From donating to volunteering, there are so many ways to make a difference in your community. One way to do that: share your wealth and build a legacy that will continue to contribute to the causes you care most about through your estate and family. Optimizing your giving with a few simple strategies can mean that your generosity won’t have a deadline. Here are four ways to help incorporate joyful giving into your financial plan and support the charities that matter the most to you.
An important first step for charitable giving is to clearly outline what drives your philanthropic goals. What is most important to you? To your family? Do you have charities and causes that you want to support regularly? How do you plan to support spontaneous needs?
Make a list of causes, people and organizations you want to support and refer to this list while making your giving plan. This will help you narrow down your choices and check impulse giving. When you budget and allocate funds in advance, you’re better equipped to manage unplanned requests and extend your giving ability. You will end up giving more over time compared to giving without intention.
Depending on the province or territory in which you live, you’ll get a tax credit for donations, which could result in significant tax savings. These tax savings could then be reinvested into your charitable giving plan, increasing your impact. An important part of financial planning and charitable giving is timing donations appropriately. For example, by making a charitable gift when you sell property or when you exercise a stock option, it may help reduce taxes on those transactions.
Giving generously doesn’t have to be done solely with cash. You can donate time, bonds, mutual funds — or even art, cars or jewelry. It might seem strange to give away a collection or a prized piece of art, but your heirs might not be as passionate about it, and a greater impact could be made through this type of donation.
Usually when art changes hands it’s subject to capital gains. Culturally significant pieces are exempt even though there are strict rules to this type of giving, including having the Canadian Cultural Property Export Review Board certify the piece. In many cases, you can receive a tax credit equal to the fair market value of the work when you make a tangible property donation. This credit can be used to offset up to 100 per cent of net income instead of the usual 75 per cent that charitable donation credits are capped at.
By donating property, you can enjoy the tax advantage, along with the feeling that you're helping others. It is also important to remember that to claim the tax credit the organization must be a qualified recipient, such as a registered charity. Visit the Canada Revenue Agency website for more information about cash and in-kind donations.
A study by the Indiana University Lilly Family School of Philanthropy found that philanthropic priorities are strongly shaped by family behaviour. It also emphasized that giving creates a positive change in communities — along with the reinforcement that giving is good for our mental and physical health, giving us a sense of joy and pride. By involving your family in the charitable giving process, you’ll raise generous-minded children and grandchildren.
A well-crafted financial plan will increase the impact of your giving. A financial advisor can help make giving to causes you care about a consistent part of your financial plan so you can build a legacy and infuse meaning into everyday life. Contact our Member Advice Centre or email us to connect with a financial advisor who can work with you to make the most your charitable donations.
Mutual funds, other securities and securities related financial planning services are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Mutual funds and related financial planning services are offered through Credential Asset Management Inc. Financial planning services are available only from advisors who hold financial planning accreditation from applicable regulatory authorities. Credential Securities is a registered mark owned by Aviso Wealth Inc.