A guide to making smart donations

Do background checks and make sure your money is put to good use

“We make a living by what we get, but we make a life by what we give,” said Winston Churchill. Most of us would love to be part of a social cause, but time constraints, distance and personal responsibilities prevent us from actively engaging in philanthropic causes.

Hence, making monetary contributions to further a charitable cause is easier. However, while donating is a noble idea, you must ensure that your hard-earned money is put to use for worthy causes.

Whom to give

Non-governmental organisations (NGOs) are founded to further various social causes, and they collect funds for the same. If you know such NGOs, you can directly contribute to them after doing some background check.

Experts say that in order to verify an NGO, we need to check if donations to it qualify for Section 80G and whether it holds FCRA (Foreign Contribution (Regulations) Act) permission. We can do a background check on its trustees, read past performance record and media write-ups, if any, and attend events organised by the NGO if possible.

However, if you are unsure about an NGO’s background, or don’t have the time to check, or don’t know where to contribute, you can consider organisations such as EdelGive Foundation and GiveIndia, which in turn fund various NGOs. “We fund NGOs, build their capacity and then connect them with donors who fund them through us,” says Naghma Mulla, COO, EdelGive Foundation.

For instance, Kaivalya Education Foundation is one of the NGOs supported by EdelGive. The NGO works to bring systemic change in quality of education by providing leadership training to principals and teachers. EdelGive not only helps the NGO with its funding requirements, but also provides resources to help train people from various schools.

Similarly, Dasra, a philanthropic foundation, also supports different NGOs. The foundation helps in social causes such as sanitation, education, governance (voting rights, access to justice, etc) and betterment of livelihood. If an individual wants to donate, he/she can choose the cause and contribute towards it through Dasra.

Advantages

The work done by NGOs such as Edelgive and Dasra, the funds collected and utilised, and the duration of the projects can be reasonably evaluated before you part with your money. These NGOs are also trained to achieve their objectives efficiently.

Most of the organisations send regular updates on projects to donors through email/post. In addition, they also encourage donors to visit project sites to witness how their money is put to use. Thus, you as a donor can be gratified that your contribution is making a difference.

Apart from the mental satisfaction that you get, an important benefit of donating is the tax deduction you can claim under Section 80G of the Income Tax Act. The eligible amount of deduction depends on the type of institution you donate to.

For instance, you qualify for 100 per cent deductions without any upper limit if you donate to the Prime Minister’s National Relief Fund or the National Sports/Cultural/Defence Funds. You are allowed 50 per cent deduction without an upper ceiling when you donate to funds such as Jawaharlal Nehru Memorial Fund or the Prime Minster’s Drought Relief Fund.

However, some other donations qualify for 100 or 50 per cent deductions, subject to an upper limit — 10 per cent of adjusted gross total income. The entity to which you are donating to should provide a receipt as proof of the donation made. The receipt should contain the name, address, PAN of the entity, registration number, name of the donor and the amount.

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