In 2017, generous donors across Canada continued to support charities and non-profit organizations. Most people, like you and I, are driven to donate in support of important causes in our community because we care about the enormous role charities play in our lives. What you may not know is that there are considerable tax incentives attached to charitable giving.
According to Imagine Canada's sector report, the charitable sector is not only vital to creating caring and supportive communities, it is a key contributor to our nation's economy: charities accounted for more than $251 billion in revenue and $240 billion in expenditures in 2015, and the non-profit sector employs over two million Canadians. By donating to organizations and groups that support causes dear to your heart, Canadians are contributing to the well-being of your fellow citizens.
With tax season in full swing, it is important to understand how to give wisely and how tax incentives work. Both our federal and provincial governments provide income tax credits in recognition of the difference each donation can make in a community and to encourage ongoing charitable giving. Individual tax filings show that Canadians gave more money to charities in 2015 than ever before - $9.1 billion. While this amount is significant, The Giving Report states charitable giving has remained stagnant in Canada since 2010. Your donation can make a difference whether small or large.
When many of us think of charitable giving, we think of someone making a large cash donation to a non-profit organization. However, charitable giving comes in many forms. In addition to our personal donations, we are often compelled to give in support of causes thanks to fundraising by our friends and families. Whether you donate in support of your grandchild who is participating in Niagara Health Foundation's Kids Ultimate Challenge or a family member or friend who is participating in the Big Move Cancer Ride, we find ourselves constantly giving and our donations add up at the end of the year.
For every eligible donation, you are entitled to receive federal and provincial tax credits. On the federal level, you will receive a 15 percent tax credit for the first $200 of donations and then 29 percent on the remaining amount. In addition, each province offers its own tax credits for charitable giving. In Ontario, you will receive a 5.05 percent for the first $200 you donate and 11.16 percent for donations beyond that. The First-time donor's super credit (FDSC) supplements the value of the charitable donations tax credit (CDTC) by 25% on donations made after March 20, 2013, by a first-time donor. So remember to claim your charitable giving from 2017 and speak with a professional about how you could give more effectively in 2018.
Donations can also take other forms, such as the transfer of stocks or securities. When you transfer securities directly to your charities of choice, you will receive a tax receipt for the full fair market value of the investment (at the time of donation) and pay no capital gains tax on the increase in value. You can also name a charity as a beneficiary of a life insurance policy. When you file your taxes, your premium payments are considered additional donations that entitle you to a tax credit.
While receiving a charitable tax receipt is likely not what will drive you to make a charitable contribution, it is important to know that claiming your charitable donations will only result in you having more money to contribute in the long run.
Ultimately, donations of all sizes make a huge difference for charities across Canada, from Niagara to Nunavit, Newfoundland to North Vancouver Island.
Roger D. Ali is President and CEO of Niagara Health Foundation and Chair (volunteer) of the Association of Fundraising Professionals, Foundation for Philanthropy Canada.
