Whether you’re trying to save the world or assuage your guilt for not helping society, donating money to charity is one way to do it. Of course, nothing beats volunteering regularly, but if you’ve basically sold your soul and all your free time to your boss, giving a bit of cash in support of a good cause is an alternative.
But how do you know you can actually trust these organisations that call themselves charitable? How do you know you’re not donating money to an organisation that isn’t going to use your hard-earned cash to install gold taps in their bathroom?
Before parting with your money, it’s a good idea to size up any charitable organisations, whether local or foreign.
Why should you be careful about which organisation you donate to?
Just because an organisation calls itself a charity doesn’t mean your money will necessarily be used for the greater good. In many cases, “good” is entirely subjective manner.
If you intend to donate regularly or bequeath a large sum to a particular charity, you need to understand how it’s run and what kind of work it’s doing. So check out the charity’s website, pay them a visit and preferably spend at least a day or two volunteering for them to better understand what it is they do and what their values are.
Here are some questions to ask yourself before you donate:
Do you really support their work and values?
Just like regular human beings, charities have values or goals that you might not necessarily agree with.
For instance, Focus on the Family, “a pro-family Christian charity” according to its Wikipedia page, has gained some notoriety for certain activities, such as a sex ed workshop that a student called out for promoting gender stereotypes, as well as counselling services which deal with “unwanted same-sex attraction”.
It is easy to see how the work of such an organisation might be divisive. If it’s not for you, there’ll be another organisation that is.
Are they mismanaging money or being dishonest?
There isn’t a lot of accountability when it comes to how a charity uses the funds it receives. So don’t just assume that because the organisation was supposedly set up for a good cause, it’s necessarily using the money the way it should.
The National Kidney Foundation scandal in 2005 is a prime example of how a charity’s funds can be misused — in this case, to pay CEO T. T. Durai an astronomical salary and outfit his private office suite with opulent fittings including that famous gold-plated tap.
Are they being run efficiently?
Like regular businesses, charities can be well-run or badly-run. And just like inefficient businesses, some charities do not use their funds in an optimal way. In such cases, you might prefer to divert your donations to a charity that’s using the money in a more effective manner, as the impact of your donation will be of greater benefit to society.
Think about your donation as an investment. Naturally, you’d want your dollar to be maximised in terms of how much good can be achieved with it.
How are charities in Singapore governed?
Charities in Singapore is an extremely broad term. When you do the research on charities, you’ll come across any of the following terms:
Registered Charity / Voluntary Welfare Organisation (VWO): These are the organisations we typically think of as charities. Think SPCA and Habitat for Humanity. About half the organisations classified as charities are associated with a religion.
They are also commonly referred to as Voluntary Welfare Organisations (VWOs). You can find a list of charities/VWOs on the government’s Charity Portal.
Institution of a Public Character (IPC): IPCs are registered charities with a special status — donations to them are tax deductible (just remember to ask for a receipt). This usually makes it easier for them to receive donations.
You are entitled to tax deductions for donations to approved IPCs only. This does NOT include donations to registered charities without IPC status, or foreign charitable purposes managed by approved IPCs.
Until 31 Dec 2021, your tax deductions will be equivalent to 2.5 times your approved donation. This sum will be subtracted from your income when assessing the amount of tax payable for the year.
Society: Some organisations register themselves as societies rather than charities even if their goals are charitable. This is likely to be because societies have a simpler and more relaxed system of governance than charities. Do note that some organisations get registered as societies first, and then later obtain charity status.
Non-Governmental Organisation (NGO): This is an umbrella term for non-profit organisations set up for a certain cause that are not affiliated to the government. They may or may not be listed as VWOs, IPCs or societies.
How do you know if a Singapore charity is legit?
All registered charities (including IPCs) should be listed on the Charity Portal. When it comes to societies or NGOs not listed as charities, ask for the registration number of the organisation if you want to check that they are registered with the government, and be sure that they aren’t a for-profit business.
In its infancy, a fledgling organisation might not yet be registered. While that’s totally fine, be aware that you donate to them at your own risk. A better option would be to volunteer with them instead, if they’re fighting for a cause you care about.
Finally, definitely check out Just Cause if you’re trying to evaluate whether an organisation is worth donating to. This website publishes detailed reports on charities in Singapore and Southeast Asia.
What about donating to overseas charities?
For many Singaporeans, the mere mention of charity brings to mind orphanages in Cambodia or disaster relief in earthquake-stricken lands.
Assessing the legitimacy of overseas organisations is a lot harder. At the very least, try to find out if the organisation is registered in its country of origin and make sure it is a charity or NGO, rather than a profit-making enterprise. Many jurisdictions maintain an online database of some sort listing charities and/or NGOs.
It’s also a good idea to do a bit of research to find out if supporting this type of organisation does more harm than good. For instance, donating to an orphanage can often harm more than help, with a UNICEF study showing many of the children in orphanages in certain countries may not even be orphans but placed there by their own parents, which isn’t great for the kids themselves.
You should also be a bit suspicious of organisations that promote “voluntourism”, or offer overseas volunteer positions for a fee, as they might be a profit-making enterprise. Also be very, very suspicious if a charity comes knocking on your door soliciting donations. Use good old Google to see if they’ve been involved in any scams.
Finally, if you’re dealing with charities in Southeast Asia, it can’t hurt to check if you can find a report about them on Just Cause.
The goal of this article isn’t to discourage you from donating to organisations, but rather to ensure that any money you do donate actually benefits the world in some way. And of course, please also consider volunteering your time to an organisation that’s doing good work.
Which charities do you support? Share with us in the comments!