Indians big donors, but only during tax-saving months
April, 15th 2014
We may be a charitable society — donating to shrines, NGOs and for other causes — but we are also getting increasingly smart at the way we are doing it. Being a society obsessed about saving taxes, there has been a spike in donations made during tax-saving months (January to March) and a dip in charity in the subsequent period.
According to NGOs, with growing awareness about tax benefits on donations, collections have risen significantly this year during the tax-saving months as compared to the previous years. GiveIndia's 'India tax saving challenge', a fundraiser that encourages NGOs to tap donors looking to make that final contribution, saw a 30% increase in donations during January to March in 2014 as compared to the same period last year. Also, this year's tax-saving months saw a 110% increase in donors as compared to the preceding non-tax saving months (October-December 2013).
"Research and surveys have shown that people do not donate for tax benefits. However, they do avail of them. Over the last couple of years, we have seen a steady rise in donors and donations during the tax-saving months. This can be attributed to increased awareness of donations being a tax-deductible benefit and a higher degree of communication by charities around this time," said Dhaval Udani, CEO, GiveIndia.
As per data provided by GiveIndia, which has over 150 NGOs listed with it, donors during tax-saving months have risen from 1,319 in 2012 to 3,319 in 2014. Donations have doubled.
CAF (Charities Aid Foundation) India said it witnessed nearly 60% increase in donations in the last four months of the financial year 2014. "We can't corroborate this trend to anything else but smart tax planning. We have noticed this sudden surge in the last few years which is surely pushing philanthropic landscape in India," said Sangeeta Sharma Thakral, head, communications & marketing, CAF India.
"Charities do get last-minute boost from donors these days. From our experience and observations, we can clearly see two prominent trends that are emerging—donations during festive and tax-saving months," Thakral said.
To make the most of such surges in donations, NGOs are equipping themselves to handle the extra load. This is important as donations usually dip in the subsequent months. "There is a dip of about 40% in donations during the first few months following the tax-saving season, especially among the high networth donors because they usually exhaust their donation amounts till March end," said K M Paliwal, secretary, Psycho Educational Society which was part of GiveIndia's tax saving challenge in which over 60 NGOs raised Rs 1.55 crore from nearly 1,900 donors, which is an average giving amount of approximately Rs 7,000 per donor over four weeks. Other participants included Teach for India, Gram Vikas Trust, The Kalgidhar Society, Rural Health Care Foundation, Divya Jyothi Charitable Trust and Deepalaya.