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Financial planning tips

October 16, 2017

4 ways to make the most of charitable donations

Do you want to use your money to make a difference?  Here are 4 easy ways to ensure you and your favourite charity get the most bang for your buck.

Charitable giving is on the rise. In fact, according to Statistics Canada, more than 80% of Canadians 15 years of age or older donated to their favourite causes in 2013, doling out $12.8 billion in total – almost a quarter more than in 2004.

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 4 tips can help: 

1. Put your donations on autopilot

An easy, effective way to up your charitable giving game is to think beyond the usual 1-time gift approach. 

 “[Automatic monthly donations are] easy and convenient,” says Shannon Craig, chief marketing and product officer at CanadaHelps, a registered charity that processes donations and distributes 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 1 tax receipt for all your monthly gifts, making tax time a breeze.”

And from the charity’s side, monthly 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 focused on advancing literacy and education in developing nations. “Monthly donors also tend to be stable and loyal, which lets charities fairly accurately forecast their financials on monthly support.”

2. Claim your tax credits

A great way to free up cash for giving in future years is to be certain you’re claiming all the charitable-donation tax credits available to you now.

You can claim donations to registered charities totalling up to 75% of your yearly net income. The federal charitable tax-credit rate for 2017 is 15% for the first $200 donated and 29% on the portion of the donation over $200, if your taxable income is up to $202,800.

Your donation also qualifies for a provincial tax credit. In Ontario, for example, the rate is 5.05% for donations up to $200, and 11.16% on the portion of the donation over $200.

Finally, there’s still time to take advantage of the first-time donor’s super credit, which offers a bonus 25% credit on any single gift of money up to $1,000 if neither you nor your spouse or common-law partner claimed a charitable-donation tax credit in any year after 2007. This program is scheduled to expire at the end of the 2017 taxation year, so you still have a couple of months to make a qualifying donation.

3. Give your time instead

Money isn’t the only way to give. There’s an urgent need for your time, too. Statistics Canada found that 12.7 million Canadians aged 15 years or older volunteered in 2013, a decrease of 4% from 2010 – despite the fact that the total population grew 3.5% during the same period.

Signing up for gratis work can bolster your career prospects as well: When 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 prospect’s CV.

4. Donate your investments

Finally, if you invest in stocks or mutual funds, consider donating those in addition to or rather than cash. You’ll receive a capital-gains tax break, which can be especially helpful for estate planning, while simultaneously increasing the potential size of your contribution.

 “Let’s say you purchased ABC stock a number of years ago, and since then its value increased by 300%,” says LeBlanc. “If you sold that stock to make a charitable gift, you would pay tax on the gain, which would affect the value of the gift if you were basing it on the net proceeds of the sale.”

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

If you’re ready to apply these tips to your own donations but are still mulling 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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