A win-win solution

Joyce @ WWF-HK

When talking about NGO, especially found-raising, what I can recall is all about the very traditional, inflexible, or sometimes even be kind of old-school communication. However, surprisingly, I noticed that some NGOs in many other countries approach donors in a very attractive and creative way. They express touching (but seriously) messages while offering various “donate solutions” to reduce the inconvenient to donors. That helps to ensure the donation income to charity and bring a very new role of donation itself to the donors.

Sometimes charity organizations complain that donors have very short memory. They make donation for an urgent accident but always forget (or deny) to continue the donation to solve problem for a better future (for both environmental and humanitarianism issues). Lot of researches express that the top 1 “excuse” from donors always is “I am too busy to make donation”, but whether that’s an unchangeable reality or it’s just because NGOs didn’t offer a good emotional reason to push the donation?

Except the bad facts and sad stories, what else a NGO can “offer” to push the donation? A “side-benefit” can be the answer, I think.

1) A special legacy – leave a gift in your will

More and more charities encourage donors to leave a gift in their will. That is a unique, perpetual way to show their care for the future as that is a special legacy that people will remember. Some nice and touching quote I found from WWF UK as below:

“Give the next generation a world worth living in

Leave a gift in your will and you will help to ensure that the world remains a place where all life can flourish. A magnificent world where the mighty rainforests of the Amazon still stand tall and endangered animals are protected not poached. A fair world where indigenous communities can live in harmony with their environments and where precious resources are used in a sustainable way.

The humpback whale, the giant panda, and the mountain gorilla – can you imagine a world without them? “

It would be an infinitely poorer place. You could ensure that tomorrow’s world will still be home to today’s magnificent and beautiful animals. Including WWF in your will is the easy way to leave an incredible gift to future generations – a world where they can live and thrive. “

However, a touching communication shall always accompany with the “action” you request. In addition, a clear mission and action plan (projects) are the must to support the success of the project. Donors will not make donation just because of a vague vision, people support because they know things can happen because of the actions. That’s the critical point, I personally believe.

2) A gift in memory – special way for people to mark the occasion

In UK, WWF also encourages bride and groom to request wedding guests make a donation with the money they would have spent on the presents they would have bought. They then can both be supporting the work to tackle the most serious environmental challenges facing the planet, building a future where people and nature thrive together.

As many people may be invited to make donation, the execution must be very easy and organized. The groom and brides surely will be crazy busy for their big day and NGO shall be the one to provide (or work with other organization to provide) an easy donation method. There are various websites who work with NGOs and allows the new couple to set up their own page. They can personalize their page with picture and own message in few minutes and that looks like a tailor-made webpage for the wedding! They also suggest new couple to host their wedding gift list on website, putting the links to the various items on their wedding page, and encouraging friends and family to make a donation to charity FIRST.

3) Tax free solution — Payroll giving, Gifts of Stock and Life insurance

Regular donations are vital to fund NGO work but by donating through payroll giving, the donors can actually make their money go even further. To do this, they can simply choose to give a specific NGO through payroll giving. The employer will deduct donation from their salary each week or month, before tax is taken. Because tax has not been deducted from it, the donation will be worth an extra 20% (in UK, at the standard tax rate of 20 per cent), which they would otherwise have paid in tax. That means that for every £1 the donor gives, the donated NGO will receive an extra 20p. So a donation of £10 per month would actually cost the donor just £8.00!*
(Note: Payroll giving is available to everyone who pays UK income tax and who is employed by a UK organization.)

A stock portfolio is often among the most valuable assets the donor personally own, one that can carry substantial capital gain or appreciation in value. With careful planning, the donor can reduce or even eliminate federal capital gains tax while supporting a specific NGO. Below is an interesting chart from WWF UK that can help us to understand the mechanism clearer.

Gift of Securities

You

1

You give securities.

2

You receive an income tax deduction.

World Wildlife Fund

3

Securities are sold and World Wildlife Fund receives the cash proceeds.

Stock Market

But why donors will to donate stock to NGO?

“Tax saving” is the key reason, especially for the rich!

In most of the countries, stocks are considered to be appreciated for tax purposes if they’re worth more now than when you purchased them. As stock prices increase, so do the taxes the donor owe on the long-term capital gain, which are generally charged at a rate of 15 percent (0 percent if you are in the 10 and 15 percent tax brackets, based on the tax law in UK) through 2012. But when the one donate publicly traded stock that’d owned for more than one year to a qualified charitable organization, which will enjoy various tax benefits. (Note 1)

In another way, donating stock can save quite a number of % taxes. A higher federal tax bracket and any state or local income taxes would further improve the donor’s financial results.

Life insurance is an asset that people may not think of donating to NGO. Similar to giving a stock, this method provides the donor tax benefits as outlined below.

Gift of Life Insurance

You

1

You give a life insurance policy.

2

You receive an income tax deduction.

World Wildlife Fund

3

The policy is kept or cashed in by World Wildlife Fund.

Insurance Company

Note 1: according to the tax law in UK, the donor can enjoy two major tax benefits if they donate publicly traded stock that they’ve owned fore more than one year:

· Be exempt from paying capital gains taxes on any increase in value—taxes who would pay if the donor had otherwise sold the securities.

· Are entitled to a federal income tax deduction based on the current fair market value of the securities, regardless of their original cost.

One response »

  1. Report Review Committee says:

    籌款的精緻分析。可否幫忙想想,這些作法對其他不同類型組織的可參考性以及必要修正為何?

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