New tax laws introduced in early 2008 now allow for up to one third of any donation over $5 by individuals to be claimed back at the end of the financial year, with the maximum donation being up to the level of your pre tax income for the year. Companies can now make tax deductible donations to charities.
These changes are designed to make it easier for people to make donations to charities. This change by Government is very timely given the impacts of the global recession, when charities and non profit organisations are the first to suffer from income drops as people curtail spending. Not only have traditional sources such as fundraising drives and appeal weeks yielded less, but the philanthropic and trust organisations who grant money also have less to give as their investment income has dropped.
These changes mean that it is now more tax effective to give donations prior to death, rather than gifting via a Will. Bequests given via a Will do not qualify for any tax relief, so there is a real incentive to make those substantial bequests while you are alive and see your gift working during your lifetime.
Up until now, bequests to charities have accounted for between 10 and 20% of a typical charity's income, is not usually budgeted for, and often absorbed in one-off projects or consumed in administration when the funds arrive. Trends from overseas show however that it is more effective for donors to build or setup a fund from donations during their life, which provide an income stream inperpetuity for the charity. The fund keeps on working and doesn't disappear. This income can be tax free for the charity provided the fund structure (normally a trust) is registered with the Charities Commission.
However setting upsuch a structure can be complex time consuming and costly, and often is too discouraging to donors who want to leave ongoing benefits. The Geyser Community Foundation provides a ‘ready made' way for donors to be able to set upan income generating fund without having to go through the set up process from scratch or worry about how to manage the fund and distribute the benefits in the future.
Called a ‘Named Fund', donors are able to giftmoney to the Geyser Community Foundation, and express wishes as to how they would like the income from the fund to be distributed. The donor pays a modest administration fee, and enjoys not only the expert investment advice from the Foundation's experienced trustees and advisers, but also the economies of scale that the Foundation can obtain by investing the charitable funds together.
Charities benefit from knowing they have a regular income stream from a trusted, well managed source.
To be effective, Geyser Community Foundation accepts special purpose Named Funds with a minimum of $25,000. This sum can be donated as one lump, or built up over a periodof 5 years, with $5,000 being gifted each year. The tax relief is claimed in the year of donation ending on 31 March.
Geyser Community Foundation also accepts general tax deductible donations of any amount and these are added to its general pool for general community grants.
