For many Canadians, ’tis the season for charity. But budgets across the country are tighter this year. Inflation has driven up costs—including for basics like food. Meanwhile, interest rates have crept up, which means debt costs more, too. If you have less to give, it’s even more important to make sure each donated dollar goes further. These eight strategies can help you maximize charitable gifts.
1. Look for matched donations
A matched donation multiplies the impact of your gift. Your employer may match charitable donations made by employees. Philanthropists and large companies may also offer to match donations up to a certain amount in support of a specific charitable campaign. When your donation is matched, it goes twice (or more) as far.
2. Maximize your tax deduction
The first $200 in donations claimed on a tax return receives a 15% federal charitable tax credit—but amounts above that receive a 29% federal charitable tax credit. So, it’s a good idea to pool charitable donations with your spouse or common-law partner and/or carry forward donations for up to five years and claim them all at once. Saving more on taxes leaves you with more to donate.
3. Donate a little at a time
Charities love it when donors sign up to make regular donations because it gives them a more predictable stream of income. It’s good for donors, too. A $20 monthly gift is a lot easier to fit into a stretched budget than a $240 annual gift, even though the total amount donated is the same. Planning for a regular, smaller amount may allow you to give more than you thought you could.
4. Donate publicly traded securities
When you donate publicly traded securities such as stocks, exchange-traded funds or mutual funds, you get a charitable tax credit for the fair market value of the securities and you don’t have to pay capital gains tax for securities that rose in value after you bought them. This extra tax savings makes donating publicly traded securities a very tax-efficient way to give to charity.
5. Consider impact investing
Maybe you can do good at the same time as you invest for your future. Impact investing is an approach that chooses investments based on their positive impact on the environment or society. Depending on your priorities, this may mean investing in clean-tech companies, not-for-profits or small businesses in emerging markets. Making a difference with your investments achieves two goals at once.
6. Set up a donor-advised fund
A donor-advised fund (DAF) allows you to donate a sum of money now and get a charitable tax credit in this tax year—but decide how to allocate the money later. It may be a good option if you want a structure that will help you plan your philanthropy more strategically and tax-efficiently while you’re alive and that can continue to distribute funds to charity after your death.
7. Give time as well as money
Your time has a lot of value to charities, and volunteers often say they get a lot of value back—meeting new people, developing new skills and feeling good about giving back to their communities. Check to see if your employer offers volunteer grants to the charities you choose to give your time to. That way, they can benefit from financial support on top of the time you give.
8. Amplify with life insurance
There are many ways to incorporate life insurance into your charitable giving plan. Simple strategies include transferring ownership of an existing life insurance policy to charity (you’ll get a donation receipt right away) or retaining ownership and changing the beneficiary to a charity (your estate will get a donation receipt after your death). Life insurance can amplify your charitable plans.
Some of these strategies are do-it-yourself projects. Others would benefit from your financial advisor’s insight. All can help you do more with less this year and ensure your favourite causes are able to continue doing their important work.