September 15 2015
Will your charitable donations reach the right people?
Many people consider leaving money to charity by their Will. This can be their whole estate, or just a specific amount or part of an estate. Many family trust deeds include, in the list of potential beneficiaries, either specific charities or charities generally. Many of us also are in the habit of making donations to charities each year. There are also websites where particular causes or people in need are highlighted.
Before you give money to a worthy cause you want to be sure that the money will help the right people. A recent example was where money was donated for a particular child but it was claimed it had been used mainly by the child’s father for his own benefit. Is there anyone who is checking up on this sort of thing? Of course the parents of a child who is particularly ill are likely to have incurred major expenses and it may be fair enough that they receive some of the money so that they can support the child. It’s difficult to be sure in individual cases without knowing a lot more.
Before deciding to make a donation or to include a charity in your Will, it’s a good idea to make some enquiries. One way of checking where your money is likely to go is to look at the list of registered charities. Visit https://Charities.govt.nz to read the Charities Services’ list of registered charities,
Charities don’t have to register but most of the main charities are registered. ¹ Registered charities have to file a return each year so you can have some reassurance that the money has been spent in the way that was intended. It’s worth checking whether a charity is registered and has published an annual return on the Services’ website. You can then have some assurance that the money has been used properly.
By contrast, there are few controls over pop-up sites and campaigns to help individual cases of need. No doubt most are well intentioned but you have no way of knowing for sure.
When charities go bad
Despite the best intentions of the founders of a charity, there’s always the risk that the wrong people might get to be trustees later on. In the case of a small non-profit charity which is not registered, there’s less chance that this will come to light. For registered charities there is a greater chance that someone will eventually spot the problems. If someone has a complaint about misuse of charitable funds the Attorney-General has the ability to intervene. The Crown Law Office can bring a case on behalf of the Attorney-General against a defaulting trustee of a charity.
Philanthropic trust funds
Several of the statutory trustee companies² have long-term charitable trust funds. These are invested and the interest and other income each year is paid out for various charitable purposes. These purposes are usually set out in the Will or trust deed which established the charitable trust. There are a number of these trusts and some of them receive requests each year for community activities which they are able to support.
At least one trustee company has set up an umbrella arrangement so that individual donors can set up a medium-size trust within the umbrella arrangement. This can help keep down costs of ongoing investment and administration.
Most people, however, prefer to establish their own stand-alone trust with their own name on it. Such trusts can last for decades or can be set up as a perpetual trust (ie: one that can potentially last forever). Creating such a trust in your Will for the benefit of further generations may be a nice way for you to be remembered, as well as to support a cause close to your heart.
May be it’s time for you to update your Will?
¹ Registered charities get an exemption from income tax.
² Public Trust, Trustees Executors and Perpetual Guardian.