Charitable giving is good for you and good for your community – but can strategic charitable giving also be good for your financial plan? Whether your motivation is spiritual, personal or altruistic, you can make a greater impact by incorporating strategic giving into your budget and financial plan. Strategic giving means careful selection of a charity, then planning how you’ll make your contribution.
Does your financial plan allow you to donate?
Before you start thinking of donating to a charity, you should make sure there’s room in your budget to do so. Are you living paycheck to paycheck? Should you be paying down debt with this money? Are you saving for retirement? Reviewing your financial situation will help you decide if you can afford to donate and how much. If you can, consider your options – lump sum donations or regular contributions. Every donation counts, but one option may work better for your budget than another. A lump sum donation may make sense if you get a bonus or a tax refund while regular contributions allow you to plan your monthly budget better. Meanwhile, many employers offer a pre-tax deduction from paycheques you can direct to a specific charity.
What to consider when choosing a charity
You may choose a charity because you’ve been affected by that cause. Or perhaps you’ve seen a charity working in your community to improve a situation or need. Before you donate, you’ll want to make sure that your money is having a direct impact on the cause you support. After all, that’s why you’re donating in the first place. Charities registered in Canada are required to report financial information, some of which is made public. You can view the public financial information of registered charities here. It’s important to understand where your money is going once it’s in a charity’s hands.
Are you receiving a tax receipt for your donation?
The Charitable Donations Tax Credit issues credits for 15% of the first $200 you donate and 29% of anything over that amount to a registered charity. You can check to see whether a charity is registered or not through the Canada Revenue Agency. Remember, if you donate to a registered charity and keep records of your donation, you can still deduct this when filing your income tax – even without a formal receipt.
Are there other ways to donate money?
Other ways to give strategically include buying a life insurance policy, purchasing stocks or leaving a financial gift (also known as a bequest) in your will. Your financial security advisor can help ensure your gift is a win-win for both you and the charity.
What else should I consider?
A monetary donation isn’t the only way to give. You can also give your time by volunteering. This may mean taking a shift once a week at your local food bank or helping during seasonally busy times. If you have a skill set to share, charities might be eager to use your expertise – be it bookkeeping, writing, photography, digital marketing or something else.
However you decide to donate, you’ll have a positive impact on your chosen charity. Feeling connected to a community means your contribution makes sense – no matter the size.
The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.