Australian Charities and Credit Card Reward Points - Opinion
31 March 2010 at 12:08 pm
A while back, when examining my credit card statement and my reward points in particular, I began wondering as most people do, what I would redeem my points for. I thought what a good thing it would be if I could redeem the points to buy raffle tickets in my favourite charity raffles. I soon discovered that currently this is not possible, not with my bank nor with any of the other banks I subsequently contacted. I therefore decided to write to the major Australian banks, and some of the smaller banks, and ask the question, “Would you allow your credit card customers to redeem their reward points to purchase raffle tickets issued by Australian charities?”
Of the major Australian banks only the ANZ has so far replied, and that was to say they were “currently not reviewing the ANZ rewards program”. Of the smaller banks contacted the only replies received were from Macquarie Bank and Bendigo Bank. Bendigo Bank, whose credit card rewards scheme is, admirably, linked to a partnership with the RSPCA, said they would think about my question. Macquarie Bank said they would stick with their current arrangement of allowing customers to redeem points for donations to charities. Indeed, if you look at the Macquarie website you will see that points can be redeemed for a donation to Aspect (Autism Spectrum). It was very interesting to see from the Bank of Queensland website that they appear to be the most active in allowing points to be redeemed for donations to charities ($50 minimum). I counted 11 charities listed.
I then contacted several of the charities supporting my website www.raffleresults.com.au and asked whether they would be interested in a scheme where reward points could be redeemed for raffle tickets. Without exception they were interested although one charity expressed misgivings about the ability of banks to act swiftly enough to match the reward points to a particular raffle before that raffle closed. To my surprise some of the charities I spoke to were unaware that a number of banks currently allow reward points to be redeemed for donations to charities. They puzzled over who would get the tax deduction, the bank or the credit card customer? I therefore decided to contact the Australian Tax Office. The advice I received from the ATO, some written, some verbal, was as follows – If the Bank acts as an agent for the credit card customer in swapping the points for cash which in turn is then paid by the Bank to the charity, then the credit card customer can claim the tax deduction (over $2). If the credit card customer receives a gift voucher from the Bank valued between $2 and $5,000 “as a results of redeeming points under a customer loyalty program” and that gift voucher is in turn donated to a Deductable Gift Recipient (DGR), then the tax payer (credit card customer) is not entitled to a tax deduction.
Of course all this is irrelevant in the case of raffle tickets where no tax deduction is allowed. However I remain surprised that not all charities are aware that banks allow reward points to be exchanged for donations. I would have thought it was the duty of banks to offer this facility to all charity customers. After all, the banks enjoy enormous benefits from the deposits charities maintain with them.
So far as redeeming points for raffle tickets is concerned we fail to see why this should not be allowed under the banks various reward schemes. In 2005 there were approximately 15 million credit cards on issue in Australia. That figure is now sure to be much higher. If only half those credit cards had loyalty programs attached and if only half that number again (card holders) swapped points for $50 donations/raffle tickets to charities, just once a year, the charities would benefit by close to a further $20 million. Furthermore, we know that a lot of card holders, through forgetfulness or simply because they are too busy to think about them, see their points expire. They should be able to give their banks a standing instruction to use those points, when those points are of a sufficient number, to make a donation to, or buy raffle tickets issued by, a favourite charity.
Undoubtedly the process of swapping points for charity raffle tickets would be a little more complicated than swapping points for theatre tickets or a gift pack of wine, but I am sure the Australian banking system would be able to get their minds around it if they tried. I have invited visitors to our website to answer the question, “would you redeem your reward points for raffle tickets” and all replies received have been in the affirmative. Australians spend more than $2 billion a year on charitable gaming (the purchase of raffle tickets) and using reward points as an alternative to reaching in their wallets would be very appealing to many people.
The catalyst for the changes required, to convince banks to amend their loyalty schemes, needs to come from the charities themselves. The charities need to approach the relationship managers within the banks they deal with. They need to ask those managers to make a proposal to their Head Office. Whilst the ‘Raffles on Sale” page of our website www.raffleresults.com.au’ is not an exhaustive list of all raffles on sale throughout Australia, it will allow banks to steer their credit card customers in a direction where they can begin to make a choice. Remember banks need their charity customers more than the charities need the banks. The competition for deposits is fierce.
If any charity would like to discuss this issue with the writer they are welcome to contact email@example.com