Did you know that the percentage of Canadians donating to a charity has fallen over the past few decades? In a CBC article the research said that only 23% of Canadian donated to a charity, down from 30% in the 90s. I feel it is important that we give back in some form, in some way, to someone or some place that is important to us. Whether it is money or time it is important that we do what we can to make our surroundings and the surroundings of others the best possible environment.
I was so proud the other day when I read that a gentleman, a University of Calgary Alumni, donated $100 Million dollars to the University. I too am a U of C grad but unlike this gentleman I do not have $100 Million dollars to donate. It is amazing that someone with that kind of wealth feels compelled to donate so much to a University that meant so much to him. I also donate to the U of C but on a much smaller, monthly scale. Why do people donate?
Just to give back
This fellow felt that the U of C was an integral part of his success and wanted to share that success with the University. The charity might not be a school; it could be an organization that helped someone out of a hard life towards something greater. It could also be a place that has a real personal family connection like a cancer treatment centre or another place that was there for a family in need.
Related article: Develop a charitable giving strategy
Building a better community
By giving back to our surrounding community we help build it into a productive, healthy community that in turn will help people and businesses in that community grow. Charitable donations can be in the form of money but many Canadians also donate time which is just as valuable as donating money. Donating their free time to causes and places can also make a significant difference. Time donated is precious because we all are looking for more time in our day to day lives.
People donate time and/or money and in return have their name or business advertised as someone who has donated to particular cause or organization. For every person that donates and receives some form of public recognition there are just as many, I feel, that donate and seek no public recognition. I am married to one of these people.
Some donators want the recognition, others do not but it can still be part of the recognition process.
To save money on taxes
When you contribute to a registered charity, you may be eligible for a tax receipt which gives you a tax credit. This tax credit is key reason why Canadians make charitable donations. The maximum cumulative tax credit is 75% of your net income. At death it is bumped up to 100%. You receive a 15% Federal Tax Credit on the first $200 dollars and then a 29% Federal Tax Credit on the amount over $200 dollars. As a result, sometimes it makes sense to save your charitable tax credits and lump them together in one year rather than spread them out over 2 years.
Related article: Different ways to give to a charity
There are two ways in which a person can donate. They can donate while they are alive and they can donate upon death. We have discussed the use of Life Insurance as a way of making a donation at death so we won’t go over it again.
Related article: Charitable giving using life insurance
Consult your Financial Planner to determine what the best way is to make charitable donations at death using your life insurance. Do you appoint a beneficiary but continue to own it or do you change ownership and appoint a beneficiary. Many things to consider.