She's On The Money - Charity & Philanthropic Budgeting

Episode Date: April 19, 2022

All of us have donated money in one way or another. The ways to support charities and philanthropic organisations have evolved to integrate our moral compass with our spending habits or lifestyle focus. But how do we decipher where our money should go, and how to budget for it? In this episode we go though on the ins and outs, some considerations and context of charity and philanthropic budgeting.The advice shared on She’s on The Money is general in nature and does not consider your individual circumstances. She’s on The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Infocus Securities Australia Proprietary Limited ABN 47 097 797 049 AFSL - AFSL 236523.See omnystudio.com/listener for privacy information.

Just before we get started, we'd like to acknowledge and pay respect to Australia's Aboriginal and Torres Strait Islander peoples. They're the traditional custodians of the lands, the waterways and the skies all across Australia. We thank you for sharing and for caring for the land on which we are able to learn. We pay respects to elders past and present and we share our friendship and our kindness. She's on the money. She's on the money. Hello and welcome to She's on the Money, the podcast for millennials who want financial freedom. The last few years have been chaotic, to say the least. From bushfires and floods to a pandemic and a couple of wars, the world has been through a lot in recent times. And if you're

anything like us, you've probably wanted to help out struggling communities by donating to a good cause. But how do we decipher where our money should go and how can we budget for it? My name is Georgia King and joining me to answer these questions and more is the woman whose love language is giving, Victoria Devine. You have lots of feelings about this one. My love language is giving. Tell me I'm wrong. Yeah, you're not wrong. It's also words of affirmation. So if you could have added love language is giving, also she's really nice, would have actually been much better.

But I have a lot of feelings on this and come what may, I feel like this could be an episode that divides a lot of us. Not in a bad way, but I think that a lot of people have colourful opinions on giving and philanthropy and whether you should do it or not, or whether you should care about yourself, but I feel like there's a lot to be learned when you give. Like I genuinely am a believer that the more you give, the more you get back. And I would hope that, you know, even with She's On The Money, you guys are seeing that the more that we give to you, the more that comes back our way in love, obviously in being able to run a business. But G, we are not here today to convince you, but today I guess we're here to give you some

context and unpack some points around charity and philanthropy and give you the information that you need to make a conscious and educated decision around it. Today, we've got some hot stats, some history and some context around what giving in Australia means and the difference between charity and philanthropy and how does it work and what does it mean and ways that you can give back. We're going to talk about the ick factor, G King. The ick factor.

The ick factor. We're going to talk about tax and some tips for working it into your budget and much, much more. Obviously, I'm very passionate about this area. Can't wait. I can't believe it's taken us like two and a half years to talk about this. I mean, I feel like it's been intertwined in the conversations that we've had historically. True.

Like it's not a surprise that we're talking about it officially on a podcast, but I feel like giving has always been a part of our budgets and always been a part of what She's on the Money does. Maybe not so visibly though. So now is the time to, you know, really talk about what it means to us. Let's begin, V, by defining the difference between charity and philanthropy, because I kind of thought they were the same thing. People might think that.

What's the difference? It's not all about where the money is going necessarily. The simple explanation here is that charity aims to relieve the pain of a particular social problem, whereas philanthropy attempts to address the root cause of that problem. So that's kind of cool. Now you're more educated. We can be done with the episode. There's a little more to it than that, isn't there?

There's a little bit more to it than that. You are correct. So charity would meet the immediate needs of somebody. So like providing them with food and water and shelter and medical care and philanthropy actually looks more at identifying the root causes of systemic issues and making the world a better place by tackling societal problems at their roots. And there's obviously a lot more privilege in being able to do philanthropy than just charity, obviously, given how big the impact is. So charity is probably more what we would be able to contribute to on a smaller scale. Yeah, and philanthropy is often a bit bigger. It can be made up of lots and lots of people donating to that particular philanthropic cause. I think today we're going to talk a little bit

more about charity and what that means and how it works for us. A couple of stats for you there, Lord. All right. She's coming early. In December 2020, there were around 58,600 registered charities in Australia. That's pretty heaps. That's heaps, isn't it? That doesn't mean that they're super big and really well known, though like there aren't 58 000 massive charities they could be quite small right okay so the charities aid foundation ranks australia as the eighth highest of more than 140 countries over 10 years because we're nice humans of the world giving index with three in five australians

making a financial donation to a charity see nice humans as expected the pandemic put financial stress on the sector with total giving falling around 7.1 percent in 2020 and a further 12 in 2021. That's interesting. Good stats. Good stats, Gal. I feel like that gives us a bit of context. And then also furthering that, my stat that I'm going to share is in 2017 slash 2018, 4.4 million individual taxpayers claimed a total of $3.75 billion as tax deductible donations compared with 4.52 million claiming $3.84 billion the year before. So, G, this is consistent with the trends that we've seen over the last 10 years that actually show, sadly, a smaller proportion of Australians are giving, but those who are giving are giving more. Okay. Interesting, right?

Yeah, kind of. I wonder why. I wonder why as well, given how prevalent charity is now. Like we're on social media, people are sharing their causes left, right and centre. Like I don't think that there's been a week I've been on social media that I haven't seen a GoFundMe pop up. Like I just feel like, charity is massive, so the fact that less people are doing it, what does that mean? Yeah, I don't know. Maybe there's just, like, too much decisions. Analysis paralysis, maybe? Yeah, yeah, that's what I was trying to say. Trust? I don't know. We're going to break it down in a hot second, though.

We are. Spoiler! Faye, outside of the world of benefit, galas, hospital wing donations, and other, shall we say, like, champagne and big name philanthropy, why do the rest of us tend to give? Just because we're little legends? I think it's because we're little legends. I think that we know that supporting our community is really important, or I would hope that we know that. But there was a giving study done

by Giving Australia in 2016, and they reported the top three reasons why people were giving. And these top three reasons were someone said, it's a really good cause slash charity, and 39% of people said that. The second reason was they had respect for the work it does, and that was 21%. And the third one was that they had sympathy for the people that it helps. And that came in at 14%, which is really exciting. But also I feel like it's nice to know that they have clarity on why they are giving, but I want to see that further broken down. Like I don't want people to be like, oh, it's a good idea. Like I would really like them to give, I guess, more detailed responses because I think the more we talk about it and the more reasons why you do

something, Georgia, the more likely you are to influence other people. And I guess I'm in a bit of a biased position here, which I probably should call out really early is that I am involved in a charity. For those of you who don't know, I am the treasurer, of course, I ended up with the manager of TLC for Kids, which is an absolutely gorgeous children's charity based here in Australia. And I have been doing that for the last three years and I am obsessed with them. I love it. And I can see the impact that donating to charity has, like dollar for dollar, like we do these measurements that show us exactly where every dollar is going and how much of every dollar donated actually makes it to the kids as opposed to, you know, admin costs and, you know, rent and

stuff like that, which we have to pay as a charity. Like we exist as a business, but we are obviously a not-for-profit and all of that goes back to the charity and back to the people it impacts. That's really cool that you get to see that breakdown. It is so special. Yeah. A criticism of donating to charity is that like none of it will actually get to the person that needs it. It's all just admin costs, as you mentioned. But that's up to you as the individual to do the research, right? So I'm very critical in this space because I'm so close to it, right? But every charity in Australia has to publish their annual report. It has to be public because you are a registered charity in Australia. You obviously get a number of tax benefits for doing

that and it's a good thing. But if you are genuinely interested in donating to a particular cause, maybe do a deep dive into the charity and understand what they do and how they do it because something that really frustrates me and this, you know, I understand that a CEO deserves to get paid at a CEO level, but sometimes I think in charity, they're making it a bit of a joke. Like I look at the way TLC for kids is run and I'm just so proud to work for a company that is so transparent and cares so much more about the kids than they do themselves. It's an argument sometimes to, you know, make sure that they're paying themselves properly because they care so much more about, you know, the charity. But then you look at similar charities or charities that

are, you know, benefiting similar demographics and you see that their CEO's on a million dollars a year and you're like, are they doing it for the right reasons? It shouldn't take a million dollars to have somebody running that business or running that charity. So I think we really need to break it down. If you're going to donate to charity, great. Donate to causes that make sense to you. But if you're worried about it, make sure that you're doing the research. And because charity in Australia is arguably so transparent, you should be able to find the information so that you can go, well, how much of it is going to kids? You know, how many things were sent out? Like, how can we measure that? What does that mean? And, you know, who's on their board? Do I

like them? Do I not like them? Am I supporting this? Yeah, I think there's a lot to it that a lot of us don't think about because you just go, it's chucking $2 in the bucket when they come around, right? And it's so much more than that to me. Interesting. On a more of a group level, V, workplace giving is a thing, right? It's a massive thing. And it's just another way that we give, right? Like workplace giving is essentially a joint relationship between the employers, employees, and charities that actually enables individuals to donate a proportion of their pre-tax salary, which we love. And some employers, and I love this, G, they actually match staff donations because the ATO in 2019 released some stats that said 201,237 Australians

donated through workplace giving in 2019. That's pretty cool. The average donation was actually $215. Chunky boy. That's nice. Very decent. More than $66 million was donated through workplace giving platforms. That did include the employer match-up program, though. Just be aware. Right. And those that were aged, I love this one, those that were under 34, gee, they're the biggest givers. Legends. What legends? We are both under 34 for those listening along at home. Yeah, yeah. Can I ask why workplaces offer this? Are there tax benefits to them? Is it good PR or are they just good blokes? Look, there can be tax benefits to donating to charity, absolutely. And you know what? There are some people who definitely donate to charity so that they don't

have to pay to the tax office. I don't think that's the worst thing in the world. I would much prefer people who need it to get it, but I just would want to be doing it for the right reasons. I think it's really, really important to understand that. Yes, you can claim it on your tax actually and get tax back for it, but I'm pretty sure your donation has to be more than $2 to be eligible. Okay. Seems fair. And private ancillary funds, what are they? A PAF. A P-A-F. In the philanthropic world, we refer to them as PAFs. And a PAF actually enables an individual or a family or an organization to put money aside in trust to support charities over the long term. I'm obsessed with this idea. Literally, it is all I talk about. Ask the TLC for Kids board. I'm like,

PAF, very good idea. One day we'll be big enough to have one and it will be really incredible. And the reason I'm so obsessed with it is because, gee, all you hear me talk about is investing and the power of investing. And what happens when you have a path is that you can actually put money into this and have it invested and then the dividends forever to go to a charity. So you can have a long lasting impact instead of just donating $2 here and there. Obviously, this is very, I don't want to say elitist, but you would be in a very privileged position to be able to establish a path. They are not cheap because whenever you establish them, they are their own entities. They have their own tax returns. They have a lot of responsibilities that need to

be met. But it is very cool to think that there are a lot of really wealthy families in Australia who have established these paths so that they can benefit the community and charity and the world basically forever. And I think that's really cool. That is really, I've never heard of a path. Never heard of a path. Now you're a path genius. Exactly right. We will move away from paths. On the other side of the break, we will be talking about other ways of giving back. So don't go anywhere, guys. All right, G, you told us that you were going to tell us other ways we can give back. What are they? Well, not all of us can afford to contribute to causes financially. A hundred percent. So giving our time, I mean, we saw it very recently up in northern New South

Wales and Queensland, the horrible floods. People were popping on their gumboots, getting out, there and shoveling that mud out of those destroyed homes. It was so heartening to see, also so horrible, of course, thoughts with everyone affected up there. But there are so many meaningful ways that we can affect change without actually putting any money on the line, right? Absolutely, there are. And I guess that's a really good place to point out that you're really privileged if you can give money to charity. Like how special is it to be in a financial position that you have enough money for you, George, but you also have enough money to share for somebody else. When you give, you often give with no expectation of return and that's

what's happening with charity. You're not giving to them in the hope that you get a solid investment return. You're giving because it is arguably one of the right things to do. And it's something that a lot of us feel like we should be doing, but we just don't have the budget for it. Like you might be a young couple and you're desperately saving for your first home and that's okay if it's not part of your budget. I would love to think that over time it could be built in and from little things, big things grow. It's been a while since I said that on the pod. We're bringing it back. We're bringing it back, G. But it's one of those things that if it's in line with your budget, that's okay. If it's not, also okay. But it's not just about money. It can sometimes be about

the thought. It can be about consistently being a kind person and helping others where you can and where is feasible. But it could also be about volunteering some time. It could be about mentoring somebody. Like I am so wildly passionate about this. I'm also really passionate about talking about the difference between volunteering and, you know, giving hands on support versus donating money. And I feel like sometimes people really want to just get their hands dirty and they want to get into the nitty gritty of it and go, oh my gosh, gee, like we spent, you know, a whole day out helping pack bags for the homeless or, you know, we went down to this soup kitchen or we did this or we did that. And you go, that is really great. And for a young person who doesn't

have a lot of money, that is such a fantastic and really beautiful way to give back. Because we've got to be honest with you, sometimes that can be really confronting. It's not easy to change your circumstance and go and, you know, be a part of that. And I adore it. I think it's really important. But on the flip side, for people who are much wealthier, you know, what if you're a high-flying CEO. Is your time best used down at the soup kitchen serving? Or is it better for you to work a few more overtime hours so you can donate some more money to charity so that you can fund the soup kitchen for the next few weeks? Or do you know what I mean? Like, I feel like we need to have this conversation around trade-off and what that means because too often people think

money's the only way to donate because that's what the wealthy do. Whereas we do need hands on deck. We do need people, you know, turning up in gumboots with a shovel, but sometimes we also need the financial support. So all of that is well and good. And we're talking about this time versus value trade-off here, Jay. But at the end of the day, I personally, and I know a lot of other people, get a lot out of volunteering and doing the nitty gritty and getting your hands dirty. And I feel like it keeps us connected with our community and it genuinely makes you feel like you're contributing to your community and supporting them. And it's so nice connecting with people when you are there. It's not necessarily about just throwing money at the

problem and hoping it's not a thing. And I mean, if that's what you want to do, you're more than welcome to. But there is this balance between, okay, giving money is really important, but also sometimes it's equally important to learn, to get in there and to be a part of that community and see what they can do and how they can do it. 100%. And like connecting with people. I also found I I used to volunteer at this legendary place called Orange Sky Laundry. Oh, yeah, I remember. Yeah, so we'd go down every Monday night. We had these vans.

One had showers in it and the other had washing machines. And we would wash and dry the clothes of people doing it tough on the streets of Melbourne or in low-income housing situations. And it was just the best. Like it was so – like the majority of those people just wanted to have a big old yarn, someone that – like a friendly face, check in with every Monday, and it was the best. And you do.

You get so much out of it. I'm sure I got much more out of it than they did. I know, and you kind of feel a little bit guilty. I've done that before as well, and I just feel like I end up walking away feeling so nourished, and I've heard these beautiful stories, and I've got to be a part of their community. And usually, if you are dealing with that demographic, they're so welcoming. They just want to have a chat with you.

Like, they just want to sit down and have a cup of tea. Oh my gosh, like, I can afford the time to do that. Exactly. I absolutely can do that. Yeah, 100%. All right, V, let's move on a little bit here. what sorts of things would you say are good to take into consideration in this world of charity and philanthropy outside of the fact that there are always going to be some causes that we connect

with more than others? Oh, absolutely. And I do think it's genuinely important to be connecting with causes that you feel passionate about. It's not about saying this is the charity of choice, you need to go and support this particular one because you're more likely to have sustainable change and sustainable donations if you really feel connected with that and that's to me really important to also donate in line with your values but that's one of the things that can get caught up in the charity and philanthropic space right like your values might not be being met and gee I'm sure you've heard of it before as well but charities exist where they do really good work and they support really great causes but then they're not supporters of our friends in the

LGBTQIA plus community or they're not doing the right thing by our Indigenous friends or they're not doing the right thing when it comes to having really exorbitant organisational or CEO costs. And I touched on all of this stuff before, but we really need to make sure that they're not in a way greenwashing us and telling us they do this really great thing and then it's not actually translating. And a good way of understanding that is kind of going, all right, well, if I donated a dollar, how much of that dollar would actually go to the cause? And thinking about charity in that way, for me, feels like it's a bit more impactful. It's a bit better to think of it that way because you go, okay, well, as much of that dollar is going to charity as possible. Whereas there are

some charities where 20% of it ends up with the cause and the rest of the 80 years about their fancy office and their fancy CEO and supporting strategy days that they might not need. And I just, I don't want to be supporting that. And I'm sure you guys don't. And the only way you're going to learn about it is if I call it out. Yeah. A hundred percent. And as you said before, you can kind of find out how legitimate a company is by looking at their annual reports or charity rather. Yeah. And like, and charity at the moment, I think is really important to be having a conversation about because George, you mentioned that we've been through so much. We're currently going through some world wars. We've gone through bushfires at the start of COVID. Then COVID

happened. Then we're having the floods. Like we have been through it all. And that has meant that people are giving to different charities, which are very, very viable. It's very, very important to be giving to those who need it. Like there is no way I would say don't donate to the flood relief because we need to do something else. In fact, she's on the money donated to the flood relief because that's really important to us. But we also need to remember that there are lots of charities throughout that time didn't survive because they didn't have the donations coming in the door that they needed and I remember having these conversations you know even in TLC how are we going to make sure that we as a charity survive this pandemic because the priority isn't necessarily

on donating to a children's charity right now I think it's important obviously but more often than not charity that is front of mind usually gets serviced first or the charities that have the really really big names and you know I'm not going to call them out on here but you're very likely to give to them because they have the exposure. They're in all the supermarkets, you can put the money in the tin or, you know, they have these big call centres that call up and say, hey, do you want to make a donation? And I think it's important to realise that there are a lot of charities that just don't have the funds to do that, that still need supporting, especially after the pandemic we've gone through. Like it's crazy, but I think we need to remember that there

are a lot of small charities out there doing really good things that need a lot more support. And that's exactly right, V. Like there are 58,600 charities in Australia. Like not all of them are going, well, it's just impossible. I look at a lot of the charities. I'm like, okay, cool. Like, is this actually about the kids? Is it actually about the cause or is it about you having a big bougie charity gala? Because that costs a lot to host. And obviously the return on investment there is significant, but like the privilege of being able to get a bunch of multi-millionaires into a room to raise a million dollars for charity is gorgeous, but that is not a privilege that all charities have. So I think being able to find a charity

that aligns to your values and what you want to achieve while also funding someone that maybe isn't getting the funding that is so visible. Yeah. This kind of brings me to my next question about GoFundMe campaigns because these can kind of operate on a more personal level. People can put anything up there and ask for your money. Remember, again, start of the pandemic, we were all going through the bushfires in certain parts of Australia and Celeste Barber, the absolute legend, raised, was it like $50 million? It was $50 million. Insane. But then later on, because of, I don't even know what the details were in that, but the money that she raised wasn't able to be distributed how she wanted it to be.

Yeah, it was heartbreaking. So what happened was she had raised all of this money, but when she signed up to the GoFundMe in the terms and conditions, obviously you have to nominate a charity. And if you're raising money for that charity, they like their terms and conditions are all of that money goes to the nominated charity. Because if you have donated to that, you weren't donating for anybody else. You were donating for that specific cause. So it has to go to that cause. And she obviously established it not knowing she was going to raise $50 million. And unfortunately, all of it had to go to one charity instead of being distributed between a number of different charities and locations. So I think it ended

up only benefiting one state as opposed to a number of states, which is upsetting, but that's the nature of GoFundMe, right? Yeah. Okay. So that organization is obviously putting the money to good use. It's not anything to do with them. Like they didn't choose that. They wanted to share it. but then charities also have particular mandates to be a charity. So they can only spend on certain things. And unfortunately in the mandates, like they weren't able to distribute it to other charities because it's against what their boards say. It's against everything that they were established for, because obviously that charity does this one particular thing and they've got to do that one particular thing. The money can't be spent on anything else. So they're good people.

They're doing good things. It's just a bit of a fickle platform. And I'm a bit, I guess, triggered, especially after the pandemic and seeing you know on a current affair that people were raising money for themselves but they weren't their authentic selves like it was really upsetting to think that you can have something on your Facebook feed or your Instagram feed pop up and you go wow that's such a special cause really connect with Georgia she really needs that and you donate and then later find out that maybe they weren't that truthful like it just gives me the ick like that makes me feel honestly sick that people are donating and not being transparent about that. It's also enormous. I'm just looking at the numbers now. There are 70 billion donors

donating $9 billion as of 2021. Yep. And 10,000 new campaigns are started every day. Every day. With $4 million raised every day. So it's super effective. Super effective. But maybe it is pretty open to scammers, being able to exploit it. Yeah, but also super accessible to start a cause. Because you can raise money for anything. And I've donated to different things over time on GoFundMe that I want to support, but they might not necessarily be official charities. They might not necessarily be causes that are registered, but I want to support it and I'm happy with the decisions I've made. But I think GoFundMe is more about the visibility and micro-opportunity created to make tangible change. And that's really great,

but I just hate that there are people out there that exploit platforms like that like they shouldn't be allowed to do that yeah 100% they should be ramifications if you do that okay well I feel like the moral of the story today is that like intention is the most important thing if you're donating your time or your money it's the intention that matters right it's like less about what you can afford on that though V have you ever experienced an ick after when I say go fund me no not when I've donated but when I've seen GoFundMes where I feel like they're not super transparent and then I see them blowing up and I'm like why are we doing this like this is not a good thing to be putting your money towards but like each to their own it's not my decision what

you donate to and I mean that's probably me being a little bit unnecessarily judgmental all right before we head off for the day V let's chat through the tax implications of all of this what do we need to be mindful of obviously this is cheese on the money we do need to talk about tax. So if you are going to donate to a charity, please make sure that they are a DGR and that is a deductible gift recipient, which means that you are able to claim it on tax. It's not necessarily about you being able to claim that because like you donated it with goodwill. You're not trying to get a benefit out of it, but it means they're more legitimate. So G, it also has to be a legitimate gift or donation. You can't just fudge it and put it on your tax return and hope it'll

stick. It has to be legitimate. And that is you voluntarily transferring money or a property without receiving or expecting to receive any type of material benefit in return. Because obviously that would be a little bit dodgy. It must be as well, George, money or property. It can't be anything else. Like it can be financial assets. You could donate shares. You could donate cryptocurrency, but it has to be an actual asset and it needs to comply with relevant gift conditions. So for some DGRs that do have income tax laws, there are added conditions that affect the type of deductible gifts that they can receive. So important to just be aware of that. Just make sure that they're legitimate. If you really are worried, look into them,

see what they're up to and, you know, have a think about what means the most to you. Yeah. Oh, I think that's the perfect place to leave it there, V. Perfection. Do you want to wrap it though? Yeah, yeah. Let's wrap it before we head off. Remember, guys, that the advice shared on She's On The Money is general in nature and does not consider your individual circumstances. She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or a financial decision. And we promise Victoria Devine is an authorised representative

of In Focus Securities Australia, Proprietary Limited, ABN 47097797049, AFSL 236523. and as always we would love it if you wanted to join our facebook group where our community shares money tips and tricks every single date free of judgment search she's on the money on facebook and join us if facebook's not your thing you can find us on instagram we're at she's on the money aus and as always please don't forget to rate subscribe or review on your relevant platforms see you soon guys Thanks for watching!