Jeremy Tauri: Donations rules deserve change

There is tax incentive to donate.

A lot of Kiwis are posting passionately on social media about the problems facing people in New Zealand and overseas.

The subjects include child poverty, recovery from natural disasters, and unemployment.

But though we seem to be saying all the right things, are we putting our money where our mouths are?

Throughout the world donations from individuals and companies support people who are suffering because of poverty, drought, famine and disaster and that money can make a big difference to communities.

The government's quarterly volunteering and donating indicators show that between September 2010 and September 2014, more New Zealanders started donating to charity but donate less on an individual basis now than they did in 2010.

In September 2010, 38 per cent of us donated an average $98 a month; four years later, 41 per cent donated an average $91.

The median for donations dropped from $42 to $40.

There are tax incentives to making donations. The true power of the donations aspect isn't fully realised until the sums are done to include rebates into this system.

For example, if half New Zealand's population donated $10 we'd raise $22 million for a dedicated cause.

A third of that, $7.3 million, would be rebated so in effect the net cost of the donation would be $15 million or $6.67 from the $10 donation. One shortfall is that the administration and record-keeping for rebates is outdated. Rebates need to be filed by the individual each year, which is hardly an incentive for a $10 donation. Though individuals are entitled to rebates, companies are entitled to tax deductions for donations. For companies the process is more straightforward as their financial processes capture transactions for tax deductions.

Whatever the process is in the future, continue to make donations to those organisations which need them.