Photo by: Tali Le Bamba licensed under Creative Commons Attribution 2.0 Generic
Canadian charities had a rough year according to Statistics Canada. Donations were down 5.3% as recession-wary Canadians cut back on support for their favourite causes. There is still a window of time left to help a charity that means something to you. If you do decide to give, make sure you take a smart approach to making your gift. A bit of planning and discussion with your financial planner can help you make the most of your giving, not just for the organization you’ve decided to support, but in your financial plan as well. Here are a few quick tips to get you started:
Plan ahead
Set aside money annually for your charitable donations. Whether it’s a fixed dollar amount or a percentage of your gross income (say, 2.5%), you should have a good idea of how much you plan to give to the cause or causes you’d like to support during the year.
Spread it out
Think about making your donation through monthly deductions from your account. This will spread out the impact on your cash flow over the year.
Consider insurance
You can designate a charitable organization as the beneficiary on your insurance policy. Doing so allows you to leave a larger gift to a cause you’re passionate about, after you die.
Don’t Forget the Write-off
Save all your receipts, no matter how small your donation is. You can combine them and claim a tax credit for up to five years of donations, to get the biggest bang for your donation buck. Here’s how it works: the first $200 of donations earns a federal tax credit of 15%. Above that, the federal tax credit jumps to 29%. Magnify that by the provincial tax savings and you’ve got a win-win!
Pool your receipts
If you and your spouse give to different causes, pool your receipts. It doesn’t matter whose name is on the receipt – combining them will help push you over the $200 threshold to maximize your tax credits.
Think about starting a foundation
You don’t need to be a fat cat to have your own foundation. Even a $20,000 lump sum could become the basis of you or your family’s gift plan for many years.
