Planned giving: How to choose what causes to support

Insights
November 2020

One of the most challenging aspects of planning an individual or family’s annual giving is deciding which charities or causes to support.

 

With more than 170,000 charitable and non-profit organizations in Canada, about 86,000 of which are registered with the Canada Revenue Agency (CRA), it may be overwhelming and confusing to know where to put your efforts.

 

Choosing where to give may require some introspection and research to help narrow down your options, in addition to alignment with family members. Below are some guiding principles on how to make giving a success for you, your family and your chosen charities.

 

Take your giving personally

 

Individuals and families often get the most satisfaction, and make the biggest impact, by choosing charities that align with their values and interests. Many are also inspired by life events that affect them personally, such as a professional mentorship opportunity to help empower the next generation or global events, such as a natural disaster.

 

The good news is, given the plethora of charitable organizations and non-profits to choose from, there’s a cause to match almost every interest and passion, ranging from animal welfare and human rights to healthcare and education.

From the outset, it’s important to determine the appropriate level of involvement in charitable activities to suit your current family dynamic and wishes.

Are you simply making a donation or is the expectation to volunteer time as well? Is this a long-term commitment? Would you like to see your initial giving turn into something more strategic? How does your giving align to causes you may have supported in the past?

 

Get to know the charitable organizations

 

When selecting which organizations or causes to support, it’s important to do your research or consult your professional network to support your due diligence. A thorough examination into the organization’s governance structure and budgets, how it’s funded and how donations are used is an advisable process to support your annual giving.

 

Individuals or families can contact the organization directly for this information. Charities that are financially healthy, accountable and transparent will often willingly provide data and information on its annual activities. Information may even be posted on their public-facing websites. Reputable organizations will be eager to discuss what they do and how they’ll put your donations to work.

 

You can also look for information about a charity on the CRA website, including whether it’s registered, revoked, annulled, penalized or suspended. In many cases, the CRA can also provide information on a charity’s governing documents such as its statement of purpose, its directors and trustees and its financial statements. The information can help inform your decision about which charities are the best match for your giving plans.

 

Some donors may even wish to volunteer for the charity, where possible, before providing financial support. In some cases, you may want to support the cause with a donation and your time, which most charities would welcome.

 

Discover how professionals can help in your giving

 

Choosing the right organizations and causes can be onerous, but your professional network and advisors can support you in making a decision that aligns with the wishes of you and your family.

 

Wealth management professionals with charitable giving expertise can help you determine a strategic giving framework based on your goals. Advisors can also work with individuals and families on a tax-efficient plan for donations, incorporating their charitable giving into a broader wealth management plan.

 

Some individuals or families may choose to set up a private foundation to distribute donations to different causes. While a private foundation is a great avenue for multiple generations to share skills, values and talents, they also take a deep level of commitment and personal engagement and administrative overhead, and traditionally have higher start-up costs. An additional point to consider is anonymity, recognizing private foundation records are publically available through the Canada Revenue Agency’s Charities Directorate.

 

Another increasingly popular vehicle is the donor-advised fund, where the administration of the vehicle, along with the charitable assets, are professionally managed. With a donor-advised fund, the donor recommends what charities should receive grants and the timing of distributions, while the foundation or financial institution handles the administration. Donors can support one cause or multiple charities over time.

 

Regardless of how and where you decided to donate, stay focused on the why: Give to causes you and your family believe in and that align with your individual or family values.

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