Plan your charitable donations

Charitable Choices

Many of us are in a position to give a little back to society.  Many individuals choose to demonstrate their support through monetary contributions while others choose to dedicate their time by serving on boards and volunteering through charitable responsibilities. With approximately 80,000 registered charities in Canada there are many options available to individuals wishing to contribute to charity.

Individuals have a limited number of dollars they are willing to donate to charities.  Planning may assist you in stretching those donations a little further and to benefit those charities you would like to support the most.  With the growing number of charities they are becoming increasingly sophisticated in their campaigning techniques.  As more charities chase these dollars the field is getting more competitive.  The following are some unique ways charities are bringing donating closer to you:

Donating Online

Donating money has never been easier.  In many ways we like the idea of donating online.  No one is pressuring you and individuals have ample time to do their own research before they donate to a specific charity.  Individuals may read annual reports online, which is more environmentally responsible than requesting reports be sent by mail.  Requesting physical copies of such reports can be costly when you consider the cost of printing and postage.  Most of us would like to see administrative costs minimized and this is one area where we can all help.  These reports are important as it allows donors to compare and contrast the merits of each charity.  Many registered charities have access online and can issue electronic tax receipts instantly.  Many websites provide options for the donor to ear mark the funds for a specific purpose rather than as a general contribution.  With its convenience and accessibility, we expect that this method of donating will only grow in popularity.

Point-of-Sale Donations

Many retail stores offer the ability to add amounts, such as $2 or $5, to your purchase to be donated to a charity.  Point-of-sale donations are becoming a popular method for charities to raise funds.  For some charities, their most successful campaigns may come from point-of-sale.  In principle, the idea of everyone contributing a little is a good one; after all, crumbs make bread.  Most customers have a dollar or two to support a good cause.

Point-of-sale is not our favourite method of donating because individuals donating may not always know what the specific funds will be used for.  While retail stores may offer this service to benefit a charity they generally do not issue tax receipts for these smaller contributions.  The side benefit to the retail store is that they can pool their customers’ contributions and make a donation to a charity.  This allows many retailers to be viewed as good corporate citizens while the method in which they report these contributions is not always clear.  It is possible, in some circumstances, that the company is receiving the tax deduction instead of their customers for point-of-sale donations.

Ribbons, Pins and Wrist Bans

Also gaining popularity is the sale of ribbons, pins and wrist bans.  Although individuals do not receive a donation receipt, they do receive a token that they can wear to demonstrate their support of the charity while marketing the cause to others.  The idea of getting a larger number of people contributing a smaller amount shows just how much a little can go a long way!

Changing the Way We Donate

The 2006 federal budget contained a number of proposed changes to personal and corporate income tax.  Some of these changes may alter the way some choose to donate.   The proposed changes provide greater incentives for individuals and corporations to make donations of securities listed on prescribed stock exchanges, mutual funds and segregated funds.  These contributions are also known as “in-kind” donations.  The proposed changes also address the donation of ecologically sensitive land.  Our next column will focus entirely on the strategy of an investor donating securities listed on a prescribed stock exchange.

Planning Your Donations

Charitable causes seem to be consuming more time than ever and has led to terms such as “donor fatigue.”  Similar to investing, we advise individuals to investigate before they give.  We feel that individuals with a limited amount to allocate to charities are best to plan their donations.  We know that donations cannot always be planned, for example giving additional funds to individuals/group affected by a natural disaster or unforeseen event.  Your planning activity should include making calculations of your tax savings, based on specific donation amounts.  You can then decide how to allocate the donations to a charity or among a number of charities.  Planning your donations often enables you to obtain the best tax breaks for the dollars you donate.  This planning may allow you to make even greater donations in the future.

Seeking Professional Advice

Some individuals may want to incorporate their charitable plans with their estate plans.  Individuals considering planned giving should avoid the “do-it-yourself” will preparation kits.  Before implementing any strategy noted in our columns we recommend that individuals consult with their professional advisors (insurance consultant, financial advisor, accountant and estate lawyer).