Liam Croke: How much should you donate to charity

“If you haven’t got any charity in your heart, you have the worst kind of heart trouble”

“If you haven’t got any charity in your heart, you have the worst kind of heart trouble”

- Bob Hope

I am celebrating two anniversaries next month: on July 29 I will be 20 years married to my wife Roseann and in the same month, again 20 years ago, we set up a standing order that continues to this day where each month money is debited from our account and goes to a charity we chose way back then, World Vision of Ireland.

I can’t remember why we chose World Vision and I think it was Roseann who decided. Of course, there are so many worthy causes deserving of money, we just thought at the time that sponsoring a child in need of help and support was the one for us. Twenty years on we know we made the right decision.

The money we currently send each month is going to help a girl called Christina who lives in Tanzania and Christina is the fourth child we have been involved with in the past 20 years.

As each child finishes a programme or reaches a certain age, you are assigned a new child and told this is who your money is going to help.

In 1995 we weren’t earning that much and had just taken on a new mortgage. Money was tight, so the amount we started off contributing wasn’t a great deal but it was all we could afford.

There is nothing wrong with that; sometimes people might think that the amount they can give is so small it’s not worth it, but it can and really does make a difference.

So, how much should you set aside from your monthly budget that can go towards charitable causes?

This is a hard one to figure out because you don’t want to become a charity case yourself as a result of giving too much money away and it doesn’t make sense to give money when you are deep in debt and finding it difficult to make ends meet each month.

But if you are not in debt or worked your way out of it then the chances are good that you can give a little bit of your salary each month and trying to find a monetary value you are comfortable with, is important.

According to the last report (2into3) issued back in 2012, Irish people donated a total of €800 million to charities in 2012 which means we contribute €185 per head of population which is less than what the English give (€289) and significantly less than what the Americans do (€781). But these levels from an Irish perspective are very high nonetheless.

In the United States the amount people aspire to contribute is between 3% and 10% of their taxable income but this is often influenced by their religious affiliation.

My crude rule of thumb for the amount you should set aside each month for charitable donations is the amount left over in your account after you have paid your bills, covered other expenses without getting into debt to do so, and you have put savings aside for your children’s education and your retirement.

Of course you can give in other ways that are non-monetary, like volunteering. They don’t have to be charities per se; you can use your time to help elderly neighbours; help at local schools; deliver food to the hungry and homeless etc. These are all powerful ways you can contribute to the greater good. Of course some people may not have the time to volunteer and donating money is the only practical and manageable way they can give to others.

If this applies to you, it is important to know that the amount you give may qualify for tax relief and the amount received by your chosen charity is greater than the amount that left your account.

From January 1 2012, all donations made by individuals to qualifying charities qualify for tax relief at a new blended rate of 31%. The minimum annual amount you need to contribute for tax relief is set at €250.

But, if you did contribute €250 over the course of the year, the tax relief that applies to this amount is actually greater than the blended rate of 31% because the donations you make come out of your after-tax income, so Revenue “gross up” to take account of you paying a notional income tax rate of 31%.

For example, donating €250 will be grossed up at 31% as follows:  €250*100/69 = €362.32 so the tax refund will be €362.32-€250 = €112.32 meaning that your charity actually get, €362.32. So the tax relief works out as 44.93% of the net donation.

There is a list of the authorised charities listed on the Revenue Commissioners website that are eligible for tax relief on donations and the link to find out who these are is as follows: www.revenue.ie/en/business/authorised-charities-resident.

In order for the charity to reclaim this tax relief, you will need to complete a CHY3 form and on this form you will need to provide your name, address and your PPS number.

It’s a very easy form to complete and won’t take you long to do but it is very important to the charity you are donating to.

By signing this form the charity can apply to the Revenue for tax relief on your donations over €250 in any year for a five year period and it doesn’t commit you to pay money every year. It simply enables the charity to reclaim tax relief on your donations if you donate €250+ in any of the next five years.

If you have previously made donations to a registered charity but have not returned any form to them to submit a claim for tax relief then do so, because they can go back four years to get this tax relief back and these additional monies could be very important and valuable for your nominated charity.