Ask Paul: How to find the right charity to support?

Dear Paul,

I'm 71 and getting closer to retirement. Budgeting has become more of a focus and I am more aware of expenditures.

As a family, we've been donating to many great prominent causes. We continue to donate to five worthy causes where those donations are tax deductible. We also purchase tickets in three charities where multimillion-dollar properties, expensive vehicles or gold bullion packages are the prize.

We receive multitudes of additional mail from other charities seeking donations. We've never heard of any of them. My question is, how does one decide which charities to support; which great causes do you make those contributions to?

I've been a Money reader for what seems like forever. I have been tempted to subscribe, but like to see the lights stay on at my local newsagent. - Rod

Good one, Rod. I burst out laughing reading your comment about keeping the newsagent's lights on. On behalf of your newsagent and the Money team, thanks for your loyalty and sense of humour. 
I am with you on giving money to charity.

We're about the same age and have the same view. Life has been pretty good to us and our families.

Australia is not only a wonderful country to live in, it has also given us the opportunity to make a living and create a bit of wealth. In turn, we both feel the need to give back.

In our case, we set up a family foundation, a thing called a private ancillary fund (PAF) This is a bit like DIY super.

The catch is I don't think they are economically sensible unless you are putting in about $300,000. In my case I sold my business, so it made sense, but I appreciate that it involved a pretty large amount of money.

But the reality is, whether it is your own money you are donating or from a PAF, the problem remains the same.

Which charity will put more of our money to good use?

First up - and I know you will have done this - is to target your giving to your areas of interest. Then we take a look at efficiency. How much of the money raised goes in costs to raise the money and cover administration and staff?

We have a strong focus on youth support, so in bigger organisations we see that charities such as The Smith Family do a great job in breaking the poverty cycle. Smaller organisations are a mixed bag. Some are grossly inefficient, while others do give bang for your buck.

Stepping Stone House, for getting kids off the streets, is a good example, but there are many more.

We also find giving money away easy, but giving it away effectively is very hard. It seems to me that you should focus on what interests you. Then focus on charities that do good work at a low overall cost, with most of the money going to the cause you wish to support.

All the best with your future giving.

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