You may be bracing for that early December feeling – a crisp chill in the air, the tingling of bells and a mailbox overfilled with donation requests from charitable organizations. The holidays are traditionally a critical time for charities, and Canadians made over a third (35.2%) of all donations across the board in December 2016.
The non-profit organizations that we donate to are dependent on those charitable contributions to support our favorite causes. And, while the contributions we make are for the greater good, many savvy investors understand that charitable contribution is also an investment.
Reasons for donating are as varied as the contributors themselves. Besides furthering the goals of a cause close to their heart, charitable giving can soften one’s personal brand, be a touching tribute or legacy for a loved one, or create numerous tax advantages for investors.
A charitable tax write-off sows guaranteed returns, and a lifetime of charitable giving can help with estate planning. There are several ways that a charitable contribution is an investment in one’s portfolio. For example, opening a Charitable Remainder Trust (CRT) may help an investor turn non-income generating assets and properties profitable. Charitable investments may also fund life insurance, better providing for heirs. Additionally, private foundations offer reduced estate and income taxes, a charitable bequest may reduce gift taxes and donor advised funds allow assets to grow, tax-free.
How to Donate – Screening chosen charities
It’s the season for giving, but beware. There is never a shortage of scandals involving charitable foundations misusing funds or turning out to be outright scams. As an investor, you want to make sure your dollar is stretched as far as possible, which means fully screening whom you choose to invest in. Luckily, there are more options now than ever for screening the charities of your choice.
- Canada Helps – helps you find a charity in a category that is close to your heart.
- List of Canadian Charities – can confirm if a charity is registered to help guide your donation decisions, updated each business day
- give.org – documents legitimate charities including governance and cost-effectiveness. Check these websites to see if the charity you are thinking about giving to is a scam.
- http://www.myphilanthropedia.org/ – ranks the most cost-effective charities by cause.
GuideStar – collects the tax returns of charitable organizations. Here you can see executive compensation, mission statement, and if any money went to the family or business of the executive, among others.
When to Donate
For tax savings, there is not necessarily a better time to give throughout the year. However, the urge to give is typically strongest around the holidays. As the holiday season coincides with year-end, this time of year is often best for investors looking to limit their tax burden.
It is important that you have a charitable giving plan. Researching the charities that serve the causes close to your heart and working with your financial advisor to develop a plan around you giving will help you maximize the benefit of your donation, both for the organization of choice and for your personal investment.
For a better understanding of how charitable giving can both help your investments and minimize your tax obligations, contact us at __________.