This has not been the best of years for the not-for-profit sector. Wrathful economic winds and freezing credit conditions have affected many organisations. And this has happenedat just the time when many of their services have been most in demand. Recessionarypressures have also hampered the ability of some not-for-profits to recruit volunteer staff.
But wait, there has been good news – and from an unlikely source.
This has also been the year in which the Inland Revenue Department has effected changes that will benefit the charitable sector which, I would argue, those of us in the business world ought to be involving ourselves in as much as possible. So thank you, IRD. While a few people might argue that a business player’s only purpose is to make money, virtually every organisation or successful business person I know takes a different view, and is the better for it.
Under the new IRD rules, the previous limit on donations that could be claimed by taxpayers against their taxable income has been removed, with donors now being able to claim anything up to the level of their taxable income. So, if you want to donate all of your income, fine; you can and no tax will be deducted.
This change, which has been in place since April 1st 2008, also applies to businesses, meaning that any donations are now on a pre-tax basis as well.
By the end of the current tax year, additional benefits for charities, and those making donations to them, will also be in place.
A payroll giving-scheme, for example, will allow employees to benefit from the donations they make each payday, with the only requirement being that a business needs to sign up to the scheme rather than the current process, where you must collect all of your donation receipts during the year and then apply for the rebate from the IRD. The new process will allow the rebate to fl ow through your pay via the PAYE system throughout the year, and you will not have to present the donation receipts either. The legislation is on track to be enacted before year’s end – which is to say, before Christmas; a popular time for individuals and organisations planning their charitable giving.
Under the same legislation, there has been clarification on the tax treatment for honoraria and reimbursements for volunteers and community groups. This is intended to simplify the process for volunteers to meet their tax obligations and also to reduce the associated tax compliance costs.
Another area business people might consider with respect to the not-for-profi t sector is voluntary work. This is an area a lot of professionals shy away from and various reasons are pressed into service to explain this, but I would strongly encourage any holdouts to reconsider.
Why? There are a couple of selfish reasons – and one altruistic one.
Taking the latter first: those of us in business are part of a wider community that sustains our activity and makes profitability possible. Why not give something back to it?
At the same time, of course, engaging in this way also opens up a new world of contacts and prospective clients and referrers. It also means you can take on roles with greater and wider responsibility than may be available in your own business situation.
And it bodes well for your future success. From a personal perspective, my voluntary roles have been hugely fulfilling and created a lot more learning opportunities than I had expected. Plus, there is far more appreciation and recognition received; because everyone knows you’re not just in it for the money.