High net-worth (HNW) Canadians with at least $1 million in investible assets (excluding their primary residence) are more hesitant when it comes to charitable giving, according to a new report from Bank of Montreal’s (BMO) wealth-management division published on Tuesday.
The biggest obstacle to charitable giving among the wealthy is the concern that the recipients won’t use the money wisely, with 43% of HNW survey participants citing this as their top concern. A lack of connection to a charity (28%) and a feeling that they aren’t wealthy enough to give (27%), were cited as the next biggest issues.
“For many Canadians, feeling dissatisfied and unfulfilled by charitable giving stems from questioning the impact donations are having. These concerns often come from donors who are giving to multiple organizations and haven’t focused on specific issues,” says Marvi Ricker, vice president, philanthropic services, with BMO Wealth Management, in a statement. “Doing your research to find an organization or issue that you feel passionately about and having specific goals for making meaningful change are important steps for impactful philanthropy.”
Among those who do give to charity, 52% cited their personal connection to the cause as their primary reason for giving to a particular charity. Furthermore, the report notes that more than half of the wealthy say their motivation to give is “the desire to have an impact on their community,” whereas only 21% say they give to reduce taxes.
Nevertheless, the report notes that “Canada has one of the most generous tax systems for charitable giving” and it suggests that investors get professional advice to help guide those decisions.
Specifically, the report cites prior research showing that 50% of wealthy Canadians say that “they would like to talk with their financial advisor about the tax benefit of giving as part of their tax planning discussion, and almost half (49%) would like to use their financial and estate planning conversation to learn more about transferring wealth to people in need and charities.
“Understanding the rules for donating assets can make a big difference when it comes to capital gains tax. Moreover, it opens up options for the form that such donations can take,” the report says, noting that there are a variety of ways to give, including donating securities, real estate, creating a private foundation, and making charitable bequests.
The survey was carried out online with a sample of 502 wealthy Canadians from Aug. 16-23.
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