How to Donate Prudently

May 31, 2015

dreamstime_xs_43147295Here are some questions you should consider asking when solicited for a charitable donation – or how to donate prudently!

Are you a registered Canadian charity? What is your full legal name and registration number? Will I get an official donation receipt for my donation?

In general, only registered Canadian charities can provide official donation receipts, and only with an official donation receipt can one claim the charitable donation tax credit. Once armed with this information, you can, if you choose, verify the accuracy of the information provided using the Canada Revenue Agency web-site, which maintains a list of registered Canadian charities which may be searched by name and registration number. Registration numbers are 15-digit identifying numbers in the format #########RR####. You can also use the Canada Revenue Agency web-site to determine if a charity’s registration has been revoked, and whether that revocation was for cause, voluntary, or for failure to file an information return in a timely fashion. Registered Canadian charities are not obliged to issue donation receipts for every donation. Many charities, for instance, do not issue receipts for donations below a certain dollar value, and charities cannot legally issue donation receipts for the full entry fee for things like fundraising dinners and golf tournaments.

What are your charitable purposes? What is your mission? What are your objectives?

Get to know the charity before you donate. Peruse their web-site, and any written material with which they can provide you. Get on their e-mail or newsletter list, Facebook page, or Twitter feed. Volunteer for the charity. Speak to your friends, family and business associates to see if any of them have opinions about the charity you are considering supporting.

What charitable activities do you carry out, or do you support the charitable activities of others? Where? How many people benefit from those activities?

Smaller charities frequently do not carry out their own charitable activities, but instead support the activities of other, larger charities, or of a partner charity or non-governmental organization in another country.

How long have you been in operation?

The Canada Revenue Agency, on its web-site, also suggests that the following can be warning signs of fraud:

  • Inappropriate pressure to give immediately;
  • Calls that thank you for a pledge you don’t remember making;
  • Organizations that use names similar to popular charities;
  • Canvassers who are reluctant to give you details about their organization;
  • Requests to send cash or a money order, rather than a cheque or credit card (cash is untraceable and can’t be cancelled). Always make your cheque payable to the charity, not to the canvasser personally;
  • Offers to send a courier or an overnight delivery service to collect your money;
  • Overly-friendly canvassers who ask personal questions;
  • The use of free e-mail addresses that allow individuals to easily hide their identity; and
  • A strange combination of call display numbers such as 123-456-7890 or 777-777-7778, which suggest that the caller may be attempting to hide their number.

With a little effort, you can ensure you direct your charitable donations wisely and effectively.

The First-Time Donor’s SUPER-CREDIT

May 29, 2015

tax_formThere is still time to use the first-time donor’s super-credit, if you have not already done so! This measure, enacted by the federal budget delivered on March 21, 2013, aims to encourage donations to registered Canadian charities. A first-time donor is entitled to an additional 25% federal charitable tax credit on donations of up to $1,000 made after March 20, 2013.

A donor who donates $1,000 to a registered Canadian charity but does not qualify as a first-time donor would receive a federal tax credit of $262 on that donation, as follows:
• 15% on the first $200, or $30
• 29% on the remaining $800, or $232
• Total federal tax credit of $262

A donor who makes the same donation but does qualify as a first-time donor would receive a federal tax credit of $512 on that donation, as follows:
• 15% on the first $200, or $30
• 29% on the remaining $800, or $262
• 25% on the entire $1,000, or $250
• Total federal tax credit of $512

For the purposes of the FDSC, you will be considered a “first-time donor” if neither you nor your spouse or common-law partner (if you have one) has claimed and been allowed a charitable donations tax credit for any year after 2007. 

This is a temporary credit, which can be claimed once between the 2013 and 2017 taxation years. If you have not ever made a charitable donation, or haven’t made a donation in the last five years, you still have time to access this tax advantage!