Taking advantage of tax deductions on charitable donations can help make your giving more sustainable

By Anne Klein, Head for Solutions, Fiduciary Advice, FNB

Individuals and businesses have a genuine desire to use the means they have at their disposal to make a positive difference in the lives and futures of others. COVID-19 and the national lockdowns amplified many social challenges and, while the government is working to help alleviate them, an effective response requires the commitment of private and public partnership. Government recognises that philanthropy in the right sectors should be encouraged as it provides support and services in areas other resources are unable to reach.

Charitable Organisations approved by the South African Revenue Service (SARS) as Public Benefit organisations (PBOs) enjoy favourable dispensations provided various requirements have been met. To qualify for the deduction, an organisation must be approved as a public benefit organisation by SARS and meet the requirements set out in section 18A of the Income Tax Act, read with Part II of the Ninth Schedule to the Act. Taxpayers donating to such approved charitable organisations, are eligible to receive a section 18A certificate which allows them to deduct qualifying donations up to 10% of their taxable income. As of 1 March 2014, donations above the 10% threshold may be carried forward to the next tax year. 

While most people and businesses do not donate for a tax deduction, it helps ensure that a qualifying donation delivers the maximum tax deduction, which is an effective way of safeguarding that you have the resources to enable you to keep on giving in the future and, hopefully, turn it into a habit over time.

If you wish to claim such a deduction it’s important to ensure that the donation you make meets all SARS requirements and ensures that the organisation you are donating to is a section 30 and 18A registered PBO.

Giving, whether through regular charitable donations or a more extensive philanthropy strategy, is most effective when it is undertaken tax efficiently and taking advantage of tax deductions where they are available is an excellent way of ensuring that your charitable commitments are sustainable, for the long-term benefit of those who you ultimately support.

While not all ‘charitable giving’ qualifies for tax deductions, it is worthwhile to take advantage of these tax breaks if they are available based on the organisations you support. The impact of your donations can be more effective when your donation is supported by a solid strategy that will ensure a long-term impact for both the recipients and the giver.

We recognise the shared value inherent in such a sustainable giving strategy, which is why we offer assistance for those who want it as well as the easy donations feature on our FNB App, which makes it safe and easy for a donor to choose from a list of causes aligned to what is close to their heart that they can support and receive a tax deduction (if applicable) in the process. The section 18A certificates are available when you choose to donate via nav» Care to one of the causes listed on the FNB App.

For individuals, families and businesses that want to take their giving a step further and transform it into a long-term philanthropy commitment, we also provide the services of a dedicated Philanthropy Centre, staffed by experienced experts, offering an integrated range of philanthropy tools and social investment advice to maximise the impact and reach of your generosity.

Our research points to the fact that a vast majority of people in this country provided some form of support to others during the pandemic, it’s our  commitment that makes a lasting change happen when giving is structured by leveraging any of the tax deductions that are available to you, and partnering with a bank like FNB which has extensive giving, philanthropy and fiduciary advice experience, you not only secure your charitable legacy for yourself, your family and the wider community, but you also help create a healthy and growing culture of a giving ‘supply chain’ that will make a positive difference for years to come.

Anne Klein is the Head for Solutions, Fiduciary Advice, FNB. Anne is an attorney, notary and conveyancer, she holds a BIuris degree as well as an LLB, has full membership of STEP, serves on the FISA Disciplinary committee, was profiled in the Annual Guide to the World’s Top Lawyers 2021 and was awarded Fiduciary Lawyer of the Year: South Africa, 2019. 

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