Make sure your charity gift comes home to roost

Send a chicken to Africa; use an affinity card to benefit a favourite charity... Whatever you give this Christmas, your generosity will go further with financial know-how

You might hear plenty of Scrooge-like "Bah, humbug!" over the next few weeks but there will still be a lot of festive spirit about.

Many of us like to give to the less fortunate at Christmas, whether in the form of coins for carol singers, charity cards, purchases made from a charity catalogue or simply donating to a good cause.

But these and other acts of goodwill often prove to be less munificent than they could be because we aren't giving to charities as efficiently as we might.

While it is, of course, better to give than to not do so at all, you should always try to make the most of your generosity.

Here, we show you what to watch for to make sure your charitable instincts really count.

Christmas cards

When sending messages of festive cheer, many people choose cards that benefit good causes.

But beware - the amount going to help a charity can vary enormously depending on the card you buy.

In many cases, less than 10 per cent of the purchase price is actually donated, according to the Charities Advisory Trust (CAT), the organisation behind the annual "Scrooge Awards".

Over the past five years, the CAT has exposed many of the worst offenders in the charity Christmas cards market. "Retailers have been shamed into raising the amount going to charity," says Hilary Blume, the CAT's spokeswoman. "For example, we are delighted that John Lewis [which gave a mere 4 per cent from the sale of some cards last year] is now offering an own-brand range with 25 per cent going to charity."

Elsewhere, Ms Blume also applauds WH Smith, whose donations on its own range of charity cards have shot up from 8 per cent last year to 20 per cent.

But not all retailers have cleaned up their act.

This year, the CAT's Scrooge Award goes to London's most famous department store, Harrods, which is offering 35 designs with only 3 per cent of the purchase price going to charity, and a further 73 designs where less than 5 per cent is donated.

It has also awarded another plush London store, Liberty, with the Georgie Porgy Award for the Greedy for the second year in a row. It is selling a card that gives just 2.9 per cent to the Meningitis Trust.

Ms Blume urges consumers to boycott any card where the donation goes below 10 per cent. She advises shoppers to buy at temporary Card Aid shops, which are now open (often in churches or libraries) in London and other parts of the country. Card Aid guarantees that at least 40 per cent of the purchase price goes to charity - rising to as much as 60 per cent if you buy online (see below).

Credit cards

While piling up your purchases, you may want to do your bit by putting them on a charity gift card or affinity card that promises to raise money for a good cause.

Most cards make a one-off donation on the first purchase; then, each time you use the card, a small percentage of the amount you spend will go to the charity.

But Stuart Glendinning of price comparison service moneysupermarket.com is unimpressed, warning: "These cards offer little in the way of financial or charitable benefit."

The annual percentage rates (APRs) on the cards can be high - which means they are really suited only to people who pay off their debt in full each month.

And cards that pay a portion of your spend each time you shop usually offer only 25p on every £100.

If you do take one out, one of the better cards, says Mr Glendinning, is Amex Red. "This stands out by virtue of the amount that is donated to charity - at least 1 per cent - with a competitive typical APR of 12.9 per cent."

Alternatively, he chooses Oxfam's Advantage Platinum, with a typical APR of 14.9. It comes with a 0 per cent interest deal for both balance transfers and purchases for the first six months. Oxfam receives £15 when the account is opened and £2.50 if the account is used within the first six months - plus 25p for every £100 spent or transferred to the card.

One of the least competitive offerings, according to Mr Glendinning, is the Comic Relief card from Nationwide building society. This has a typical APR of 17.9 per cent and no 0 per cent period for transfers or purchases. It donates just £6 when first used, and 0.5 per cent thereafter.

Consumers would be better off, he says, taking out the GE Money Transformation card, offering 0 per cent on purchases for 12 months and 0 per cent on balance transfers until 1 May 2008. "You could then donate the cash you save directly to the charity of your choice."

'Good' gifts

If you're fed up with all the consumerism at Christmas, you may prefer to give an "ethical" gift. These can take the form of goats or chickens, agricultural training courses, school books or other essentials for communities in the developing world. Closer to home, you might want to sponsor a guide dog puppy or pay for a family on a low income to go to the seaside.

Flick through the pages of this year's Good Gifts catalogue, run by the CAT, and you will find gifts from as little as £3 (for a paraffin lamp to light a hut in an African village).

"Goats are still the big sellers, along with chickens and also ducks," says Ms Blume. "But we are now out of the tanks and Kalashnikovs [to be turned into agricultural tools] that were so popular last year."

Good Gifts guarantees that the money you donate goes directly to that cause, and not into a pool of funds. "This means that if you buy a goat for an orphan in Rwanda, a goat is given to an orphan in Rwanda," says Ms Blume. "Any gift you purchase can be traced directly to the beneficiary."

Elsewhere, other charities offer similar schemes: Oxfam has the Unwrapped catalogue, while Christian Aid runs Present Aid. But Ms Blume says these charities do not necessarily spend the money on the item requested: "Although [those receiving an ethical gift] get a card saying 'I gave you a goat', the small print reads, 'We use the money where it is most needed'."

Oxfam insists that "all gifts on its website are needed", but says it has to remain flexible by responding to varying needs across the world as they occur. This, it says, means that in some cases "what we have shown [in the gift catalogue] is an example, but we will always spend your money on a related item".

So, if you buy a goat or donkey, or an animal-care kit, your gift could end up being used to fund the livestock "more appropriate to the individual community".

"We are very open about this," says a spokeswoman. "If we sell enough goats to fulfil the quota required by a country, we may use the money to buy a donkey instead, say. We won't just send out more goats for the sake of it."

Christian Aid operates a similar policy.

Charitable giving

If you are going to give to charity this Christmas, make the most of tax relief available on donations.

"Using Gift Aid [to give to a UK-registered charity] means the charity will receive an extra 28 per cent," says John Bunker, tax-planning partner at law firm Thomas Eggar. "For example, if you give £100, tax can be reclaimed and added to your donation - making it worth £128 to the charity."

Higher-rate taxpayers, he adds, can claim 18 per cent personal relief on the gross value of their donation - which works out at £23 for every £100 donated.

Another way to give tax efficiently is through the payroll-giving scheme.

"If you are paid through Pay As You Earn (PAYE) and your employer has a payroll-giving scheme in place, you can donate to charity from your salary before it is taxed," adds Mr Bunker. "This means a monthly gift of £20 will cost a basic rate taxpayer £15.60 from their net pay - or just £12 if you are a higher-rate taxpayer."

Contacts: www.cardaid.co.uk; goodgifts.org; oxfamunwrapped.com; presentaid.org

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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