Charitable giving falling to fewer Canadians

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 organizationthat 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 ofalmost 30 per cent in the early 1990s, the proportion of taxpayers claiming charitable donations on their tax returnshad fallen to23 per centby 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 Imaginefrom 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 a1/4 of tax filers claim donations

Figures released on Feb. 13 by Statistics Canadashowed that 5.71 milliontax filersclaimed 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 AbbotsfordMission, 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.

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 thedriving force that convinces people to donate, but there isevidence 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 causeslead based on the proportion of the number of donations,accounting for40 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 areceipt for the donation, one whichhasthe 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 yourreturnif 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-refundabletax credit, rather than a deduction, whichmeans it can only be used to reduce tax owed, not taxable income, and therewon't be any benefit if you don't owe any tax. A donorcan get credit fordonations 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 centof a deceased person's income in the year of death andgoing 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 getfederally for charitable donations.
• Tax filers who arerequired 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 andprovincial credits, the tax saving is about19 to 35per cent of thetotalup to $200 depending on theprovince and, above that,ranges from 36 to49 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 thepartner with the higher income and alsoto carry unclaimed receipts forward, for up to five years, to allow thetimingof claims in a year ofhigherincome.

There's also another way in whichtiming 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 tosupport a charity or causethat is eligible for matching donations from your employeror the federal government. For example, World Vision Canada has apartial listof employers that support its work.

To see if there are current humanitarian relief efforts for which the federal government is matching donations, check theCanadian International Development Agency website.

If you're not sure who should be at the top of your list of worthy charities, there area 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 sitewhereyou can search the listof 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 hidehis or hernumber.

4. If you receive a gift for contributingfor example, concert tickets for giving to an orchestrathe value of those tickets must be deducted from the donation.

5. Quebec and Albertaare the best places to make charitable donations, with thehighest provincial tax creditrates.