Giving to Charity increases Happiness and can be Easy 

Liz Koh - Money Matters -
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Few would dispute that giving is good. It's not just the recipients of giving who benefit. Research shows that giving to another person increases the donor's level of happiness. 

New Zealanders are amongst the most generous people in the world, ranking fifth in the World Giving Index published by the Charity Aid Foundation last year. The index is constructed by surveying people on three aspects of giving; giving money, volunteering time and helping strangers. Interestingly, it shows that some of the most giving countries in the world are not the wealthiest, with Myanmar ranking first equal alongside the United States, reflecting its strong Buddhist community. In fact, only five of the top 20 countries in the World Giving Index are in the so-called G20 – a group representing the world's largest economies.

Giving is not closely linked to wealth or prosperity. It is a behaviour that is influenced by religious beliefs, age, gender, natural disasters and the presence of conflict. In developed countries, women and older people lead the way with charitable giving. The key to increasing the level of giving is to make it easy.

Technology is doing just that with the likes of crowd funding websites such as Give a Little and Pledge Me radically changing the way in which people connect with good causes.

Donation of time is also going online with the likes of the recently launched Seek Volunteer which matches volunteers with organisations needing assistance.

One of the biggest issues in the charitable sector is what is referred to as 'funding burden'; the time and cost spend by charities on applying for money and reporting to funders on how it has been spent and the outcomes achieved. Much of this burden disappears when charities can connect directly to the public online.

Payroll giving is another way to make donations easily and cost effectively. Donations are deducted directly from an employee's salary or wages and paid to their nominated registered charity by the employer, in a similar way to the deduction and payment of PAYE. The advantage for the employee is that the tax benefit from the donation is received immediately rather than at the end of the tax year. Unfortunately, payroll giving has not really taken off because employers dislike the additional administration burden it imposes on them, even though it is relatively minor. Offering payroll giving is optional for employers and it would be good to see employees encouraging their employers to make it available.

Giving can be done at the time of death through a bequest or the establishment of a charitable trust. A trust can provide ongoing support through distributions of investment returns while keeping the trust capital intact. However, New Zealand is overrun with charitable trusts and they are expensive to set up and maintain. A solution to this problem is the community foundation, which provides a vehicle for collectively managing funds and distributions. Funds are pooled and invested in perpetuity, however donors can specify who they wish the distributions to go to.

The ease and simplicity of the community foundation concept has seen these charitable organisations grow rapidly over the last twenty years. Most areas of New Zealand now have their own community foundation and the Tindall Foundation has been a catalyst and supporter of their development. Community foundations have made it possible for people with modest wealth to leave a lasting legacy. In fact, there is no reason why every New Zealander cannot leave a bequest to their community foundation.

Bill Holland, former chairman of Tauranga's Acorn Foundation, who recently received a Tindall Foundation award for his outstanding contribution to his local community, is an advocate of leaving 10 per cent of your estate to your local community foundation. Even if you plan to spend your kids' inheritance, you most likely will still own a house when you die. Leaving 10 per cent is a way of giving back to the community in which you have raised your family so that the facilities and services you enjoyed from charitable organisations will be available for future generations.

It's pretty hard to argue against that.

Liz Koh is an Authorised Financial Adviser and author of Your Money Personality; Unlock the Secret to a Rich and Happy Life, Awa Press, 2008. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free of charge by calling 0800 273 847.

Originally found on Stuff.

Giving to Charity increases Happiness



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