It’s a question we get all the time. Why aren’t our donations tax deductible? There is a long and dry answer to this, so I’m going to make it as interesting and exciting as possible by explaining it using animated gifs.
Firstly, One Girl is a registered Australian charity and we have Tax Charity Concession endorsement from the government. That means we don’t pay as much as tax as a for-profit business. (Awesome). But tax deductibility is a different kind of endorsement. And we don’t have that yet.
To get tax deductibility, charities need to apply to become a DGR recipient. DGR stands for ‘Expensive Resource Intensive Process That Takes Far Longer Than It Should’.. okay, not really. It stands for Deductible Gift Recipient status. And that’s what we need.
Believe it or not, there are THIRTEEN different types of DGR statuses that Australian charities can apply for, and the International Aid status is one of the most difficult and time intensive processes to go through.
It’s a two step process. First we have to apply to the federal government to become an ‘approved organisation’. They’ve got a big list of requirements that we need to meet. Once we’ve met all those requirements we have to prove to the Australian Tax Office (ATO) that our money is being spent on supporting people in developing countries.
The amount of information and the length of these forms is nothing short of extraordinary. It will take a trained professional roughly six months to collect all the information required and then to fill out the forms, and then they need to be checked by lawyers to make sure we’ve ticked all the boxes before they are submitted.
Once handed over to the government, the approval process can take anywhere from 6 months to a year – so you want to get the forms perfect before you hand them in. There is just one person in the entire government who can grant your International Aid organization DGR status, and that is the Minister for Foreign Affairs. Your forms might sit on their desk for months before they get looked at.
An overseas aid organization must have programs running for at least 12 months – 2 years before they’ll even CONSIDER your application. Our programs began at the start of 2011, so we’ve only been eligible to apply for about 12 months.
It’s a resource and time intensive process, but we’re finally starting the process this year. We know that we need it to keep growing.
In the meantime, we’ve set something up with another charity called World Relief. We’ve become a partner of them, which means that we can process tax deductible donations through them and they will take anywhere from 6% – 10% of the donation, depending on the size.
Because we lose such a large chunk of our donations, we only offer this for donations larger than $500 (or if someone is adamant that is must be tax deductible).
To date, we’ve raised almost $700,000 online without tax deductibility. So it hasn’t limited our growth in a big way. But for creditability moving forward, we need it. It makes us look established and trustworthy. And people will know we’re sticking around for the long haul. We’re starting the process this year. We have ALL of our other government registrations and statuses – just not this one.
It’s coming soon, we promise. And when we get it, we’ll look like this.