Don't lose your head when you donate from the heart

Think carefully and check the bona fides of the charity before you donate, advises Caroline Madden

CHRISTMAS MAY be the season of giving, but charities are feeling the pinch this year. At a time when demand for their services is growing exponentially, corporate sponsorship is falling away and Government funding is also drying up. As a result, charities are becoming increasingly reliant on individual donations from members of the public.

Irish people are known for their generosity, even when times get tough. But before embracing your inner philanthropist and helping out your charitable cause of choice it's important to find out exactly where your money will go, and how it will be spent. Admittedly this is easier said than done.

New legislation relating to charities is expected to come into force next year and this will introduce a far greater level of transparency and accountability to the charity sector.

Among other things, it will establish the Charities Regulatory Authority which will register and regulate charities.

However, at the moment, there is no legal framework for the registration of charities in Ireland. The Revenue maintains a list of organisations to which it has granted charitable tax exemption - which contains close to 7,500 charities, and can be accessed on www.revenue.ie/en/business/charities.html.

"That's the only place where members of the public can go to find out if an organisation is recognised as being a charity," says Ivan Cooper, director of advocacy at the Wheel, which represents 800 community, voluntary and charitable organisations.

Before making a donation to an organisation, ask for their CHY reference number to make sure that they're kosher. This number will have been issued to them by the Revenue if they are on the list of tax-exempt charities, and should help you avoid being caught out by bogus operations, such as the clothes collectors who pose as charities.

These con artists post leaflets and plastic bags through letter boxes asking for unwanted clothes, which they then sell on. As well as looking for a CHY number, check whether fliers or collection bags display the Irish Charity Shop Association clothes hanger logo - if not, then chances are it's not a legitimate collection.

There are a number of other ways of getting information on your chosen charity. If, for example, it operates as a company, you may be able to find useful information, including annual returns, by searching on the Companies Registration Office website, www.cro.ie.

You should also consider contacting an organisation called GuideStar Ireland (www.guidestar.ie) to see if it can provide information on the charity in question. Although only in its pilot stage, the GuideStar Ireland project aims to draw together publicly-available information on Irish non-profit organisations.

When the new charities legislation comes into force, all registered charities will have to produce an annual activity report detailing how they raise their funds and what they use those funds for.

All of this information will be made available to the public. This will obviously make it far easier for donors to check that their donations are being spent effectively.

In the meantime, don't be afraid to ask for a breakdown of exactly how a charity spends its money.

If it's a priority for you that the vast bulk of your donation is spent on frontline activities, you'll want to know if most of your donation would actually end up paying for secondary activities like administration and fundraising events.

Many of the larger charities now disclose this type of information voluntarily.

Focus Ireland, for example, publishes its annual report on its website, which gives details of how its funds are spent.

"It's very important that people can be confident that their money is going to the cause that they want to support and that we, as a charity, are operating as effectively and efficiently as we can," says Mark Mellett, director of fundraising at Focus Ireland.

It views its donors as investors and believes in being open with them. "They are investing in what we do, so it's critically important that they understand and are happy with what's happening and how we're running."

He explains that Focus Ireland desperately needs funds this Christmas. Its corporate fundraising campaign has been hit by companies either folding or cutting back on donations and, although individual donors are still supporting them, they're giving a little less this year.

Focus Ireland is far from being the only charity straining to meet demand. Stuart Kenny, spokesman for St Vincent de Paul, says that it is now spending about €1 million a week providing basics like food and clothes to people in need. Calls to the charity have shot through the roof recently. "Calls are up nearly 40 per cent in some areas," he says, adding that 28 per cent of callers have never had to contact St Vincent de Paul before.

Many of them are people getting into difficulty because they've lost their jobs. "They've run out of the few bob redundancy, they've run out of the credit cards, they've run out of everything. Now they've hit the wall and they have to come to Vincent de Paul," he says.

Despite the dire economic climate, the early indications suggest that members of the public are still giving to St Vincent de Paul. "That would sit with our experiences before in the 70s and 80s when things were bad . . . When Vincent de Paul put the word out that they needed money, the public stepped up to the plate and they were fantastic," he says.

Once you've decided on your charity of choice, and are satisfied that it runs a tight ship and that your money will be well used, what is the most efficient way to make a donation?

Most charities are happy to get donations in any form. However, they generally prefer if donors commit to giving regularly, rather than making once-off donations. Regular income streams make it much easier for charities to plan ahead and provide services on a continuous basis.

Also bear in mind that it is more tax-efficient to donate amounts over €250 in a given year (either as a lump sum or through regular donations). If you're a PAYE employee, eligible charities can claim back the tax you paid on this income. So if you pay tax at the higher rate of 41 per cent, a donation of €250 could be worth roughly €423 to the charity.

A standing order of just €21 a month will bring you over the tax relief threshold. If you're self-employed, you are entitled to claim the tax refund yourself, so you might want to factor in this saving when deciding on the amount you donate.

If you're struggling to choose between myriad worthy causes in need of funding, check out www.communityfoundation.ie.

The Community Foundation operates a donor service, helping people to get involved in charitable giving by identifying the most deserving and effective local grassroots causes. Its website also contains information on a variety of different methods of supporting charitable causes.

If you're interested in donating to a foreign charity, try and get as much information as you can about the organisation first. Check whether there is a charities regulator in the country in which it operates and, if so, whether it is registered with that regulator.

Just because it's a donation to charity doesn't mean that you should hand over your hard-earned money without doing your research - it's still a case of buyer beware.

"Under a new law all charities will have to produce an annual report