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:
- 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.
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?