How to raise £1bn extra for charity

Regular, tax-efficient donations have more impact than festive gifts, finds Sam Dunn

There's an adage that's swiftly and expertly learned by the children of straight-talking parents: "You don't ask, you don't get."

There's an adage that's swiftly and expertly learned by the children of straight-talking parents: "You don't ask, you don't get."

And during the festive season, charities also apply this saying to maximum effect.

"People generally give when they are asked and, quite simply, they are asked more at Christmas," says Amy Mac-Laren of the National Council for Voluntary Organisations (NCVO), whose research reveals that every month, two-thirds of British adults give to charity. In 2003, the average was £12.32, although barely one in 20 of us gave more than £50 to charity each month.

As individuals, we handed over £7.1bn last year - down from £7.3bn in 2002, in part because of falling markets and a dip in economic confidence, says the NCVO - but this year donations are expected to be buoyant.

Like any other demand on our money today, charity choice is overwhelming.

Whether it's Shelter, Children in Need, Christmas cards, the Royal National Lifeboat Institution, Sport Relief, the new Band Aid single, last week's World Aids Day or even the newly formed "Book Aid", enlisting literary giants such as Salman Rushdie to write short stories to help fund the fight against Aids, there are plenty of appeals for our money and plenty of people responding.

Nearly a quarter of all our donations go to medical research, says the NCVO, while the next popular causes are children or young people (21.6 per cent), animals, religious organisations and overseas relief work.

More people are donating by monthly direct debit and standing orders, too - up from 15.3 per cent to 16.8 per cent of all charitable giving - and these regular donations can make a bigger difference than seasonal gifts.

If we always handed over money in the most tax-efficient way, our chosen charities would benefit by nearly £1bn extra each year, says Cathy Pharaoh of the Charities Aid Foundation (CAF).

Foremost is Gift Aid, a scheme where every £1 you donate to charity secures another 28p from the Inland Revenue.

Ask your preferred charity for a form, says Ms Pharaoh. Alternatively, if the recipient of your cash doesn't have the document - this may be the case with small bodies such as your child's school, for example - simply print off a template from the Inland Revenue website (see the address at the end of this article) to hand over with your donation. To participate, you must be a taxpayer.

If you ask your employer to make payments to a charity of your choice direct from your monthly wages, you'll get immediate tax relief. A £100 donation to charity will cost £78 if you are a basic-rate taxpayer - £60 for higher earners.

More than 9,000 businesses offer such "payroll giving" to five million employees and these figures should rise as a new government grant will make it easier for smaller companies to offer the scheme to their staff.

In the 2002-03 tax year, more than £86m was raised in the UK through payroll giving. It's also worth asking your company if it will match your donations; many have such policies.

If you're a regular shopper, you could also use a charity credit card. A tie-up between lenders and good causes, these donate a one-off payment when you first take one out - usually £10 (English Heritage) but as high as £20 (Cancer Research).

Each time you then use your card, a fraction of the transaction value is passed to your charity. A £100 spend will typically produce a 25p donation.

But always check the annual percentage rate (APR). Although many charity cards have become more competitive and include 0 per cent introductory offers, a number - the RSPB and Comic Relief, among them - have an APR as high as 17.9.

Don't forget to drop unwanted items off at your local charity store: Oxfam has some 750 shops across the UK that raised £16.9m last year. Mobile phones are expected to be among the most popular gifts this year and, rather than send your old handset back to the company, donate it - and the charger - to your charity shop.

If you're having an end-of-year financial clearout, give any small, unloved shareholdings to charity. You won't have to pay any capital gains tax and can claim income tax relief.

Small charities that can't pick up the cost of selling the stock can use ShareGift, a free service for donors that re-registers your shares and holds them (in the charity's name) until it has enough for a bulk sale.

Giving to charity is easily done in your will. Any bequest will reduce your inheritance tax estate, where tax is payable at 40 per cent on any amount over £263,000. While many people leave a direct legacy, an alternative is to leave the "residue", what's left after all else is settled.

www.inlandrevenue.gov.uk/charities; www.payrollgiving.co.uk; www.sharegift.co.uk