Become a social investor
Jonny Cline considers 21st century strategies for effective charitable giving
ALTHOUGH THE UK Jewish charity scene is fairly traditional and institutional, we are seeing both charities and donors adopting new technologies and trends. Today’s donors expect to have greater access to information, so charities are sending out regular emails and posting their annual accounts online. They are giving donors more control by enabling them to target their donations to specific projects. Donors are behaving more like investors, who are looking for a good return on their investment. Rather than seeking profit, they are aiming to improve society through the portfolio of charities they support and they may drop a cause if they are unhappy with the social return on their investment. Donors are also advocating for causes that they support, using social media to share information and crowdfunding sites such as Indiegogo.com to invite friends to support the same projects.
At UK Toremet we have identified three models of giving — impulsive, in response to a personal or media appeal; tax-driven and strategic. Impulsive donations are not always tax-efficient for the donor. The Gift Aid not claimed on small donations makes up the vast majority of the £0.75 billion of tax rebates on charitable donations that go unclaimed
each year. Some tax-aware donors realise at the end of the year that, in order to maximise their tax benefits, they must rush to make donation decisions, often without time for careful consideration. A preferable alternative is strategic giving — using a charity account to allocate money tax-efficiently during the year to the causes that you and your family have investigated and chosen to support. You can also carry over your balance from one year to the next in order to support the causes that really matter to you.
Lawyers used to advise only sixfigure donors to manage their
philanthropy, because the costs of incorporation and reporting are restrictively high. Today’s charity accounts are free to set up and can be managed online. Donors of all sizes and ages can open a charity account with either a lump sum or a monthly direct debit, asking employers to match contributions from your pre-tax salary through the GiveAs-You-Earn scheme. With Gift Aid, you can choose how to allocate the extra 25 per cent added to your account by the taxman — that’s a better rate of return than any other account you can put your money into!
Select a charity account that is not tied to one charity and does not limit the causes you can support, geographically or ideologically. You should be able to use it to make tax-efficient donations to overseas charities, including Israel, as long as the activity you are supporting would be deemed charitable by UK law. It should allow you to make impulsive donations without losing the tax benefits, to give tax-efficiently without the endof-year rush and to allocate your money carefully, setting criteria and checking for the maximum social return on your investment, while using the internet to manage your portfolio securely online. Today’s savvy donors should be savvy social investors, taking control of the donation process and making their money work harder for the causes in which they believe. Jonny Cline is founder and CEO of UK Toremet and organiser of the Amuta21C philanthropy conference in Israel
Jonny Cline chairs the Amuta21 Conference