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Managing your money

November 06, 2019

4 easy ways to make your charitable donations count

Canadians are a generous bunch, and the opportunities to make a difference are greater than ever. Here’s how you can make your donations more effective and rewarding.

Charitable giving is on the rise. According to Statistics Canada, total charitable donations reported by Canadian tax filers rose to $9.6 billion in 2017

If you’re looking to join or become a bigger part of that growing trend, but also want to be sure you’re maximizing your impact, the following tips can help: 

1. Set up recurring donations to charity

One easy, effective way to up your charitable giving game is to think beyond the usual one-time gift approach.

“[Recurring or automatic monthly donations are] easy and convenient,” says Shannon Craig, chief marketing and product officer at CanadaHelps. This registered charity processes donations and disburses the funds to other Canadian charities. “Your gift is given automatically and you’re free to cancel, change or suspend it at any time. You also get one tax receipt for all your monthly gifts, making tax time a breeze.”

And from the charity’s side, monthly or recurring donors are quite literally a lifesaver.

“They give charities a sense of revenue predictability,” says Allen LeBlanc, director of fund development and marketing at CODE. A registered Canadian charity, CODE focuses on advancing literacy and education in developing nations. “Monthly donors also tend to be stable and loyal. This helps charities accurately forecast their financials on monthly support.”

2. Claim your charitable tax credits

Are you claiming all the charitable-donation tax credits available to you now?

When filing your federal income tax, you can claim eligible donations up to 75% of your yearly net income.

The federal charitable tax-credit rate for 2019 is 15% for the first $200 donated.  You can claim 29% on larger sums if your taxable income is up to $214,368. And, a special 33% rate can apply to your donations beyond the first $200 if your 2019 taxable income exceeds $214,368.

Your donation also qualifies for a provincial tax credit. In Ontario, for example, a 5.05% rate applies to donations up to $200, and 11.16% for larger sums. (Please note that these rates do not reflect the additional impact of the provincial surtax, which can produce even higher donation credit rates. You may want to talk to a tax professional for more information about surtax.)

3. Begin volunteering for a charity

Money isn’t the only way to give. There’s an urgent need for your time, too. Many charities thrive through the efforts of their volunteers. Think about what skills you can offer a charitable organization. For example, if you like event planning, you can help organize a drive and raise funds. If you like to draw, you can help create art- or design-work for an organization’s website or promotional materials. 

Volunteering can also boost your career prospects. In 2016, Deloitte surveyed people who hire or affect hiring decisions in the U.S. The consulting firm found that 82% would be more likely to pick someone with volunteer experience. And, 85% would be willing to overlook other weaknesses if volunteer work showed up on a person’s resume.

4. Donate your investments to charity

Do you invest in stocks or mutual funds? Consider donating them along with a cash contribution. Doing so not only increases the size of your contribution, but also gives you a capital-gains-tax break. Here’s what that means for you:

“Let’s say you bought ABC stock a number of years ago, and since then it increased by 300%,” says LeBlanc. “If you sold that stock to make a charitable gift, you would pay tax on the amount you gained. So, the charity would only receive the net proceeds of the sale.” Net proceeds refer to how much money you get for an investment or asset after taxes and other expenses have been subtracted.

But what if you give the stock directly to charity? “Then the charity would get the total value of the stock,” he adds. “And, you wouldn’t have to pay that gain from a tax perspective. You’d also get a charitable tax receipt for the full value of the asset.”

Still thinking over how much you can afford to give and how? Consider speaking with a financial advisor. Find out what works best for you so you can maximize your impact and your ability to give.

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