Cause and effect: how to choose presents that make a difference

Charities are having a rough time in recession-haunted Britain. A quarter of them have suffered a drop in the amount of donations over the past year, according to a survey by the Charity Commission. So with Christmas round the corner, they are stepping up their efforts on behalf of good causes, not least with present ideas. And one alternative to that pair of socks or bottle of port is to spend the money instead on an ethical gift.

One of the most popular charitable presents – often in the form of a card showing the recipient how their gift is making a difference – is paying for an animal or an infrastructure project that will benefit individuals or communities in the Third World. With Send A Cow, for instance, a single £750 donation pays for a farmer to be given a dairy cow in a developing country, with the charity overseeing the farmer for five years.

Martin Long, head of programmes at Send A Cow, says the impact on that person's life can be enormous: "Milk from one cow is more than enough for a family's needs, and any surplus supply they can sell generates income quickly. What makes this value for money is the 'pass it on' principle," with other members of the community receiving the calves. Knowledge is also passed on, adds Mr Long. "You get a ripple effect with indirect benefits – in essence, neighbours looking over the fence and seeing what the others are doing. This way, one farmer will help nine more."

Less costly presents can still make a big impact. A gift of a donkey, say, costs just £70, while for £20 farmers in Africa can receive vital training in growing crops in as water-efficient a way as possible.

Charitable gifts are big business: last year Oxfam sold 540,000 through its online shop. As well as donkeys, cows, camels and goats, gift buyers can pay for teachers in the developing world or for farm implements. "By paying to train a teacher, they will be passing that knowledge on so that the children will be well educated and work themselves out of poverty if they are given a chance," says Rose Marsh at Oxfam. "And when it comes to livestock such as a goat or camel, it's not just a one-off – it can benefit a family for years to come."

Bear in mind that you won't always know exactly how your money is being used. A close look at the Oxfam website, for example, reveals that donations may be pooled for carrying out charitable projects. However, Good-gifts.org, run by the Charities Advisory Trust, promises to use each donation to buy what is specified at the outset. For instance, the £25 gift of a goat will end with a farmer in an under-developed country actually receiving the livestock, rather than the cash being pooled for an infrastructure project such as building a well or irrigating farmland.

Those hoping to help save the planet, meanwhile, can pay for 25 trees to be planted for as little £8.

If you don't fancy the idea of a charitable gift but still want to do your bit for a good cause then there are charity Christmas cards. However, be careful where you buy your cards from as this can have a dramatic effect on the extent to which the charity benefits. With Oxfam, for example, 71 per cent of the face value goes straight to Oxfam when bought from one of its own shops. But it only receives 10 per cent if bought from another retailer.

Some charity cards give even less to a good cause. The Charities Advisory Trust said earlier this month that around four out of five cards sold on the high street return less than a 10th of the retail price to charities; almost half donate less than 5 per cent. If you do want to go down this route, remember that the Christmas postal delivery deadlines are 18 December for second class and 20 December for first.

Should the season of goodwill tempt you to buck the credit-crunch trend and start giving to charity then there are ways to get the Government to top up your donations. "If you want to maximise your gift, it is important to use a tax-efficient method," says Richard Mason, managing director at advice website Moneyextra.com. "Under Gift Aid, charities can reclaim basic-rate tax on your donation. It's easily done: the charity will send you a simple form to fill in and then it will do the rest.

"Remember: if you give money to collectors on the street, they can't claim the tax back. And these collectors, if they are not volunteers, have to be paid a salary, so only a small amount of money may go to charity,"

Another option for those looking to donate regularly is payroll giving. In essence, this is an arrangement where you can make donations straight to your charity by authorising your employer or pension provider to debit a set amount of money before tax is deducted. The big advantage to charities is that they don't have to go through the rigmarole of claiming the tax back.

Regular payments through payroll giving also make it easier for the charity to budget and plan.

Charity projects: how your cash will be spent

Save the Children

A place for a child at school, first-aid kit for a clinic, equipment for a school for a year: www.savethechildrenshop.co.uk

Christian Aid

Disaster aid: www.presentaid.org

Water aid

Hand-dug well, taps for a village water point: shop.wateraid.org

Good gifts

Gift of spectacles and sight tests for a child; travelling library for African schools: www.goodgifts.org

Oxfam Unwrapped

Plant trees; care for a vulnerable child; train a teacher: www.oxfam.org.uk