Family get-togethers for U.S. Thanksgiving are quickly followed up by retail therapy on Cyber Monday. After all, who doesn’t need a little retail therapy after spending time with family?
We’ve got Black Friday, Cyber Monday, now what about “Giving Tuesday”? Launched in 2012, the movement has generated over $632-million US dollars in donations. Giving Tuesday encourages “social philanthropy” where donors large and small can invite their social networks to join them, match them and celebrate their reasons for giving. (This year, Giving Tuesday is November 27th.) Philanthropy is your way of directing and controlling the social and research-based change that you want to see.
There are, however, financial incentives too. Donations under $200 are eligible for the donation tax credit and donations above this threshold are eligible for a credit at the highest marginal tax rate similar to what you would receive for making an RRSP contribution. (Although technically an RRSP contribution still offers a superior deduction.) To take full advantage of this donation incentive, spouses should file their slips together to ensure that the treatment of the first $200 isn’t applied twice.
Donations can also be made with assets, not only cash. In fact, anything that has a value can be donated if the charity is willing to accept it such as stocks, art, collectibles, life insurance policies, RRSPs/RRIFs and real estate. These donations are typically done in kind (they keep their original form) rather than selling the item and donating the proceeds. Larger charities have access to “planned giving specialists” to help you make the donation in the most tax-advantaged way. Also, banks, law and accounting firms also have specialists in philanthropic giving.
There are circumstances that merit incorporating charitable giving into a financial plan. Some of these situations are:
- A projection of significant estate taxes for clients who are no longer eligible to purchase life insurance.
- Clients who wish to eliminate a stock position but are hesitant to sell due to capital gain’s taxes.
- Clients who are philanthropically minded and who are considering allowing a life insurance policy to lapse because they no longer need the protection that it once provided.
- Clients who are considering downsizing and can no longer display, or no longer wish to insure, valuable collections.
According to Arianna Huffington’s book Thrive, a meaningful life is comprised of 4 components: work, wisdom, wonder and giving back. As Giving Tuesday approaches, consider how to incorporate philanthropy into your financial plan.
Here are some resources to check out:
- Canadian Association of Gift Planners: https://www.cagp-acpdp.org/
- The Canada Revenue Agency: https://www.canada.ca/en/revenue-agency.html