Why You Need a Financial Adviser to Get Charity Right

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By Licensed Adviser


Charity towards those in need around us has been a way of life in India, entrenched by scriptures, culture and values passed through generations. Now, with growing social awareness, easy access to information, and better incomes, we are changing the way we give. We want to be able to choose the cause we give for, be it education for the girl child, disaster aid, or employment for the disabled. More importantly, we want to be able to make a difference, and see the impact we’ve made.

Fortunately, the opportunities and avenues for meaningful giving have also grown in the country. Private charitable organisations, Non Governmental Organisations (NGOs), start-ups facilitating peer to peer lending towards different causes, are all helping create a vibrant social sector in India. A 2019 report that studies philanthropy in India reported that individual giving has grown 21% over the last 5 years.

However, this changed approach in giving also means that it is as much (or more) of a financial decision than a humanitarian one, and requires the services of an informed, unbiased financial adviser. Let’s explore why.

Making a Difference Should Be Part of Your Financial Plan

Let’s put it this way: making a difference through charity involves sustained giving over years (even if it is of a small amount), or in some cases, the transfer of a significant amount of wealth. And the best person to help you plan this in a manner that does not affect your personal financial goals, is your financial adviser.

Building your charitable goals into your financial plan is the surest way to ensure that you will be able to keep giving at the rate you want. Without planning, even with the best of intentions, our giving can get easily interrupted due to sudden expenses or conflicting demands.

Your Charity Should Be Tax Efficient

We’re mostly aware of this nowadays, as requests for donations often come with information on the Section 80G tax deductions available on the same. However, this section of the IT Act has fairly complex terms and conditions on the deductions that can be claimed. For example, only donations made to charitable institutions notified for this purpose by the government can be claimed as deductions. This list is regularly updated and also details how much of the donation can be claimed as deduction for each listed entity. There are also limitations on the amount that can be claimed as deduction if the donation has been made in cash.  

Understanding the tax impact of your charity is thus a time consuming and specialised task. If you are serious about continuing your charity over a period of time, consulting an expert will help you structure your giving in a manner that benefits you as well.

Charity Should Be Goal-Oriented, Accountable and Transparent

With India’s social sector opening up, we have a vast number of private organisations, individuals, action groups and more, who are addressing various needs and ills using different approaches. It is no longer easy for an individual to figure out the best possible organisation or team to support when it comes to giving donations. Besides, as mentioned above, there are questions of government recognition, monitoring and accountability to be ascertained as well. Financial advisers who offer specialist services for philanthropy or charity undertake to study the available avenues after understanding your purpose and objective in giving. They have the know-how to ascertain which initiatives are bonafide, are compliant with regulatory registration, reporting and auditing requirements, and have the credibility to make a lasting difference.

Advisers will also help you determine the best way to achieve your goal: whether by giving money directly to a grassroots organisation; supporting policy change to bring about a desired result; or, if you are looking to donate something substantial, by setting up a trust or grant to execute your charitable objectives.


In Conclusion

Andrew Carnegie, a well-known American industrialist and philanthropist once said, “It is more difficult to give money away intelligently than to earn it in the first place.” And this is as true today as it was in the 19th century. By helping you take a more planned, goal-oriented and measured approach to your charity, a financial adviser can help you maximise the social impact of your wealth and create a true legacy.

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