Canadians are among the most generous people in the world, but there are worrisome signs that the responsibility of supporting charities is falling on fewer sets of shoulders.
"Compared to other countries, Canada has a large and vibrant charitable sector," said Cathy Barr, senior vice-president of Imagine Canada, a national charitable organization that promotes Canada's charities and non-profit organizations.
But Barr says that while Canadians' generosity should be praised, a worrying trend has emerged in recent years.
'Fewer and fewer people are donating larger amounts.' — Cathy Barr, senior vice-president of Imagine Canada
"The data over time shows that the percentage of Canadians donating to charity has been declining," she said.
From a high of almost 30 per cent in the early 1990s, the proportion of taxpayers claiming charitable donations on their tax returns had fallen to 23 per cent by the 2011 tax year.
The average annual donation, meanwhile, has climbed from $458 in 1984 to $1,437 (or $748 in 1984 dollars) by 2010, according to data compiled by Imagine from Statistics Canada and Canada Revenue Agency figures.
"We're getting a situation where fewer and fewer people are donating larger amounts," Barr said.
Less than a 1/4 of tax filers claim donations
Figures released on Feb. 13 by Statistics Canada showed that 5.71 million tax filers claimed charitable contributions for the 2011 tax year, down 0.6 per cent from the year earlier. Giving totalled $8.47 billion, up 2.6 per cent from 2010.
The median donation nationally was unchanged from 2010, at $260. Average donations ranged from $430 for the 0 to 24 age group to $2,000 for those 65 and over.
Manitoba had the highest percentage of tax filers declaring a donation, at 25.9 per cent, followed by Saskatchewan, at 25.0 per cent, and Prince Edward Island, at 24.9%.
The metropolitan area with the highest median donation, for the 10th straight year, was Abbotsford–Mission, B.C., at $630. Calgary followed at $400, Vancouver and Victoria at $390, and Kelowna, B.C., and Saskatoon at $380.
Statistics Canada qualified the numbers with the reminder that tax filers can carry donations forward for up to five years after the year in which they were made, which might skew year-to-year comparisons on the amount of giving.
And spouses with higher incomes can also claim contributions made by their partners, which could mean the number of donors was actually higher than the number who claimed tax credits.
Tax credit changes proposed
That trend toward a shrinking donor pool has led Imagine Canada over the last two years to propose changes to the tax treatment of donations. It has recommended the introduction of something called the stretch tax credit, which would reward donors who exceed their previous highest level of giving with a larger credit.
|Charitable giving tax credit comparison, by province and territory (assuming $1,000 donation in 2012 tax year)|
|Province||Total tax credit||
15% (up to $200)
($450.77 - total adjusted for 16.5% federal tax abatement Quebec residents get)
20.00% (up to $200)
24.00% (over $200)
10.00% (up to $200)
21.00% (over $200)
8.79% (up to $200)
21.00% (over $200)
9.10% (up to $200)
17.95% (over $200)
10.80% (up to $200)
17.40% (over $200)
|Prince Edward Island||$415.20||
9.80% (up to $200)
16.70% (over $200)
11.00% (up to $200)
15.00% (over $200)
5.06% (up to $200)
14.70% (over $200)
5.90% (up to $200)
14.05% (over $200)
|Newfoundland and Labrador||$383.80||13.30% (over $200)|
7.04% (up to $200)
12.76% (over $200)
4.00% (up to $200)
11.50% (over $200)
5.05% (up to $200)
11.16% (over $200)
Currently, the federal tax credit allows taxable income to be reduced by 15 per cent of the value of total donations under $200 and by 29 per cent above that.
Increase your personal highest total contribution amount, Imagine proposes, and the government would increase the credit to 25 per cent — for total donations at or below $200 — or 39 per cent, for total donations above $200.
Barr says tax deductibility might not be the driving force that convinces people to donate, but there is evidence that donors give more because of it.
Health, social services among top recipients
Imagine Canada's aim with the stretch credit is to encourage more donors, especially more small donors, and to give charities something with which to engage and encourage their supporters to increase their giving.
Exactly which causes are the closest to the hearts of Canadians depends on how you measure it.
Based on the proportion of those who donate, Imagine Canada's data shows health and social services are the top cause, with more than 50 per cent of Canadians who give donating to health institutions and more than 40 per cent giving to social service organizations. A third give to religious organizations or institutions.
Going by the size of donations, religious causes are at the top, with average donations of $450, followed by universities and colleges, at $300.
Religious causes lead based on the proportion of the number of donations, accounting for 40 per cent of all charitable donations.
But Barr says there's been a "fairly slow but clear" declining trend over the last decade in the share of donations going to religious causes, dropping from 45 per cent in 2004.
Support for international causes, though still small, has increased from four per cent in 2004 to eight per cent in 2010. But that includes disaster relief, which might skew the results if there have been more high-profile natural disasters in certain years.
Canada ranks high
Trying to determine how Canada's charitable activity compares with that of other countries is a challenge.
A 2005 study by Johns Hopkins University and Imagine Canada suggested that out of 37 countries, only the Netherlands – at 14.4 per cent — surpassed Canada – at 11.1 per cent — in terms of the percentage of the economically active population that was either paid or volunteered in the non-profit sector.
Britain's Charities Aid Foundation, in an analysis released a year later, complained that there is "very little standardized international data" on giving.
But its data ranked Canada third in terms of giving as a percentage of GDP, at 0.72 per cent, behind the U.S., at 1.67 per cent and the United Kingdom, at 0.73 per cent.
Barr has blunt advice for Canadians concerned about the declining proportion of Canadians donating: "Get out there and donate."
If you do that, there are some things you need to know in order to get the benefit of a tax credit.
Make sure to get a receipt for the donation, one which has the charity's name and registration number, date, serial number, the donation amount, the donor's name and has been signed on behalf of the organization. Include these with your return if you file by paper, and store them away if you file online in case your return is reviewed by the CRA.
Giving to charities makes you eligible for a non-refundable tax credit, rather than a deduction, which means it can only be used to reduce tax owed, not taxable income, and there won't be any benefit if you don't owe any tax. A donor can get credit for donations up to a limit of 75 per cent of net income. Those who donate certified cultural property or ecologically sensitive land might be able to claim 100 per cent of income.
An estate can get credit for up to 100 per cent of a deceased person's income — in the year of death and going back one year.
Usually, the tax savings equal the tax credit. But there are exceptions:
- Residents of Quebec are entitled to an overall abatement of 16.5 per cent on their basic federal tax, and that lowers the tax break they get federally for charitable donations.
- Tax filers who are required to pay provincial income surtax can use their charitable tax credit to reduce both the base income taxes and the provincial surtax.
Government, employer may match donations
As well, those donating publicly traded securities may increase their tax savings by reducing their capital gains tax.
There are ways to get a bigger bang for your charitable dollar.
As mentioned above, the tax credit rate rises significantly once the total value of your donation crosses above $200. When you combine the federal and provincial credits, the tax saving is about 19 to 35 per cent of the total up to $200 — depending on the province — and, above that, ranges from 36 to 49 per cent, again depending on the province.
As mentioned above, there are two other issues to consider: the CRA allows couples to assign donations to the partner with the higher income and also to carry unclaimed receipts forward, for up to five years, to allow the timing of claims in a year of higher income.
There's also another way in which timing comes into play: if you give in December, you will minimize the time before you get the refund value the following spring.
You can also choose to support a charity or cause that is eligible for matching donations from your employer or the federal government. For example, World Vision Canada has a partial list of employers that support its work.
To see if there are current humanitarian relief efforts for which the federal government is matching donations, check the Canadian International Development Agency website.
If you're not sure who should be at the top of your list of worthy charities, there are a wide range of agencies the CRA registers, including charities, national arts service organizations, amateur athletic associations, low-cost housing corporations, provinces, municipalities, universities (including some outside Canada that have Canadian students enrolled), foreign charities to which the federal government has made a gift and the United Nations and its agencies.
The CRA even provides a site where you can search the list of registered charities.
5 facts about charitable giving
1. Charitable giving for tax purposes can extend well beyond money and include different types of gifts, ranging from securities, ecologically sensitive land and even art and rare books.
2. Among the donations not usually included are contributions of time or the purchase of a lottery ticket.
3. Warning signs that a donation scheme might be fraudulent include: inappropriate pressure to give immediately; overly friendly canvassers who ask personal questions; and a strange combination of call display numbers such as 123-456-7890 or 777-777-7778, which suggest the caller might be attempting to hide his or her number.
4. If you receive a gift for contributing — for example, concert tickets for giving to an orchestra — the value of those tickets must be deducted from the donation.
5. Quebec and Alberta are the best places to make charitable donations, with the highest provincial tax credit rates.