Every year, Canadians donate to support causes they are passionate about. Whether it be donating your time or money, there are so many ways to make a difference in your community. With financial giving, there’s an added incentive of a tax receipt to help reduce your taxes. For higher income earners, reducing their taxes by making a donation can be appealing, especially as the tax credit increases with larger donation amounts.
Whether you are choosing to start donating to help offset your taxes for the 2021 year or hoping to elevate your giving, this guide will help you determine what’s best for you and your 2021 return.
Align the causes you support with your own values
Making the most of giving back starts with you. Choose the organizations or causes that are important to you and your family. A great place to start is by making note of the charities that align with your core values. The RaeLipskie team supports a variety of different charities such as the KW Community Foundation. KWCF is focused on Granting, Impact Investing and Convening to make measurable and sustainable impacts in Waterloo Region.
Another charity the team actively supports is the St. Mary’s General Hospital Foundation. This charity is committed to ensuring that St. Mary’s can meet the healthcare needs of our community. A great resource to help find a cause or issue to support is the CanadaHelps website. The Government of Canada website also allows you to search the charity by name. Once you’ve found a charity you’d like to support, it’s important to confirm they are in good standing before you commit your time and money.
Decide how you will get involved
Different causes may require different types of support. It’s important to ensure you’re able to find something that works with your situation. The three main ways to exercise your charitable giving include donating money, volunteering time or giving physical donations such as food or clothing.
Financial support is helpful for many organizations, and it can be done in different ways to suit your needs. Three of these ways include:
- Making a one time donation
- Setting up recurring payments that automatically renew on a schedule
- Donating your investments with stocks and mutual funds, which is also the most efficient way to give.
By donating securities or mutual funds, capital gains tax does not apply. Instead, you give more and avoid capital gains tax on the growth of your investment. You can either sell your shares or donate directly to a charitable organization. If this is something that interests you, feel free to reach out to The RaeLipskie Partnership for more information.
Volunteering your time and skills is another rewarding way to support a charitable organization or local cause. It’s also an opportunity to offer your expertise such as sitting on a board or volunteering on a local initiative. You can also offer your time through volunteering to collect donations, going door to door or even performing renovations. The RaeLipskie team gets involved by volunteering with Habitat for Humanity, coaching team sports and sitting on boards.
You can also give back by providing physical goods such as food, clothing and toys. Some of these initiatives are seasonally-driven, but reach out to your local food bank to see how you can contribute. They’ll often put out requests for certain foods. You can also donate clothing to drives or charities set up for resale of donated clothing. Many are connected to associations who receive the benefit of these donations, such as Ontario Federation for Cerebral Palsy and Diabetes Canada. Toy drives or household items are another great way to get the whole family involved by choosing a gift to donate together. As many of these programs have been put on hold due to Covid, it’s important to check in before making a plan to donate.
Report your donations
Charitable organizations may issue official donation receipts for monetary donations. You can claim eligible donations up to 75% of your yearly income for non-refundable tax savings, meaning it can only be used to reduce the tax you owe. You can ensure your gift qualifies by visiting this website.
Although we’re approaching the end of the year, charitable giving is important from January to December. Adding charitable giving considerations to your financial plan can help important organizations working on the causes you care about. It also helps those around you — and can reduce the amount of tax you owe each year through careful considerations.
Not sure how much you are able to give? Interested in discovering the best way to include charitable giving in your plan? Reach out to a RaeLipskie advisor. We look at the entire picture to determine what works best for you to make the most out of your charitable giving.