Tips on Charitable Donations

When deciding how to donate your money, it can be confusing.  There are so many charities out there, and so many ways to give, that it can render you immobile.  Have you ever wondered what the best way to donate is?  I have a few hints and tips from not-for-profit insiders that will point you in the right direction.

What to donate

Although they don’t come right out and say it, generally charities prefer donations in the following order:

  1. Money/time
  2. Investments
  3. Food
  4. Other items

Investments are a little less flexible than cash but offer a benefit to the donor.   If a donation of stock is made to a charity, the donor does not pay capital gains tax.   Most charities can handle this type of transactions but be sure to verify before doing so.

While I am not suggesting for a moment that there is any type of ‘bad’ donation, the reality is that food, clothing, furniture, etc. are difficult/costly to store and transport to those that need it.   Check to see what the charity’s mandate is and be sure to donate appropriate items.

The Canadian Cancer Society, for example, may or may not benefit from canned food but would encourage volunteer drivers.  There are charities that consider ‘time’ as the most valuable donation.  Think of meals-on-wheels or visits for seniors.  Volunteering is a great way to give back to your community.

Money, of course, is much easier for the charity to coordinate.  There are constant solicitations from coworkers, family, friends, door-to-door, over the phone, tv/radio/print ads for special events.  You want to manage your donations properly but may not know the best way to do it.

Who’s asking?

Charities have special status but are run like a business.  They have expenses like salaries, rent, utilities, and equipment just like any business.    A portion of their income goes to offset these expenses.  The rest goes to their cause.

However, when there is a special event, or a door-to-door/phone solicitation, fundraising is usually done by a third party.  This company handles the fundraising for many charities putting on special events, for example.  Yes, this is outsourced and the charity pays a large percentage to these fundraisers.  If you ever plan to donate to a solicitor or for a special event, be sure to ask if they are a volunteer for the charity or if they work for a third party fundraiser.  Make an informed decision.

This fundraising relationship is good for charities because they do not need to dedicate any staff or other resources to fundraising.  Since they only pay a percentage of what is raised by the outsourcer, there does not appear to be much risk.  But in my opinion, this is not the best use of your donations.

How to donate

You can confirm a charity’s status on line.  This is a list of Canadian registered charities provided by the CRA.

The best way to donate to a charity is to go directly to their website and enter a donation online. There are no third party groups involved in this transaction and there are no staff members or volunteers spending time processing the donation.  This results in less overhead and more of your donation going towards the intended cause.  The donation page on the website should be secure using https so that your personal and credit card information stays safe.

Although you can earmark what your donation will be used for and the charity will honour it, this becomes restrictive for them.  It’s best to leave it up to the charity on how to appropriately use the money.  Like anything else you do with your money, be sure to spend your donation dollars wisely.

Readers:  Does anyone have tips on donating?  Has anyone had an experience they would like to share about donating their time?

 

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5 Responses to Tips on Charitable Donations

  1. Greg says:

    Using a credit card will reduce the actual amount of your donation by 3% to the charity. They get their money “instantly” and you don’t have to write a cheque and rely on Canada post to get it there.

    http://www.CanadaHelps.ORG is able to receive donations for ANY charitable organization in Canada and forward it along to the charity (less the 3% credit card fee). It is easy, quick and receipts are emailed AND stored on their site for your use at tax time.

    • Support Spy says:

      @Greg This is an interesting site and on the CRA’s registered list. They do take a small fee of around 3-4% depending, but can facilitate a donation using https. Probably best for some of the smaller charities that may not be set up on the web for https credit card transactions.

      This site seems good for research on the charities if you are not set on donating to any particular charity. They have the executive summary for a number of charities that I looked up.

  2. Lisa says:

    While I really like participating in Fundraising Event like runs and walks, I do know that it is not the best way to donate to my fav charities. The best ways to donate to a charity is monthly. The charity benefits from having a predictable income to run their programs and I can fit it neatly into my monthly budget.

    For a really different way of donating check out Kiva. http://www.kiva.org/ I just love there innovative approach.

    • Support Spy says:

      @Lisa good point! Budgeting is a critical part of the donation process on both sides.

      Kiva is a great site to promote entrepreneurs who would never have had a shot to run their own business otherwise! You can think of yourself as a venture capitalist 🙂

  3. Steve says:

    When claiming charitable donations on your income tax, be mindful that you get a greater credit if you have donated at least $400 (or more). If you have not, its better to allocate that credit towards next years charitable donations.

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