How to . . . donate money to charity The total value of charitable donations in the UK worth £1m or more has fallen to the lowest level since 2007, according to a report from Coutts, the private bank. While individual donations worth £1m or more between 2010-11 increased to a record 232, the total value of the philanthropic gifts fell 5 per cent annually to £1.24bn. This is the lowest since the annual Coutts Million Pound Donor Report started collecting data in 206-07. How to... Charity think-tank NPC also announced this week that donations are down by 20 per cent for community and voluntary charities. Charities still get a lot of their funding through cash collections but this is labour-intensive, irregular and tax-inefficient. There are alternatives that are better for both donor and charity. Below, we look at some other ways to give to charity this Christmas. Leave a legacy If you are writing a will you can either leave money to a charity or items of value, such as artwork, jewellery, or furniture. Either way, donations to charity do not form part of your estate for inheritance tax purposes. Maya Prabhu, executive director of philanthropy services at Coutts, says this can be achieved by legacies or by bequeathing assets from your estate to a family charitable trust. "Some clients choose to donate money by setting up a charitable trust in their will," says Prabhu. This way, whatever is in that person's estate at that time will go into the charitable trust. Dominic O'Connell, executive director and head of tax trust and estate planning at Coutts, adds that giving money to charitable causes via your will can be an effective way of mitigating inheritance tax (IHT) as qualifying gifts to charities are usually exempt. For deaths on or after April 6 2012, the taxable estate will be subject to IHT of 36 per cent instead of 40 per cent, where the deceased includes charitable bequests of at least 10 per cent of the value of their net chargeable estate. Gift Aid it This tax-efficient scheme allows charities to claim 25p relief from every £1 donated, provided you are a UK taxpayer. Those in the 40p tax bracket can claim back the rest of the tax on donations through their tax return. Tim Gregory, partner in the private wealth group at accountants Saffery Champness, says for example, a donation of £4,000 is increased to £5,000 to take account of 20 per cent basic rate tax already paid by the donor. That £1,000 is what the charity claims. If the donor is a 40 per cent taxpayer, he or she can claim the additional 20 per cent, another £1,000. That rises to 30 per cent, or £1,300, for 50 per cent taxpayers (although the 50 per cent rate will reduce to 45 per cent in April 2013). The scheme is simple to use - you complete a Gift Aid declaration form and the charity does the rest. However, the Charities Aid Foundation (CAF) says charities are losing out on £750m every year because not enough people use it. Alana Lowe-Petraske, a solicitor in the charities and philanthropy team at international law firm Withers points out that "it is worth remembering that charitable tax reliefs never operate to enrich the donor financially; the donor always parts with the gift at the end of the day. What Gift Aid and other relief schemes do is allow the net cost of the gift to be reduced, making it cheaper to give more. Give as you earn "Payroll giving" schemes allow you to donate directly from your salary, before it is taxed. This differs from Gift Aid because it is employees rather than the charity that benefit from the tax relief on donations. Employees who choose to give through the scheme benefit from full income tax relief on their donations. For basic rate taxpayers this means a £1 donation costs 80p. For a higher-rate taxpayer, it will only cost 60p. Employees can support any charity through payroll giving, and can contribute to more than one. Some companies will match what you give. "Donations made through payroll giving are very high-margin donations with virtually no administration costs," says John Howard, partner and head of charity at Wilkins Kennedy. They are an excellent source of extra revenues for charities, but the payroll giving scheme is vulnerable to changes in employment. Donations are lost when an employee on the scheme leaves their job and stays out of work or moves to a company that doesn't have the scheme. Even if the new company does run the scheme, employees are not automatically enrolled on it. Donate by mobile Mobile phone users can also give to good causes by using charity applications or "apps." Giveonthemobile.com allows users of smartphones such as iPhone, Android and Blackberry to donate to more than 80 charities signed up to the deal. The outfit takes three per cent of donations as an administration charge and charities pay £100 a year to use the platform. JustTextGiving, run by Vodafone, allows users to donate to a chosen charity or can be used to help fundraisers collect money. Once signed up to the deal, users are given a unique code that gives them access to charities. Give away small shareholdings If you have odd holdings of a few shares - for instance, from split inheritances, takeovers or rights issues - which might cost more to sell than they are worth, you can donate them to a charity such as Sharegift, which will sell them on your behalf and donate the proceeds to charity. It works by aggregating shareholdings and then selling them in bigger parcels to cut costs. Sharegift works with stockbrokers such as Killik and TD Direct Investing. It can accept shares in certificated or nominee form, and can also help track down old holdings and lost certificates. UK taxpayers can claim income tax relief on share donations through self-assessment, and the shares donated are also exempt from capital gains tax (although you also lose the ability to offset losses against profits elsewhere). Sharegift is run by the Orr Mackintosh Foundation, and distributed £866,000 to 245 charities in the last tax year. But decisions about donations are made by a board of trustees - you cannot specify where you'd like your donation to go, although you can make suggestions. Bank on good causes Schemes to make charitable donations easier mean bank customers can choose to give money to good causes when spending, saving or withdrawing their money. This year, thousands of ATMs began to offer an option allowing users to donate to some of the UK's largest charities when checking their balance or taking out money. Royal Bank of Scotland cash machines allow donations of between £1 and £150 to eight charities, while Tesco cash machine users can give up to £300 in a single transaction to a choice of seven charities including Action for Children and Barnardo's. HSBC, which has provided ATM charity donations since 2005, said the scheme has remained popular in spite of the economic downturn. In 2010 more than £340,000 was given to charity via ATMs. Customers who prefer to use a credit card to donate can choose one of the cards available from charities such as Greenpeace, Save the Children and RSPB. A percentage of the money spent is automatically donated when the card is used, meaning that the more money spent, the bigger the donation. However, interest rates charged tend to be above-average. Amnesty International's credit card, which donates £15 when the account is opened and 25p for every £100 spent, has an APR of 18.9 per cent. The Charity Bank, which opened in 2002 and is a member of the Financial Services Compensation Scheme, does not enable donations but instead allows customers to use their savings to provide affordable loans to charities and community organisations. Savings rates are not the best on the market but are higher than those provided by many high street banks. The cash Isa currently pays 2.05 per cent. Since the financial crisis began the Charity Bank says that its deposit book has increased from £33m to £76m. Additional reporting by Elaine Moore and Jonathan Eley