Pattie Lovett-Reid: Make charitable giving part of your financial plan
Charitable giving is a key component of a financial plan.
If I were to simplify it further, think of financial planning like a three-legged stool – spending, saving and giving. If we fall short in any one leg, we run the risk of becoming out of balance and the consequence is obvious: you fall. There will be casualties.
In a recent CanadaHelps Giving report, the data revealed some unfavourable trends and insights into charitable giving in Canada. The report found giving is down across all age groups with just one fifth of the country donating in 2015. The average annual donation per Canadian also decreased from $365 to $343 from 2006 to 2015.
More alarming is Canada’s donors are disappearing. Canadians aged 55 and older collectively donated $6.4 billion to charity in 2015, almost double the $3.5 billion given by Canadians aged 25-54. Clearly, this giving model is unsustainable for the sector, as donors in the older age group will need to be replaced. If you haven’t given in the past, it is unlikely you will now unless you make it a priority.
However, as government funding dwindles and the population ages, there will be funding gaps with smaller charities missing out.
What can you do to help?
Recognizing it isn’t possible to give to every charity that calls, consider the following:
1. Articulate your values clearly. What do you value, what matters most to you, and what do you cherish?
2. Explore charities that are aligned to your values.
3. Like any investment, do your homework to really understand the charity you have decided to support.
4. Decide whether you want to invest in your own backyard, locally, nationally or even internationally.
5. It isn’t always about the cash. Consider donating, stocks, bonds, mutual funds, life insurance policies etc.
Finally, if financial support isn’t feasible, consider giving yourself. It is about doing something to give back. By the way, while tax receipts are nice to have they don’t tend to be the driving force for giving. However, it’s important to have a plan when determining how much you will give to a charitable organization. Meeting with an advisor can help you to determine the right amount, ensuring you are optimizing the donation and minimizing the tax impact.
Giving back is a win-win and can bring the true meaning of balance in your life.