The end of the financial year (EOFY) is widely recognised as a major time for giving in Australia. Many philanthropic trusts fulfill their charity distribution obligations in May-June. Individuals and businesses looking to reduce their taxable income frequently make one-off gifts at the EOFY. Charities know this and compel us into the spirit of generosity at this time of year with heavy promotion.
Many donors are faced with the daunting task of identifying a charity (or two or three) to give to. Which charities are efficient? Which ones will use your donation to make a difference? Which charities are ethical?
Identifying and assessing charities is complicated. There are a seemingly limitless number of charity options to give to and it takes a lot of work reading through annual reports to get a sense for which ones are strong performers. Even then, it’s hard to know what a “good” annual report looks like and what information can be trusted.
There are two clear options for finding quality charities to give to. The first is a DIY approach where you do the research yourself. The second option involves engaging professionals to guide you on where to give.
Option 1: DIY
Giving to charity shouldn’t be overly complicated, but somehow it often is; a degree of diligence is required to make sure your money isn’t wasted. It is possible to undertake research yourself and identify quality charities to engage with by following the steps below.
Step 1: Find a list of charities that align to you
The first step in finding a charity to give to is looking for those that align with your own personal values. What cause do you want to address? How do you want problems to be solved? Where do you want programs to be run? What size charity do you want to donate to?
In order to identify a shortlist of charities that align, start by downloading the Australian Charities and Not For Profits Commission’s (ACNC) database of charities. There are over 50,000 charities in this list, but don’t fear! The vast majority in this list are small, locally-based community groups and won’t be aligned to you. To find those suitable for you, we recommend filtering the data by the following fields:
- Main activity – select only those areas that you are passionate about.
- Location of activities – select only those regions of interest.
- Charity size – make sure the charity is not too big (as your donation won’t make much of a difference) or too small (smaller charities are difficult to assess).
Add in additional criteria, like targeted beneficiaries or if it takes volunteers, until you are left with a short-list of about 20 charities. Then, click on each charity’s website to see if they align with your values. Do you support their mission? Do you like their approach? You will find that only a few really sing to your heart.
Step 2: Assess the charity’s quality
Once you have found a group of charities that appeal to you, the second step is to assess them to make sure they are ethical, efficient and effective.
A simple due diligence involves reviewing the following:
- Financial records – download the charity’s financial report and make sure that it has been audited. This provides you assurance that the charity’s financial records can be trusted.
- Governance – identify the charity’s board of directors and review their biographies to make sure there is a cross-section of skills and experiences (e.g., CPA, legal experience and experience with the cause). Appropriate oversight helps to ensure that money won’t be mishandled and the charity will stay focused on delivering its mission.
- Impact – look for the charity’s strategy and compare this to their Annual Report. A strategy that is used to guide the charity is a strong sign that they are committed to delivering on their mission.
Once you have reviewed these features, you will be able to eliminate those charities that do not meet minimum basic transparency or standards.
The decision at this point will be easier. You will have an understanding of the strengths and weaknesses of each remaining charity and you will know if they align to you.
Option 2: Engage professional giving advisors
If you’re short on time, need extra help, or want a more thorough due diligence, you can engage professional giving advisors to help identify quality charities for you. There are three kinds of giving advisors: those that work for large trustees, those that work independently and, a new option, Seedling.
Philanthropic advisors that work for large trustees and independent advisors will typically provide advice to only donors that are giving significant gifts (>$100k). They work closely with donors to set up a giving strategy and, in some cases, distribute grant funding. Seedling has evolved so that Regular Givers of just $50+ per month and One-off Donors giving more than $5,000 also have access to quality advice on giving, at no cost to them.
Seedling is Australia’s first and only charity matching service. Seedling’s qualified advisors learn about an individual’s values, passions, life experiences and tailor a charitable giving opportunity specific to them. Each charity recommended by Seedling passes through a comprehensive due diligence process, so donors know the charity will spend the money wisely.
The end of the financial year is the perfect time to sit back and think about which charities you wish to support and how you want to give back to those less fortunate. While it can be overwhelming choosing a charity to give to, by spending a little bit of time doing research, or by engaging professional advisors like Seedling, you can have confidence your donation is ethical and efficient.
Check out www.theseedling.com.au to learn more or sign up today!