Learn about different ways to donate and make a difference, while getting tax credits in return.
Carissa LucrezianoDec. 06, 2021
The pandemic has given many of us time to reflect on causes that are close to our hearts. “It’s an important time to support charities,” says Kate Lazier, Director of Philanthropy and Legacy Planning at CIBC Private Wealth. “Many charities were hit hard by the pandemic with increased demand and lower revenues.”
There are several ways to donate to your communities and favourite charitable organizations. When you give to a charity, not only do you help causes that need your support, you can also enhance the quality of your own life.
When you give, you get back
Did you know that giving to others can improve your emotional well-being? Studies have shown that people who give to others experience greater feelings of joy and contentment.1 In fact, giving money away can make you more happy than spending it on yourself.
In addition to boosting your happiness, most types of donations can offer financial advantages in the form of federal and provincial tax credits. Talk to your accountant or tax advisor about your specific financial situation and the tax credits you may be able to claim.
Here are 3 types of donations you can make to registered charities that are important to you and that can provide tax credits:
Giving cash is simple and straightforward, and charities appreciate gifts of cash to support their programs. To make it easy, many registered charities give you the option to make a donation online and will instantly email you a receipt.
You can use your donation receipt to get a tax credit that reduces the amount of income tax you owe. If you don’t owe enough income tax to use the full tax credit in the same year, you can carry forward any unused tax credits for the next 5 years.
Gifts in kind
Did you know you can donate publicly listed stocks and mutual funds to your favourite registered charities? “On top of getting a donation receipt for the fair market value of your donation, you’ll also avoid paying capital gains tax on the amount your investment has grown over time. Depending on how well your investment did, that could be a big tax savings,” Lazier says.
Giving gifts in kind involves more steps than donating cash, so talk to an advisor and allow enough time to make arrangements.
CIBC Giving Back Program
Have you ever wanted to have your own charitable foundation but without the costs and complexity of setting it up and managing it on your own? In some ways, you can get that with our CIBC Giving Back Program Opens in a new window. The program works with a charity called Benefaction Foundation to create what’s called a donor-advised fund. With a starting donation of $25,000 or more you can create your own fund, and even personalize your legacy by naming it — for example, The John Smith Fund.
The money you put into the fund is owned by Benefaction Foundation and committed to charity, but you choose how it’s managed from a list of eligible investment options and make grant requests from the fund to support your favourite causes. You can donate cash, publicly listed securities, life insurance policies and gifts from your estate through your will. Benefaction Foundation handles all the administrative details and provides you with regular reports on the investments and grants from your fund to other charities.
The program has plenty of tax benefits:
You get a tax receipt at the time of the donation for the full market value of your contribution.
You can use the tax receipt immediately and don’t have to wait until the funds are granted to the charities.
If you’re giving investments that have grown in value, you can make a donation in kind. Benefaction Foundation will receive the full value as a donation and you won’t have to pay tax on any capital gains.
Any assets allocated to your donor-advised fund grow tax-free. That means there will usually be additional assets that you can request to be donated to your chosen charities in future years.
Giving to the communities and causes that are important to you can be life-changing for both you and the people you’re helping. Talk to an advisor about how you can make charitable giving part of your overall financial plan.
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