While December is often a popular month for donations, charitable giving has hit historic lows in Canada this year, with 20 per cent of Canadians saying they planned to reduce their giving, according to the 2023 Giving Report by Canada Helps.
It all comes down to individuals trying to find ways to cut back and save amid uncertain economic times, with 82 per cent of respondents expecting their finances to be negatively impacted by inflation. At the same time, many charities have seen both an increase in demand and in their own expenses.
“Two in 10 Canadians, about 20 per cent, are currently using charitable services to meet essential needs such as food and shelter (up 14 per cent from last year)” says Nicole Danesi, senior manager of public relations at Canada Helps, noting that food banks are one of the services struggling to keep up with demand the most.
“Among those two in 10 Canadians that are accessing those essential charitable services, 69 per cent … have stated to us they are … are doing so for the very first time this year,” she adds.
Double benefit of donating
While the circumstances behind the decline in charitable giving are clear, what some individuals may not be aware of the financial benefits of charitable giving.
“When you donate to charity, it’s not just helping the charity, but you also get a tax credit based on how much you contribute,” explains Desmond Nwaerondu, an advisor at Sun Life Financial.
“So, depending on your income level, the province that you live in, and the overall amount, there’s different tax rates or credits that you get based on the amount that you donate.”
At the federal level, the tax credit will be 15 per cent of the first $200 of donations and 29 per cent of your additional donations. The credit can reach up to 33 per cent, under certain regulations, if you are in the highest tax bracket.
There’s also a provincial tax break, which varies depending on where you live. Both can be claimed on your April tax return.
Donation rules
Donations must be made by December 31 of the applicable tax year and donors can claim any unclaimed donations made in the previous five years.
For a comprehensive list of rules, refer to the Canada Revenue Agency (CRA)’s website, which also includes a link to calculate both the provincial and federal charitable tax credit.
In order to get the tax breaks, however, it’s important to ensure that the charity is recognized as a registered charity.
“Typically, it’s a not-for-profit or an organization that’s registered with CRA, so that they can issue you a tax receipt, and they’re going to have a CRA number, typically on the bottom of their site. They also have to provide it on their tax receipt, in order for you to actually claim that,” says Nwaerondu.
Another key element to be aware of when researching where to put one’s charitable dollars is the percentage of those dollars that goes towards the cause.
“It’s important to look into the social impact that that specific charity has over another one. There’s multiple companies out there that deal specifically with how many cents per dollar that you contribute are actually going towards the charity versus paying for the expenses to run the charity,” says Nwaerondu.
First-time donors
For those giving for the first time this year, it can be hard to know where to start.
The majority of people give to causes that have impacted them personally, whether that’s a loved one who has battled a disease or a fellow veteran that needs home.
In these cases, people can search online to find the charity that best suits them, keeping in mind it has to be a registered charity to get the tax advantages. Canada Helps website also has a list of all 86,000 CRA-registered Canadians charities and it can be searched by organization name and/or by cause.
Non-profits like Dress for Success, which provides support, networking tools and work attire for women, have been feeling the pinch of lessening donations, especially since having to find a new location for their Vancouver office and seeing a significant increase in rent.
“Costs are rising for everyone, and they’re rising for us, too, so when we see declining donations, we really feel it deeply, especially for grassroots organizations like Dress for Success Vancouver,” says Natasha Irvine, acting executive director of the Dress For Success office in Vancouver.
But Irvine says that when people donate to organizations, such as hers, they can really see their money at work. She also recommends seeing if there are any corporate matching programs through one’s workplace as that can really make the dollars stretch.
“We rely heavily on individual funders and our corporate funders, who are also feeling the squeeze, so when we see those donations going down, we start to get pretty nervous,” says Irvine. “But when you’re talking about smaller non-profits, your donation dollars just go further, so you can be sure that those dollars are being put to good use.”
