Charitably speaking, it's starting to look like there's a generosity deficit in this country.
Statistics Canada reports that donations to charity have fallen by almost $1-billion over the past two years, a situation that might conceivably be explained by the recession and its aftermath. But at the same time, fewer people are claiming tax deductions for charitable donations, and the average age of donors is creeping upward.
A discussion about charitable giving on my Facebook page last week (read it here: http://on.fb.me/c6tCUA) suggests people are angry about high salaries and administrative waste at charities, which is fair enough. But moral outrage at charities doesn't do anything for people in need.
So let's look at some ideas for rejuvenating your charitable giving. For starters, the growing popularity of cellphones and mobile devices has made giving easier than ever.
The trend is called mobile giving and it basically means using your cellphone or other mobile device to flip a small donation of $5 or $10 to a charity you support. This kind of donation is also called text-to-give because you send your money by texting a keyword to the address, or "short code" of your charity.
For example, the Ottawa Mission Foundation has the keyword Meal. Text that to 45678 on your mobile device and the cost of a $10 donation to the mission will be added to your cellphone bill.
Mobile giving is all about aggregating lots of small donations, so it works best in situations where charities mount a big publicity push to respond to a natural disaster. But it's also a way to regularly give money to charities you support with virtually zero effort.
My own preferred way to give is to use CanadaHelps.org, which is itself a non-profit charitable organization. You can browse for charities on this website, or donate to one that you already know about. Indicate how much you want to donate and whether you want to use PayPal, a credit card or online debit to pay. If you use the debit option, you'll need to be a customer of Royal Bank of Canada, Bank of Nova Scotia, Toronto-Dominion Bank or Bank of Montreal. Note that PayPal, an online payments system, offers you the option of paying by credit card or from an account at virtually any bank.
Once you've made your donation on CanadaHelps, a tax receipt is instantly e-mailed to you. Print it and then file it away until tax time.
Tax Time
You're probably aware that there's a tax deduction for charitable donations, but did you know that it becomes a lot more substantial once you get above $200 per year in donations?
There's a 15-per-cent federal tax credit on the first $200 you donate, and a 29-per-cent credit on higher amounts. Matching provincial tax credits work the same way – once you get above $200, a higher tax credit kicks in.
Provincial charitable tax credits vary widely in size. Let's say you're a resident of Alberta who contributes $200 to charity in a year. Data from H&R Block Canada shows your combined federal-provincial tax credit would be $50. If you gave $1,000, the tax credit would be $50 on the first $200 and $400 on the remaining $800. The total credit of $450 would then be applied against your total amount of tax owing
Ontario is one of the least generous provinces when it comes to charitable tax credits. A $1,000 donation would get you a combined federal-provincial credit of about $362, according to H&R Block.
One way to get above the all-important $200 donation threshold is to have one spouse claim all of a household's charitable donations. "We also like to remind people that they do have the ability to carry forward their charitable donations for five years," said Cleo Hamel, senior tax analyst at H&R Block. "If you give $50 to $100 per year, it makes sense to hang onto your receipts for a couple of years."
The Canada Revenue Agency says you can verify that a receipt for a charitable donation will be acceptable for tax purposes by checking to see that it includes your name and address, the charity's business or registration number, a unique serial number and a statement that the receipt is an "official receipt for income tax purposes." You can also check the CRA website to ensure a charity is registered under the Income Tax Act.
Two additional ways to give to charity: Donate stocks and mutual funds, or use Aeroplan and Air Miles reward points to buy a donation. If there's a generosity deficit in this country, it's not for lack of ways to give.
GIVE IT UP
Here are some online tools to help you maximize your charitable tax donations:
Verify your charity
Canada Revenue Agency's list of registered charities: http://bit.ly/aSzIds
MoneySense magazine's Top 100 Charities list: http://bit.ly/95T0Ud
Give on the go
A list of charities you can donate to via cellphone: http://bit.ly/4oTrWu
Online portal for giving to 85,000 charities
CanadaHelps.org: http://www.canadahelps.org
Deduction calculator
Mackenzie Financial's charitable tax planning calculator: http://bit.ly/i3vnDi
Rob Carrick