Here are a few guidelines to Review the HDFC Charity Fund for Cancer Cure (HCC3):
“True charity is the desire to be useful to others with no thought of recompense” – Emanuel Swedenborg
Is the organisation genuine?
Will my contribution reach the needy?
So, all this while you were seeking an opportunity to give back to the society, then HCC3 might come handy. It’s like making investment and charity in one go.
Wondering what’s HCC3?
HDFC has launched HDFC Charity Fund for Cancer Cure (HCC3). Lately, it has been attracting a lot of curious investors. You can be sure of the donations reaching the needy and underprivileged cancer patients.
In India, a million new patients are being diagnosed with cancer every year. The treatment of cancer is estimated to cost around Rs.10 lakhs or even more. Many patients are left untreated or are unable to receive full treatment due to the paucity of funds. HCC3 initiative will give them the hope that they won’t be left stranded. It will render the necessary will power to fight the disease against all the odds.
HCC3 aims at donating a part of fund returns towards cancer treatment. It has been the 3rd leg in the HDFC Charity Fund for Cancer Cure series dedicated to the treatment of economically weaker cancer patients. Till now, these series have successfully donated around Rs 81 crore & benefitted close to 3168 patients. For every contribution from the investor, HDFC contributes an equal amount. So, this doubles the impact of the objective that the fund wants to achieve.
What’s more! This fund doesn’t even charge investment and management fees.
It is a close-ended scheme with the duration of 3 years (1136 days). The New Fund Offer opened on 10 March 2017 and closes on 24 March 2017. The minimum investment amount is Rs 50,000, and there’s no upper limit. There are no entry/exit loads. This HCC3 series consists of an Arbitrage Plan and a Debt Plan. The arbitrage plan is a moderately low-risk investment. It generates returns via seeking arbitrage opportunities between cash and derivative markets. It will also invest in debt and money market instruments.
Conversely, the debt plan is a moderately risky investment. It provides returns through investments in high-quality Government Securities and Debt/Money Market Instruments. Both the plans have a direct option and a regular option.
In the case of a distributable surplus, the fund may declare dividends twice a year. Under investment sub-options, you’ll get only the dividend option with payout facility. In this, you may choose whether to donate 50% or 100% of dividends declared.
Using these donations, HDFC in association with the Indian Cancer Society will provide financial aid to cancer patients. The purpose is to support the patient of families who earn less than Rs 2 lakh per annum. Each eligible patient will receive a financial aid of up to Rs 4 lakh. It will cover expenses of surgery, chemotherapy, supportive care, rehabilitation and post-treatment evaluation.
Structure of financial aid under HDFC Charity Fund for Cancer Cure
1. As an investor, you invest in the HDFC Charity Fund for Cancer Cure.
2. The fund will invest your money in securities as per the investment objective of the scheme
3. Periodically, the scheme declares dividends out of the distributable surplus.
4. According to your indicated option, 50%/100% of the declared dividends would be donated to the Indian Cancer Society (ICS).
5. Meanwhile, the Indian Cancer Society (ICS) empanelled hospitals receive applications of all the cancer patients.
6. After initial screening, these applications are then sent to the ICS Due Diligence Team (DDT). The DDT conducts meeting once a week to evaluate the application on medical grounds.
7. Upon completion of the evaluation, only the eligible applications are forwarded to ICS Governing Advisory Council (GAC). The GAC shortlists the candidates who would receive the financial aid.
8. Based on the decision of GAC, the money is released by the ICS to the hospital.
9. As soon as the hospital receives funds, the patient is intimated, and treatment gets initiated.
The rationale behind the entire procedure is to reduce the gap between registration of patient and disbursement of funds. The result would be timely treatment and recovery of the patient.
Also read: Goal based investing through mutual funds
Tax Implications of HCC3
Investing for charity was never so pleasing as before. HCC3 is a win-win proposition from various counts.
On the one hand, it restores the productive life of the cancer patient through timely and comprehensive treatment. On the other count, it makes you eligible to avail tax benefits. You may claim the investment in HDFC Charity Fund for Cancer Cure as a tax exemption under Section 80G of Income Tax Act 1961.
The dividends received on both the arbitrage plan and debt plans would be tax-free in your hands. But the treatment of capital gains differs. In the case of debt plans, short term capital gains (where holding period is less than 36 months/3 years) would be taxed as per your income slab. Long-term capital gains would be taxed at the rate of 20% with indexation (plus surcharge and relevant cess).
Short term capital gains (where holding period is less than 12 months/1 year) on arbitrage plan will be taxed at the rate of 15% (plus surcharge and relevant cess). However, long-term capital gains would be completely tax-free.
Can returns be expected from Investment for Charity?
Charity and wealth creation needs to be treated as two mutually exclusive goals. If you combine the two, you would be at a loss. It is so because charity in itself is a selfless goal. You do charity to serve the society and not to make money out of it. On the contrary, while investing for wealth creation, you have to scrutinise the fund from returns perspective as well.
HDFC Charity Fund for Cancer Cure is exclusively meant for charitable contributions towards cancer treatment. It would be highly irrational to expect high returns while investing in this fund.
If you are looking for avenues to grow your money, then HCC3 is not for you. Perceive it only for charitable purposes. For wealth accumulation, you may try your hands on some large-cap and mid-cap equity funds.