Gifts of Autumn
Considerations for your year-end giving
Autumn. It is a time of transition from summer to winter, a time for harvest and a time when we give thanks. It is a time to reflect how fortunate we are – for our health, wealth, friends and family – and to consider ways that we can give back to causes close to our hearts.
In the not-for-profit world, charitable giving is often referred to as ‘philanthropy’ – a word many of us may associate with the wealthy. In reality, there is no dollar amount connected to the word. Anyone can be a philanthropist. We give what we can, where we can, as often as we can.
As we approach the holiday season, our mailboxes will soon be filling up with year-end giving appeals. With so many worthwhile causes to consider, deciding which one, or ones, to support can be challenging. According to CanadaHelps, an online giving platform many organizations use to process donations, 11% of donations happen in the last three days of December, making this time of year significant to the charitable sector.
There are many things that factor into our choice to support an organization and how much to contribute. When making your year-end giving decisions, consider the following.
What are you passionate about? Do health and wellness organizations top your list? The environment? Education? Or are you a lover of the arts? Perhaps it’s not an organization at all, but a community that you wish to support. Take the time to consider the issues you care about and why you want to support them. There is no right or wrong answer, giving is a personal choice and you should follow your heart. Giving should bring joy and not feel like an obligation.
What impact would you like to have? Do you prefer to support international, national or local efforts? Consider what would be most effective in helping your charity fulfill its mission. Is there a project they need help with or would a general donation, left to the discretion of the organization, be best? Although donations to administration are not always top of mind for donors, there is a cost to running an organization effectively and efficiently. During a round table discussion held this past June, charities were asked ‘What challenges will your organization face in the next 5-10 years?’ The number one answer was financial restraints to implement programs and projects.
Short-term vs. long-term impact. Do you want your donation spent now or over multiple years? While there will always be a need for immediate donations, some donors have turned to endowments to create a legacy ensuring that the causes they care about are supported year after year. Endowments can provide long-term flexibility and, in most cases, donations are not spent but invested and the interest earned provides an annual revenue to fulfill the donor’s wishes.
Do you want to be recognized? Giving on an international or national level, while your donation will make an impact, it may not be recognized other than a charitable tax receipt they provide you. When you support local causes you may receive more recognition but it can vary from organization to organization and may be dependant on the size of donation as well. Similar to determining what organizations to support is a personal choice, so is donor recognition. You may want to remain anonymous but if public recognition is important to you, don’t be afraid to ask how your gift will be acknowledged.
How can I give? Gifts can be made now or planned for the future. Immediate donations are generally given in the form of cash, cheque or credit card but there are other ways to support your cause of choice, whether in the short-term or through planned giving. Gifts can take the form of:
- Proceeds from special events
- Gifts in honour of or in memory of someone
- Transfer of shares
- Life insurance policies
- Charitable remainder trusts
- Gifts of real estate
- Estate gifts (bequests)
While this list provides you with options of how you can give, it is always best to consult your advisors and the charitable organizations to ensure they are able to accept your preferred method of giving.
What are the tax benefits? When you donate to a registered charity a charitable tax receipt will be provided by the organization to be used on your personal tax return. This receipt can help to reduce your income taxes payable for the year, offset capital gains or reduce estate taxes. To check if a particular organization is registered, visit the Canada Revenue website (canada.ca/en/services/taxes/charities.html) and click ‘List of charities and other qualified donees.’
Generally, the combined federal/provincial tax credit you receive will be approximately 20 percent of the donation up to $200 and 40 percent for every dollar over $200 donated. While you may be eligible for a tax credit for your donation, there also may be limitations to the amount the gift you can claim in one year. The annual dollar limit of charitable gifts is equal to 75 percent of your net income. However, if you give more than 75 percent of your net income, the remainder can be carried forward to claim in future tax years.
Everyone has a unique set of circumstances that can impact their donation method and amounts. Speak with your advisors to find out what you can afford and which method of giving would be best to realize your desired charitable impact and tax benefit.
Include your loved ones. Charitable giving provides an opportunity to teach your children, grandchildren and others close to you about the needs within your community and causes you care about. Providing them with your insight and the importance of giving back will instill a value in them that will last a lifetime. If you are considering naming an organization to be a beneficiary in your will, it is important to have a discussion about your decision with your family to provide you with peace of mind and to avoid potential conflicts after you’re gone.
Once you have decided what your charitable goals are, talk to your family, talk to your advisors, then talk with the organizations you wish to support.
So, this autumn, as we sit back and enjoy the waning days of summer, as we take in the bursts of colour all around us and as we appreciate the subtle and sublime aspect of life, let’s also take a moment to pay it forward, by leaving our mark and making an impact to the causes and communities we care about.