Donors motivated by cause, not tax credit, says expert

Charities may be laudingPC Leader Jim Prentice forreversing the reduction in charitable tax credits, but peoplemake donations are motivated by the cause not credits, says an expert who studies charities.

In the midst of an election campaign, Prentice recently backtracked on a change to tax credits in last month's spring budget. The change meanta donation of more than $200 earned a 12.75 per cent tax credit, down from the previous rate of 21 per cent.

"Reducing the charitable tax credit, we risk putting the good work of Alberta's many good causes and the work they do at a disadvantage, and this is the wrong time to do that," Prenticesaid on Tuesday.

• Jim Prentice backtracks on charitable tax credit cut

Charities are applauding Prentice for reversing his decision on the charitable tax credit. They say now is not a good time to reduce incentive to giving.

But James Stauch,director of the Institute for Community Prosperity at Mount Royal University, said that whiletax credits are a big incentive for corporations and the wealthy, for the average person it's not the reason they give.

"They're not even among the top reasons why people donate, but they are an incentive and they are more of an incentive the larger the donation," he said. "The larger the gift, the higher net worth of the donor."

The cut would have brought in about $90 million a year into government coffers. Prentice did not comment on how the shortfall would be made up.