Financial focus: donate to a charity that reflects your values

If you are new to charitable giving or want to get started, there are a few important considerations to keep in mind.

The holidays are a great time of year to review the goals you have for the organizations and charities you support. If you are new to charitable giving or want to get started, there are a few important considerations to keep in mind.

Steps to consider

Identify your values. What are the main issues, causes and experiences that are important to you? This will help you determine who you want to support.

Select your geographic location. This could include local, provincial, national or global organizations, or a combination of these.

Research your options. Visit some organizations and talk to the people who work and volunteer there. Connect with family and friends who share similar values ​​and find out who they support. When you weigh your choices, what do their reports and financial statements tell you about them? What are their programs and initiatives?

Designate your donations. Once you’ve determined the organizations you want to support, you can get started.

Determine how to donate. Are you going to offer money or goods? An asset gift can be anything of value like art, coins, stamps, or cars.

Be careful when giving your thoughtful gift, especially large gifts, not to tie “strings” to the gift, or to be too specific about what the charity should do with the money. There are different consequences or tax benefits associated with different types of donations.

Make your donation

There are many ways to donate to charity. The most common are to use beneficiary designations on your registered investments (RRSPs, RRIFs and TFSAs), which effectively bypasses the estate and the delay associated with settling the estate and leaves behind bequests through your will that clearly identifies the cause (s) dear to you for assets that you have not named directly with a beneficiary designation.

Charities can also be named beneficiaries on life insurance policies, which also bypasses your estate and may allow the charity to receive the proceeds within a very short period of time.

For investments that have appreciated in value significantly, it may be possible to donate “in kind” (you don’t sell it before you donate). The charity receives the donation at its fair market value and bases the donation receipt on that same amount.

Impact on your tax return

If you’re looking to maximize the impact of your donation on your tax return, there are a few additional considerations that can help.

First, consider combining donation receipts with your spouse or partner. Applying all receipts to a party’s return could have a greater impact at the time of filing.

Second, carry over receipts. Charitable contribution receipts can be carried forward up to five years and applied to higher income years.

Finally, delay claiming receipts until the year of death. In that year, donation receipts can be used up to 100 percent of net income. If you still have more donation receipts, you can carry them forward up to 100 percent of the previous year’s net income to complete that year’s return.

Charitable giving begins with you. Donations don’t have to be fancy or complicated. Consult with your tax, legal and financial professionals to determine the best way to contribute to what’s important to you, based on your personal values ​​and your unique financial situation.

This article has been provided for informational purposes only and is not intended to be advice.

Ian Currie is a financial advisor based in the qathet region.

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