We're facing unprecedented fundraising decreases: Ronald McDonald House Charity Canada
Sign up for BNN Bloomberg's new weekly newsletter, Home Economics, here: https://www.bnnbloomberg.ca/subscribe
It's that time of year when pamphlets featuring a beaming girl holding a baby goat arrive in your mailbox. An infomercial on TV describes the need for cancer research. A fundraiser for a food bank appears on social media.
As end-of-year campaigns get under way, the charity industry is facing an uncertain time with job losses stemming from the COVID-19 pandemic undermining donors' ability to give while simultaneously boosting demand for charitable services.
And industry observers say the controversy surrounding the WE Charity's involvement in a federal employment program has had a chilling effect, weakening trust in the sector.
For those who plan to give, experts say there are important tips to keep in mind to ensure your donation has the greatest impact.
The first is choosing a charity.
"Align with the causes or mission areas that you're most passionate about," says Bruce MacDonald, president and CEO of Imagine Canada, an organization that acts like an industry association for charities.
"If your passion is mental health, find a mental health organization either in your community or nationally that you really like."
In other words, don't simply rely on marketing tools like pamphlets and television ads.
Still, choosing from the country's roughly 86,000 charities can be daunting for some.
It's why big fundraising campaigns with large budgets and a wide reach can be so effective.
Kate Bahen, managing director of Charity Intelligence Canada, which provides reports on Canadian charities, says many giving decisions rely heavily on brand and promotional materials.
"It's all based on touchy feely emotions," she says. "Those ads are very sophisticated. They know exactly what's going to trigger the emotions."
But Bahen says "you can put those pamphlets in the recycling bin" and instead "really think about what matters to you."
It's also worth considering where the needs may be greatest during the pandemic.
She says some of the big-name charitable organizations are continuing to actively fundraise "as if the sky is falling" despite having tens of millions in the bank -- enough to sustain programming for the next three years.
"It struck me that, my God, these are the toilet paper hoarders," Bahen says. "Right now we may want to consider the frontline charities for COVID, whether it be a women's shelter or a food bank, because these are extraordinary times."
The next step is to do your homework.
Industry experts say the importance of donor research and charity transparency has become paramount in the wake of the WE Charity affair.
They suggest carefully reviewing an organization's audited financial statements, board of directors and program activities before cutting a cheque.
"People should feel free to ask questions of charities," says Denise Castonguay, founder and CEO of Canada Gives, which sets up donor-advised funds for individual philanthropists.
"For many, they want to know that operating costs aren't going to eat up a large portion of their gift."
She suggests using the Canada Revenue Agency's charities directorate, which provides details about an organization's programs and finances.
Charity Intelligence Canada also provides charities a grade based on public reporting and a rating based on demonstrated impact.
"There is such differentiation between the charities," says Bahen, a former equity analyst. "You've got awesome charities and you've got awful charities and people often can't see the difference."
Once you've chosen a charity, how much to give -- and how often -- is the next question.
Experts say deciding on a dollar amount and whether to write one cheque a year or set up regular monthly payments is a deeply personal decision.
"I think a lot depends on how disciplined a person is," says Marvi Ricker, vice-president and director of Philanthropic Advisory Services, BMO Private Wealth.
"If they do better with a monthly budget, they could break down the amount they want to give over 12 months," she says. "For somebody who doesn't really know how much they're income is going to be until the end of the year, they could wait and might be pleasantly surprised to be able to give more."
The final step is to keep your tax receipt.
Charitable donations can be used to obtain a tax credit on your income tax return, reducing the taxes owed.
"They can claim the donation to receive a tax credit of up to 75 per cent of their tax payable," Ricker says. "If their credit exceeds that number, they can carry the excess forward for five years."
Finally, for those who can't afford to donate to charity this year, MacDonald with Imagine Canada urges people consider in-kind contributions and volunteering.
"Obviously the sector needs money to power the engine, but there are other ways to help and ensure that your community has the services of it needs."
This report by The Canadian Press was first published Nov. 12, 2020.