Looking to support a cause that is close to your heart?
Starting a new charity might not be the answer.
It is great that we live in a country where so many people want to make a difference to those that are less fortunate. But, considering our relatively small population, we must be mindful that there is only so much money and resources to go around. We should aim to maximise all available charity dollars.
Rather than working together to support common causes, many Australians choose to start a new charity, foundation or cause. While this is a noble proposition, in reality it may be detracting from the overall effectiveness of available charity funding. A large number of not for profits and charities struggle every day, meaning they are only able to provide limited support.
As at June 2015, the Australian Charities and Not-for-profits Commission (ACNC) lists almost 54,000 registered charities in Australia. In addition, there are countless sporting and recreation associations and clubs that exist for the betterment of various community causes.
There are many charities that exist purely to fundraise in support of smaller initiatives under a larger umbrella cause. This can be a great way for people to support an initiative without necessarily having to go through the headaches associated with establishing and maintaining a charity or not for profit.
Why support existing charities that align to your cause in lieu of starting your own?
1. There is a lot of competition for the public's discretionary dollar. People are faced with rising costs and a volatile economy everyday. When they do choose to donate there are so many choices that the likelihood of your organisation receiving a donation reduces.
2. Because you are dealing with other people’s money, there are a lot of associated regulation and reporting requirements. This can be an administration nightmare and a significant burden, especially if you lack accounting, legal and clerical expertise.
3. Charities have to adhere to a costly financial audit process each year by an ASIC registered auditor in order to meet compliance requirements.
4. Most people that want to donate to a charity at some point want a tax deduction. Not all charities meet the requirements for ‘Deductible Gift Recipient’ or DGR, in fact the majority likely don’t. There are quite complex rules in place to meet requirements but without DGR status, a charity’s task becomes that bit harder.
5. There is significant risk in running a charity or not for profit. Directors are required, and with that comes duties and obligations often with no financial reward.
6. Maintaining a charity is not easy. Once established, the support provided creates a reliance which takes a lot of time, effort and money to continually support. This is a significant burden and one often overlooked by eagerness and a desire to help.
There are many ways to give back, but starting a charity or not for profit every time someone has a cause, person or group they wish to support is not the answer. Connecting and supporting existing charities and NFP’s that align to your overall cause is a much smarter approach that will ensure the support is enduring and sustainable.