5 steps for creating social impact within your wealth planning

With over 86,000 registered charities in Canada, choosing which ones you want to focus on can be challenging. A social impact plan helps you cut through the noise and focus on the causes that matter most to you. Consider: What problems do you hope to improve? What demographic do you want to impact? Which geographic area will you help — local, national or global?

Ms. Lazier recommends, “Consider how many causes you can realistically support with your time and money. Then consider which causes are most meaningful to you. This may be a cause that has impacted your family or community directly. You may also want to support causes that are disproportionately affected by a lack of funding.”

While charitable giving is an admirable goal, you likely also have other objectives that need to be accounted for when creating your wealth plan. A good social impact plan fits into your broader wealth planning. Your wealth management advisor can help you with cash flow management to meet your income needs alongside your philanthropic goals. 

When cash flow planning for your social impact plan, consider leaving room for some flexibility. Ms. Lazier suggests, “Usually people portion about 80% of their total funds allocated to social impact to the key causes they’ve identified. By keeping a portion of their budget flexible, they can still respond to world events and new ideas.”

A charitable donation can reduce your taxes in a given year as long as you donate before the end of the year. For example, if you’re hoping to reduce your personal taxes in 2024, then you have to make your charitable donation by December 31, 2024. Similarly, if you have a private corporation, then it must make a charitable gift before the corporation’s fiscal year-end to claim a charitable deduction. Ms. Lazier advises, “You cannot carry-back donation tax credits and deductions to prior tax years, although you can carry unused donation amounts forward for the next five years.”

Ms. Lazier suggests, “If you’re giving a significant gift to charity, then think about gifting publicly traded securities (PDF, 150 KB) Opens a new window.. Instead of selling those shares, you can gift them in-kind to a charity and pay no capital gains tax. There is a similar rule for gifting shares on the exercise of employee stock options. For very high income earners, you may also need to consider alternative minimum tax.”