“A disproportionate amount of money to share,” is how Mackenzie Bezos describes her financial situation of some $37 billion in a letter to The Giving Pledge. “My approach to philanthropy will continue to be thoughtful. It will take time and effort and care.”
Ms. Bezos joins some 200 other wealthy individuals in signing The Giving Pledge, a commitment to give away at least half of their money to charity. Elon Musk, Mark Zuckerberg & Priscilla Chan, Sara Blakely, and Richard and Joan Branson are just a few of the high-profile signatories to the Pledge founded by Warren Buffett and Bill and Melinda Gates in 2010.
While we should all have such 37 billion challenges in life, figuring out a thoughtful strategy for one’s charitable giving can be helpful at any level of income. Small donations can add up to big amounts and you might wish to be more targeted about where your donations go. Some people determine an annual giving amount, then divvy it up among causes that are personally meaningful. Some families choose one charity each year that becomes the recipient of their combined efforts in donating, fundraising and volunteering.
According to Stats Can, around 82% of Canadians make financial donations to charitable or non-profit organizations. Yet only around 20.5% of tax filers claim donations on their tax returns. Of those, the median donation was $300. With the country’s median income at $59K, that works out to about 0.5%.
Not everyone takes the tax break and many people prefer to keep their donations private or anonymous. Others direct their charity to the personal care of extended family members. While the tax data does not reflect the full extent of Canadians’ charity, it may also be true that a lot of donors miss out on tax benefits.
This tax credit calculator illustrates how eligible donations can reduce your taxable income. For example, on a $5K donation, someone earning $100K in Ontario would receive nearly $2K in tax credits. This “How Rich Am I?” calculator puts your wealth in global perspective and gives you an idea of how different levels of charitable giving could help others in the world.
A 10% rule of giving is a commonly used rule of thumb, arising from the Judeo-Christian tradition of tithing – making a financial sacrifice as a tribute to one’s faith. Tithing creates a consistent expectation of sharing one’s resources, regardless of circumstances, much like financial planners encourage consistent contribution to one’s future financial health through monthly savings plans.
If you are fortunate to be at a stage of life where you feel, as Gloria Steinem once said, “It is more rewarding to watch money change the world, than to watch it accumulate,” then you may be comfortable supplying a larger ratio of your income or assets to the not-for-profit sector.
Somewhere between the $20 to your nephew’s hockey team and the recent $200 million gift to McGill University from John and Marcy McCall McBain (also Giving Pledgers), lies an amount that feels generous, like a sacrifice, yet does not sacrifice your own financial well-being. This, perhaps, is your sweet spot of giving.