Before You Give to Charity
August 11, 2020
Charitable donations are a great way to help out the causes you care about; even if it only seems like a drop in the bucket, your generosity can enact great change. But how do you make sure your donation is used effectively? How do you avoid scams? How can you deduct the donation from your taxes? Our team at Currey Insurance & Investments is here to help you navigate this topic!
Do your research to see where to put your dollar – and where it goes
A good way to start researching where to donate is by Google-searching for keywords related to causes which matter to you (like “cancer research” or “animal rescue”), followed by “best charity” and see what comes up. Once you find a specific charity to consider, search its name plus “complaint,” “rating,” or “scam.” If you find any red flags, it may be best to look for another organization.
In addition to general searches, you should directly look at the charity’s website to find more information about their mission and operations. If things like their spending reports, employee salaries, and program funding are not readily available, be suspicious! A great resource for information is Charity Intelligence Canada – they provide comprehensive ratings based on a charity’s overall impact, transparency, and need.
Be aware of scammer tactics
One of the easiest ways to avoid scammers while navigating charity donations is to not feel pressured to donate. Scammers will call you on the phone, stand on your doorstep, and demand your donation as soon as possible. Actual (good) charities are grateful for your donation at any time and will be as transparent as possible about their sense of urgency and funding figures.
If you get a call from a fundraiser, make sure you ask for the exact name, web address, and mailing address of the charity so you can fact-check the information. A real charity will be honest about their intentions and will not pressure you into donating over the phone. You also shouldn’t trust your Caller ID – scammers can make it look like they are calling from your area code or put a well-known charity name in their ID, but they could be calling from anywhere in the world.
Ask about tax-deductible donations
One advantage to donating to charity (asides from the knowledge of the good you are putting into the world) is that you are able to write off most donations from your taxes each year. The Canadian government offers a Charitable Donation Tax Credit which can be used to reduce your total taxes payable in a given year. The federal rate of this credit is 15% of the first $200 donated and 29% for amounts above that. There are additional provincial credits with rates that differ from province-to-province – those rates can be found in the CRA’s Charitable donation tax credit rates table. For example:
You donate $500 to charities in a year. You will receive a $30 federal tax credit (15% of the first $200) plus $87 (29% of the remaining $300) = $117 in federal tax credits. If you live in Ontario, you receive 5.05% of the first $200 ($10.10) plus 11.16% of the remaining $300 ($33.48), giving you a total tax credit of $160.58. This amount is deducted from your total taxes payable.
Not all charitable donations are tax-deductible, however. In Canada, you will be given (or can request) an official donation receipt from a registered charity or other qualified donee (for more information about these terms, check out the CRA’s Charities and Giving Glossary) which you can use to claim donations on your taxes. The CRA provides a list of these registered charities so you can be sure of whether your donation will qualify. You should note that crowdfunding websites like GoFundMe, Indiegogo, and Kickstarter do not qualify as registered charities, and donations to individuals do not qualify either. If you are donating to a crowdfunded cause, please be aware that these donations, while they may be the most directly impactful, are not tax-deductible.
For more information on how you can pay less tax on your annual return, give us a call at 613-733-3312, or e-mail firstname.lastname@example.org.