Ask Melanie

Ask Melanie: Why you should afford to be charitable

Melanie Nutbeam, a certified financial planner based in Hong Kong, addresses common personal finance queries. Send your questions to

PUBLISHED : Monday, 24 December, 2012, 12:00am
UPDATED : Monday, 24 December, 2012, 4:21am

We would like our family budget to include giving to charities. How should we incorporate this?

Giving is often spontaneous. Things happen over the course of a year that tug at the heart strings and loosen the purse strings. This is as it should be but you can also approach gift giving in the context of your wider financial objectives, so as not to compromise family goals.

Giving helps create an important sense of connectedness to our communities and it does not have to be on a grand scale. In his book, How Much is Enough?, Arun Abey notes that, "While the resources that each of us has will vary, if you make a difference to just one person the impact on the well-being of both of you can be similar to those whose reach extends to millions."

Deciding, as a family, which charities to support, often prompts a good discussion about family values, life experiences (sometimes painful encounters with illness or disability) and plans. Consider whether you want to choose a charity in which you can be involved in different ways throughout your lives - perhaps giving money now, but time and skills later.

Many charities are looking for assistance beyond money. A friend's teenage son, Louis, recently enjoyed raising funds for a charity that gives access to solar light to villages across rural India. The family is pulling together to help Louis work in India with the charity during his gap year.

Many clients have, as part of their financial plan, a stated goal to give money or time to their chosen charities. Some have succeeded in taking charitable sabbaticals that are increasingly endorsed and encouraged by the companies they work with.

Planning for this has included not only covering the income hiatus but also travel expenses and insurance cover.

When making a financial donation, consider the most tax-effective way to do this. A tax deduction of up to 35 per cent of chargeable income can be claimed in Hong Kong for donations to approved organisations and amounts over this are deductible for up to 35 per cent of a spouse's chargeable income.

The donation must be at least HK$100 and receipts should be retained for up to six years. Let the charity know if you want your gift attributed or made anonymously. You can usually obtain a receipt for tax purposes while requesting the charity omit your name from its website and other public records.

Decide if you want to earmark a portion of your charitable capability for ad hoc donations which support other people's charitable efforts. Fundraisers such as Trailwalker, Moontrekker and the Green Power walk provide a rallying point, and encourage healthy activity in the name of charity.

Dreaming up new ways to support charities also exercises our imagination and creativity. Operation Santa Claus is an example of this. Individuals and companies show remarkable enterprise in figuring out new ways every year to raise funds for 18 charities that support initiatives for the elderly, disadvantaged children, people with disabilities and environmental causes.

Formulating a gift-giving plan that involves the whole family teaches children valuable lessons about managing money and making choices. Many charitable organisations maintain interactive websites that regularly update donors. These can help keep younger family members at least visually engaged.

At the end of the day your family gift-giving programme should prove a helpful spending guide but there will always be times when spontaneous generosity provides its own rewards.

Winston Churchill once said: "We make a living by what we get; we make a life by what we give."

The views presented are of a general nature. For specific advice, talk to a professional planner. See the column archive at