Tips for Charitable Giving

Brandon Sun, March 31, 2014 - David McConkey

At income tax time, some of the receipts we are looking for could well be from charitable donations. Manitobans rank No. 1 as the most charitable in Canada, and have been for years. Yet only 26% of Manitoban tax filers report a donation to charity.

(The percentage who actually donate is somewhat higher because one spouse typically reports the combined total from both. This is good for saving taxes – more on that later.)

Of course, there are many ways to be generous that don’t show up on your income tax return. Think of volunteering time, donating food and other items, and being a good family member, friend or neigbour. As well, money can be given to non-profit groups and organizations that don’t issue tax receipts.

But donating to registered charities is a vital part of active citizenship and participating in civil society.

Here are five suggestions to make the most of charitable giving:

EMPOWER DIVERSITY

There are tens of thousands of charities in Canada, focusing on everything from the arts to zoos. So, pick one or more that you like, and donate away!

By donating, we make our lives more fulfilling as we nurture our diverse passions. We feel more empowered – we are trying to be part of the solution. We inspire others and ourselves – to be the kind of people who are interesting and involved in making a positive impact.

THINK GLOBAL

We know that there are striking needs in places that are far away from here. We are invited to help out not only during dramatic disasters but also through continuing development work.

But doesn’t charity begin at home? Sure, but where is home in the global village?

THINK LOCAL

Many local groups cannot afford much to publicize their valuable work, but they need our donations. My wife and I are fond of two small home-grown organizations: The Marquis Project and The Women’s Resource Centre.

Important also are the large umbrella-type organizations, like the United Way, community foundations, and the Brandon Regional Health Centre Foundation. And as I noted a few months ago in my bucket list column, foundations also offer you the opportunity to designate your gift as a perpetual legacy.

Some workplaces provide the convenience of donating through payroll deduction, often with programs like All Charities or United Way. Some pension plans have the same option for retirees. (Remember to include such donations from Box 46 of your T4 slip, or from your T4A slip if you are retired.)

SETTING GOALS

Why not consider an annual charitable donation goal like one-quarter of one per cent of your income? That would mean that a Brandon household with an average annual income of $75,000 would donate $200 each year.

TAX CREDITS

The federal and provincial governments provide tax credits for donations to registered charities. There are several points to remember. One is that spouses can combine their donations. A second is that donations can be carried forward for five years. A third is that there is an incentive to donate a total of more than $200. Any amount up to $200 generates a tax saving of about 25%. Any amount over $200 generates a tax saving of about 45%.

Take the previous example of a household giving $200 – their tax saving would be $50. But if they doubled their donations to $400, their tax saving would nearly triple – to $145. (Carrying forward to claim several years’ worth at once would save even more.)

In addition to encouraging everyone to donate more than $200, the federal government is also encouraging those who have never donated to get started. The new First-Time Donor’s Super Credit adds another 25% in tax savings for up to $1,000 in donations.

We can use the earlier example for a first-time donor. Now a donation of $200 has a tax saving of $100; a donation of $400 has a tax saving of $245. So, if you have never donated before, right now (until 2017) is the time!

Think more about giving more to charity. It can be a great way to support the wider community and feel good yourself. Income tax credits are an extra bonus.