Ah, the holidays—where giving is the reason for the season! Not only is this a time for many to give presents to family and friends—it’s also a great time to consider giving to charitable causes or organizations in our community.
There are an estimated 170,000 charities in Canada, many of whom wouldn’t be able to function without contributions from people like you. Supporting these organizations is a great way to give back to the community, and it’s also a great mood booster—it feels good to give!
That said, it can be hard to know how much you can comfortably donate. That uncertainty might even stop you from donating at all, even if you want to.
The truth is, you’re more likely to donate to causes you care about if you work charitable giving into your budget.
Here are some things to consider when you’re figuring out how to fit donations into your budget:
Choosing who you’d like to support is step one. You may already know of organizations you’d like to support, but if you don’t, Canada Helps has an online directory. You can search by sector and learn about the work different charities do.
A handy way to figure out how much you can afford to donate is to select a percentage of your income. That way, you can keep organized by consistently giving the same percentage, even if your income changes.
Before you choose a percentage to give, cover your bases. Make sure you have sufficient funds to cover your needs and then take a look at your wants. This is where you can draw from for donations.
Most people give between 1-3 per cent of their total take-home income to charity. You can start with 1 per cent and work up after that.
If you need a little boost to start planning out needs and wants in your budget, read this article about the 50/30/20 rule.
P.S. Some employers match your donations to charity, a great way to double your impact!
A great way to donate regularly is through automated giving, most commonly every month. With an amount fixed on your credit card, you won’t have to keep thinking about when to give. This can also help charities figure out their budget with regular amounts coming in.
Another option is one-time donations. You could do this when you receive a year-end bonus, or when you get your refund at tax time.
You could also consider making one-time donations in response to urgent needs—for example, wildfire relief funds.
If you didn’t know, take note: if you donate to a registered charity, you can claim it on your annual tax return! Save your tax receipts in a safe place so you remember to claim them at tax time.
Use this calculator on Canada Helps to calculate your tax refund from your donation amount. The maximum amount you can claim is 75 per cent of your net income.
If you’re married or in a common-law relationship, have one person claim all the donations to maximize your return.
Remember, if you forget to claim a donation for one year, you can claim it the following year! You don’t need to claim donations the same year you made them. You can’t claim donations more than once, though.
Unfortunately, not everyone has good intentions. Make sure a charity is legitimate before you donate. You can do that by searching up the charity on the Canada Helps online directory. Only registered charities will be on there, though, so here are red flags to look out for:
You don’t have to figure it out on your own. Book a meeting today and let us help you figure out your budget!
We would be happy to discuss your unique situation with you.
Our goal is to make complex topics like this one, simple.
