Studies show that when a person gives, their brain releases serotonin, dopamine and oxytocin; all of which are great for happiness and health. All three work to reduce anxiety and bring about feelings of joy. Oxytocin goes even further as it can also lower blood pressure and reduce inflammation in the body.
People that give also live longer. Giving creates purpose and a sense of community. When studies looked at parts of the world with the most centenarians, they found that these areas thrived on helping each other and playing their part as a member of their community. Not only did this result in people that needed help, receiving it but it also gave a purpose to those helping and promoted a sense of togetherness that combatted loneliness, a major cause of depression.
So, we know that giving is good for your physical and mental state but what if you don’t have billions to give? Well, you’re in luck. It turns out that it doesn’t matter how small the charitable act is, the effects are the same. And it doesn’t have to be money either. Something as small as simply helping a blind person cross the road or helping the elderly carry their shopping releases the same feel-good chemicals and their corresponding benefits.
Charitable billionaires are not found on every street corner and are certainly not capable of fixing the worlds woes on their own. So smaller donations to charities are a big help in driving change and supporting people in need. Here are a few ways you can help and reap the health, happiness and financial rewards too.
Gift Aid
If you’re a UK tax payer in the basic rate band or above, a charity receiving a qualifying donation from you can claim Gift Aid of 25p in the £1. So, if you donate £100, the charity can claim a further £25 from the government as Gift Aid.
Furthermore, if you are a higher or additional rate tax payer, you can claim additional tax relief via your Self-Assessment.
Give As You Earn (GAYE)
GAYE is the term used for payroll giving. This is a method whereby your employer deducts a regular charitable contribution from your pay before Income Tax is applied. Often, your employer may even offer to match the contribution you commit to each month therefore further enhancing the donation made to good causes. The UK’s most popular GAYE scheme is run by CAF (Charities Aid Foundation). HMRC has a list of approved schemes on its website.
Donating quoted shares
Donating quoted shares comes with a saving for Capital Gains Tax (CGT) for both you and the charity receiving the donation. Quoted shares are subject to CGT on gains however, if you donate the shares to charity, any gains become CGT exempt. It should be noted that donations of shares are not eligible for Gift Aid but instead the full cost can be deducted from taxable income when submitting your tax return.
Gifting on death
Making a gift from your estate on death can reduce your personal inheritance tax (IHT) bill whilst also doing good for those in need. If you bequest 10% of your net estate to charity, HMRC reduce the rate of IHT applied to your whole estate from 40% down to 36%.
Matched giving
If you wish to donate a significant sum, this can be boosted by way of matched giving. This is where you commit an amount of money provided others donate an equivalent amount. This pledge acts to encourage others to donate as they know that their money will effectively double what the charity receives. This has been highly successful with organisations like Big Give who take care of the logistics and promotion of matched giving agreements.
ShareGift – the share donation charity
If you have small amounts of shares hanging around, you could donate them via ShareGift. This charity aggregates small value shareholdings which may be too small to reasonably sell on the open market owing to costs. Once it has enough of a particular share, it sells the holding and donates the proceeds to charity along with any income distributions received whilst holding the shares.
Finding the best charities
So now we know the benefits of giving and how to do it, how do we decide who to give to? With the 1000’s of charities out there, it can be a struggle to know which cause is going to make the best use of your donation. Giving is Great has done the hard work for you and analyses charities to ascertain how your donation will be used and the impact it will have on those in need. Now all you need to do is start enjoying all that new found health, happiness and longevity.
Please remember, this content is provided for information purposes only. Investment involves risk. Past performance is not a guarantee or indication of future results. Investment return and the principal value of an investment may go up or down and may result in the loss of the amount originally invested. All investors should seek professional advice prior to any investment decision, to determine the risks associated with the investment and its suitability.
