Are Canadians charitable?

The Angus Reid Institute, a not-for-profit research foundation, in partnership with the Charitable Impact Foundation (CHIMP), which operates donor advised funds to facilitate gifts to other registered charities, released a new study in late November in which Canadians were surveyed about how we’re feeling about our level of charitable giving.

Although most of us feel comfortable with our level of contribution, almost one-in-three Canadians (30%) — the equivalent of more than eight million adults — said they feel they should be donating more to charity. Very few said they’re donating too much.

The survey showed that three-quarters of Canadians have donated to at least one charitable cause over the past two years and that Canadians are more likely (57%) to have given in response to a prompt from an organization than on their own initiative. That being said, 43% of Canadians give to at least one charity on an ongoing basis.

What determines whether we’re more or less charitable? Apparently, how we were raised. The study found that conversations at home during childhood appear to have had an impact on giving behaviour. Almost two-thirds (64%) of those categorized as “super donors” said they were exposed to concepts of charity and altruism by their parents; in contrast, the same percentage (64%) of non-donors said they were not exposed to these concepts.

With the end of the year upon us and the 2017 donation deadline fast approaching, now’s a great time to remind clients about charitable giving. Here are a few considerations worth mentioning:

> Donation tax credit
Charitable donations attract both federal and provincial non-refundable tax credits. On the federal side, donors get a credit of 15% for the first $200 of annual charitable donations. That rate then jumps to 29% for cumulative donations above $200. Donors who have income subject to the 33% top federal rate (for annual income of more than $202,800) and who donate more than $200 annually benefit from a 33% tax credit on such donations.

Parallel provincial credits work similarly, although not all provinces have adopted their top tax rate as their top provincial donation credit rate.

> Tax-gain donating
With just a few weeks left in 2017 and substantial unrealized gains building up in many clients’ non-registered stock portfolios, now’s a great time to remind clients about “tax-gain donating.”

Clients may be more familiar with the concept of “tax-loss selling,” which involves crystallizing a capital loss in a taxation year so it can be used to shelter capital gains realized that year or in the prior three calendar years. However, tax-gain donating involves crystallizing those winning stocks or mutual funds by donating them “in-kind” to charity.

Donations of publicly traded shares, mutual funds or segregated funds to a registered charity not only provide the donor a tax receipt equal to the fair market value of the securities or funds being donated, but also allow the donor to avoid paying capital gains taxes on any accrued gain on the shares or funds donated.

> First-time donors
This month is the last chance for “first-time donors” to take advantage of the temporary First-Time Donor’s Super Credit (FDSC), which provides an additional 25% non-refundable tax credit on donations of up to $1,000. An individual is a first-time donor if neither she nor her spouse or common-law partner has claimed a donation credit after 2007. The FDSC can only be claimed once and expires at the end of this year.

The FDSC could be particularly helpful if your client is a recent graduate who’s starting her first job and who may have never claimed a donation credit in prior years’ tax returns as the combination of the basic personal credit, along with her tuition credit, were sufficient to reduce her tax payable to zero while in school.

Read: Now is the time for clients to consider tax loss selling to offset gains