Donating and crowd funding


Spending money for good

With thousands of charities and projects competing for your support, it’s important to do some research to make sure your money will go where you want it to.

Here are some things to think about before you decide to donate to a charity or contribute to a crowd funding project.


Choosing a charity to donate to

Your decision to support one charity over another is usually based on your interest in the cause the charity supports. You may also choose a charity as a way of remembering a deceased relative or friend. Whatever your motivation, it’s important to make sure you are comfortable with the charity’s activities and how it plans to use the donations it receives.

Donating directly to an overseas-based charity can be risky as it may be difficult to verify the information found on websites or social media sites.

You may prefer to donate to an Australian charity that supports the cause or project you’re interested in. Many Australian charities operate overseas but are based in Australia.

Things to check before you donate

Check it’s a legitimate charity

Smart tip

Even if you’ve heard of the charity, you should check that the person who contacts you is authorised to represent the charity.

If the name of the charity is unfamiliar, ask for more information. For example, ask:

  • What cause do you support?
  • Where is the charity based?
  • What are donations used for?
  • Are you affiliated with any other charities or organisations?
  • Are donations tax deductible?

It pays to be careful, even if you get a satisfactory response to these questions.

If you’ve been approached face-to-face, ask to see some identification and a copy of the charity’s pledge form. These should contain:

  • the full name of the organisation
  • the corporate registration number such as an Australian Business Number
  • the business address
  • the organisation’s logo.

Call the charity directly to verify their contact details, and be sure to cross check their phone number in the telephone directory.

Charities must also be registered with the Australian Charities and Not-for-profits Commission (ACNC). You can check the ACNC website, to see if the charity is registered. Alternatively, the charity may display a Tick of Charity Registration (from the ACNC) to show they are a registered charity.

Be wary of giving credit card details

If you’ve been contacted by phone do not give out your credit card or banking details. There will be other ways of donating if it’s a reputable charity.

Ask about these options and make sure you check the validity of any website or social media page you’re directed to.

To find out about the latest charity scams see the ACCC’s SCAMwatch charity scams webpage.

Check if the donation is tax deductible

A donation is only tax deductible if it is given to a charity that has been endorsed by the Australian Taxation Office (ATO) as a deductible gift recipient (DGR) organisation.

To receive a deduction the donation must be $2 or more and must be claimed in your tax return for the income year in which the donation was made. In some circumstances, you can elect to spread the tax deduction over five income years. For more information visit the ATO’s gifts and fundraising webpage.

You can check if an organisation is a DGR by visiting the Australian Business Register or phoning the ATO on 13 28 61.

Ways to donate

There are a number of ways you can donate to a charity.

  • One-off or ongoing – You may decide to make a regular, set donation or you may prefer making a one-off donation following a particular fundraising campaign or an urgent need, like a natural disaster.
  • Workplace giving – You can support a charity through automatic deductions from your salary. If your employer has a workplace giving scheme your donation can be deducted from your pay and sent directly to your preferred charity.
  • Leave a bequest in your will – Another way of donating is to leave a bequest in your will. Contact the charity directly to discuss your plans.
  • Get involved – Instead of a cash donation, you could contribute to your favourite charity by donating goods, your time or even your skills or expertise.

How to complain about a charity

You can complain about a charity to the relevant state or territory regulator. To find the regulator in your state visit the ATO: State and territory government requirements – fundraising. You can also complain to the Australian Charities and Not-for-Profits Commission if the charity is registered, see the ACNC: Raise a concern about a charity webpage.

Australian charities working in the area of overseas aid, who get funding from AusAID, must be members of the Australian Council for International Development (ACFID), and must adhere to the ACFID Code of Conduct. For more information about the code, including its signatories and how to register a complaint, see the ACFID: Code of Conduct webpage.

Crowd funding

Crowd funding is used by artists and entrepreneurs to find money to fund their projects. Money is usually raised through a crowd funding website, which usually has information on the project’s aims and objectives, how it will work and its budget. The projects they fund are usually creative, business or social initiatives with relatively small budgets.

Crowd funding projects are usually promoted using social media and word-of-mouth. Anyone can pledge money to the project via the website and some get world-wide support from complete strangers.

What will you get for your money?

There is no monetary reward for supporting a project and sponsors are often enticed with a small gift such as a signed CD, a free T-shirt or a discount on products in return for their support.

Try to find out as much information as you can about the project and its owner before you sponsor them. For example:

  • Have they used crowd funding before?
  • Have they been involved in successful projects in the past?
  • Did they deliver the gift, if one was promised?

What if the target funding is not reached?

In most cases, only projects that raise enough money can go ahead. Most, but not all sites return funds if the target amount is not reached.

Crowd funding websites make money through a levy on the total funds received for the campaign. Often the levy is only deducted if the campaign goes ahead.

Crowd funding is different from crowd-sourced funding of shares

Crowd funding is different from crowd-sourced funding (also called equity crowd funding or crowd-sourced funding of shares), which is used by start-ups and small and medium-sized companies to raise money from the public to finance their business. In exchange investors receive securities in the form of shares.

 How to get involved in crowd funding

If you want to participate in crowd source funding, you’ll need to:

  • sign up to the website
  • nominate the amount you would like to pledge to the project
  • provide your credit card details or make a payment via PayPal or another third party payment facility (but check it’s a secure site before you pay).

Once the project has reached its target funding, the money you’ve pledged will be deducted from your account.

Is crowd funding tax deductible?

Most crowd funding websites do not have Deductible Gift Recipient (DGR) status so you will not be able to claim a tax deduction for the money you pledge.

However, the project creator may have DGR status. If so, it is up to them to provide you with a tax-deductible receipt if you request one.

You cannot claim a tax deduction if you have received a gift, reward or discount.

Check it’s a legitimate project

Raising money for a crowd funding project relies heavily on trust.

Even if there’s a small gift involved, the main motivation for sponsoring a project is usually because you have an interest in the project and a desire to see it succeed.

If you’ve heard about a crowd funding project that you’d like to support, make sure you check the legitimacy of any website or social media page you’re directed to. Remember to carefully read the terms and conditions on the crowd funding site before signing up.

Don’t give your credit card details unless you’re comfortable that the website, the project and its owners are legitimate.

Visit our banking and credit scams page to find out what to do if you think your credit card details have been compromised or you think you’ve been scammed.

Donating to a charity or supporting a project you really believe in can be rewarding, but you need to be careful that you’re not being taken advantage of.


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Categories: Tax