Give as good as you get

by Sarah Modlock

19 January 2005

Pride comes before a fall. Doesn't it? Or does this week's deadly sin just get too much bad press? Behaving in a proud manner is certainly unattractive and can be seen as vanity. But it is possible to keep your ego in check and still be proud of your country, your achievements or take pride in your work. Not all proud things come in bad packages. Take Mr Darcy, for instance. Jane Austen's anti-hero only had to stumble out of his garden pond in a wet shirt to have his haughty behaviour instantly forgiven by every woman in Britain. Sigh.

The way you earn your money could be a source of genuine pride but the cash itself should not be the focus of smug satisfaction. Unless you are Scrooge McDuck. And I have lost count of the number of stories in the newspapers involving pensioners who lived in poverty with no electricity but had a biscuit tin containing half a million quid under the bed. Where was their self-pride?

With donations of £200 million and counting to the tsunami fund and millions from the the profits of the Band Aid single, generous Brits should be proud of their charity support. But is this a blip? Figures released before those December donations reveal that 2004 saw the first drop in giving since 1996. The latest British Attitudes Survey found that almost a third of adults give less than £5 and often nothing at all, compared our American cousins who give around 2% of their income. Charitable donations come well down the league of spending priorities in the average household, below eating out, package holidays, newspapers and books, alcohol and tobacco. And it seems that the more we have, the less we give. A report by the Institute for Public Policy Research shows that the richest 20% of UK households give less than 1% of their outgoings to charities, while the poorest 10% give 3% of their expenditure.

With 153,000 registered charities in the UK alone it is easy to find a good cause. There are also lots of easy ways to donate on a one-off or regular basis.

Be a flexible friend

Around half of us make a habit of running up huge credit card bills so why not make the most of shopping splurges and pay using a credit card linked to a charity of your choice? There are more than 40 affiliated charity cards which typically donate a one-off payment to the charity of between £3 and £20 when you use the card for the first time and then continue to donate a percentage or small amount based on how much you spend after that. This is usually somewhere between 0.15% and 1.25% which may seem small but has added up to more than £33 million for charities over the last decade. Watch out for interest rates though – they can often be higher than traditional cards, although they are getting more competitive.

Making your charitable donations tax efficient is basic common sense. The National Giving Campaign says that if every donor gave their contributions tax-effectively, UK charities could claim an estimated additional £900 million from the Inland Revenue each year. Donating money through Gift Aid couldn't be easier. For every pound taxpayers give, the charity receives an extra 28p from that nice Gordon Brown. This turns a £10 Gift Aid donation, into £12.80 for the charity. If you are a UK taxpayer, all you have to do is give the charity a simple Gift Aid declaration which usually involves completing a short form or providing a few basic details for online or telephone donations.

Small investors can help good causes via the Sharegift scheme. It allows you to donate shares directly to your chosen charity and claim tax relief on the value of the shares, as well as any broker's fees and stamp duty. This is a particularly cost-effective means of getting rid of odd shares that would cost more than their value to sell. Many companies which are buying or selling other firms and issuing small numbers of shares worth just a few pounds or pence in total are now including pre-paid Sharegift envelopes when they send out the share certificates, making it as easy as possible to donate.

Make sure your company signs up for the Give As You Earn scheme and your regular donation to your charity can be made from your salary each month before tax is deducted. This means that a £10 a month donation to the charity of your choice is costing £7.80 of your take-home pay if you pay basic-rate tax, while higher-rate taxpayers are giving up just £6 of their salary.

I talked about the importance of writing a will in an earlier column on greed and it is important to mention wills again here as you can make sure a charity benefits from your estate. You don't have to go to extremes and leave everything to the local cat home but you can leave a specific amount of money or particular possessions. Alternatively, you could offer what is left of the value of your estate after all debts and administration expenses have been settled and any specific bequests have been met. Legacies are quite literally life savers with many charities such as Cancer Research UK getting half their funds from wills. Any money you leave to registered charities will reduce the size of your overall estate and in some cases this could help reduce the liability to inheritance tax which is payable at 40% on any amount over £263,000.

However you donate cash and whoever you donate it to, giving is a personal thing. But don't be afraid to be proud of what your money can do for others.