, offered by about 12 companies in India, can potentially double the contribution to your cause, if it meets the criteria and limits set by your employer’s grants committee.

You can also set up payroll deductions through your employer, says Archana Hari, head of credibility assurance team at GiveIndia, a platform that connects donors and non-profits. About 125 companies offer payroll giving and over 50,000 donors are enrolled currently. Automatic monthly deduction brings in more discipline and also helps the non-profits plan their monthly budget.

Still, while larger non-profits have access to corporate and other donor resources, the smaller ones are frequently cash-strapped. When a little known non-profit approaches you, check these four things before you decide, advises Archana Hari.

First, ask for details such as history, management and board members to assess the company’s credibility. Second, check its website to know what information it discloses. Look for the annual report and audited statement. Assess how good the group’s governance is by looking at remuneration of board members and their independence.

Third, check out details pertaining to the non-profit’s overhead expenses. Non-programme expenses should be under 15 per cent of the total expense and anything above that may indicate extravagance in personnel costs. Lastly, go through the details of how the programme works and feedback from those who benefited. This gives you some timeline on when the funds are deployed and what results are expected by when.

This can give you an indication on the time it would take before the funds would be deployed and when results can be expected.

If you’re also looking for tax breaks on your deductions (under Section 80G), keep note of the limits. Assume, for instance, that income, excluding capital gains (both long- and short-term) and other deductions, is ₹7 lakh. The upper limit for charitable deductions to most non-profits would be ₹70,000 (10 per cent of ₹7 lakh).

Under Section 80G, most organisations typically qualify for 50 per cent deduction.

So, continuing the example above, if you donated ₹2 lakh, 50 per cent of that, or ₹1 lakh, would be above the 10 per cent limit based on income.

So, only ₹70,000 will be eligible for deduction. Rangarajan of India Literacy Project advises that you check details, including registration, tax exemption status such as 80G and 35AC as well as authorisation to receive foreign funds.

These will give you confidence that Government agencies have scrutinised the organisation’s records.

Also, never give cash even if the amount is small. Payment by cheque ensures better accounting of funds. You must also insist on a receipt in a proper format for your tax records.

After all this, periodic follow-up is needed to ensure proper utilisation of the money. One simple way is to subscribe to the organisation’s newsletter, email list or social media group. Visiting the facility, participating in the events organised by it and volunteering are other ways to be keyed in with the group’s progress. As a donor, you have the right to ask for disclosures, no matter how small your contribution is. Seek details such as names and background details of the beneficiaries, goals attained, issues faced and future plans.

Follow-up by the donor as well as the organisation helps build a gainful long-term relationship.

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