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How to make your donations impactful for victims of the Coronavirus Pandemic?

If you are planning to donate to help those affected the worst, take the following into account.

With the extension of nation-wide lockdown to combat Coronavirus pandemic, the informal working force of India is facing immense financial hardships. The street vendors, construction workers and daily wagers of the country are going without any income whatsoever.  

If you are planning to donate to help those affected the worst, take the following into account:

Avoid Scams

With many organisations coming forward to sponsor food, groceries and hygiene kits for the poor, you need to do the necessary due diligence, by checking their veracity. Be wary of personal solicitation, even though it might look deserving. Often, fraudsters use such opportunity to siphon-off funds. 

Also, while making a donation, don’t fall for digital theft – by giving your bank or card details to an unknown hyperlink. It is better to donate through secure websites of trusted charities. Ask trusts to provide audit reports of fund disbursements along with its impact on communities.

Get a Tax breather

Donations made to charities that are notified by the Income Tax department can be deducted from your income - 50 per cent or 100 per cent of it, as the case may be. 

Usually, there is an upper limit of 10 per cent of gross income earned in a financial year for availing Sec 80G benefits. However, the tax laws were recently amended to remove any such limits, especially if you are donating towards PM CARES Fund (Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund). 

Supposing your income is Rs 15 lakh and you donate Rs 2 lakh toward PM CARES fund. In this case, you get a full deduction of Rs 2 lakh from your adjusted gross income; in the process, your tax liability is reduced by Rs 62,400 (31.2 per cent of Rs 2 lakh). Otherwise, the deduction is limited to 10 per cent of income (Rs 1.5 lakh in this case) along with a lower tax benefit of Rs 46,800.

The deadline for availing Sec 80G tax benefits for the income of FY 2019-20 has also been extended to June 30, 2020.

Check the cost factor

Many NGOs and Crowdfunding sites have waived-off fees for fundraising activities –, especially for victims of Coronavirus related issues. Otherwise, they charge anywhere from five to 15% of the funds collected. This, in turn, means that for every Rs 100 you donate to them, only Rs 90 or lesser actually goes towards charity. 

Charity begins at home goes the popular saying. Your maid, paperboy or car driver are more likely to bear the economic brunt of the nation lockdown. Perhaps you can help them directly. 

Think local

Charity begins at home goes the popular saying. Your maid, paperboy or car driver are more likely to bear the economic brunt of the nation lockdown. Perhaps you can help them directly. 

Double your impact

Some charities are waiving fees and selectively doubling your donations for this purpose. 

Additionally, check with your organisation, if they are offering employee matching gift programs, whereby they match donations made by employees to eligible non-profit organisations. It will essentially double up donations made to these organisations. Check with your HR, regarding the eligibility, paperwork and the deadlines to make the most of it. 

Choose the Mode

Any donation made in kind – by gifting groceries or masks - doesn’t qualify for tax benefits. Also, cash is not king. Donations only up to Rs 2,000 made to a notified charity in a financial year are eligible for Sec 80 G tax benefits. So, ensure you use the cheque or digital payment methods to make the most of the tax benefits. 

Takeaway

Carefully check the credentials of the charitable organisation before you donate. Steer clear of financial scams and avail full tax benefits. 

 

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