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November. We're coming to the end of the tax year so for many of us, 'tis the season to start thinking about charitable donations.

When money's tight, charitable donations might seem like an extra expense we can't afford, particularly with the crunch of holiday spending around the corner.

But planned giving can be a great way to maximize your donations and also benefit at tax time, both now and in the future, says Tim Dennis, a financial consultant for Investors Group. One way to do it is through an insurance policy – instead of doing a monthly donation that will add up to, say, $500 a year, you could put that amount of money towards an insurance policy that is owned by the charity.

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"Let's say you're giving $500 a year [in the traditional way]– the charity will get $10,000 over a 20-year period. But if you take that same amount of money and buy an insurance policy and that's costing you $500 a year, if it's a $300,000 policy, the charity will get that $300,000 [when you pass away]" Mr. Dennis says.

When it comes to tax credits, Mr. Dennis says you can do it one of two ways – if you need the tax credit now, you can use the premiums as your tax credit. Or you can leave it so that the tax benefit comes from the death benefit, which can cover a great deal, if not all, of the taxes on the estate.

Regardless of what mode of donation you choose, Mr. Dennis says consulting a financial advisor can maximize the tax benefits.

Maureen Flynn has found ways to donate to a charity she feels passionate about without feeling the added financial sting. The Belleville, Ontario resident was hit by a car when she was 16 and suffered a brain injury that left her unable to sit up, walk, even feed herself, and physiotherapy at The Hospital for Sick Children was key to her recovery.

So she created an endowment fund at The Hospital for Sick Children, specifically earmarked for the occupational and physiotherapy departments. Ms. Flynn donates to the endowment fund through monthly, pre-authorized payments from her bank account, as well as topping it up when she comes into a bit of extra cash.

"It's part of the monthly bills and you don't notice it," she says. "Whereas if you asked me today, could I send them a cheque for $250, I'd sort of go, well, hmm, gee whiz."

In addition to giving money to a charity she believes in, Ms. Flynn can benefit from the tax credits which offset her income. "More of my taxable income is sheltered, so it's a win-win situation," she says.

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Ms. Flynn has also earmarked funds for Sick Kids through planned giving. She doesn't have any children and has made the hospital the beneficiary of one of her RRSPs, which will be added to her endowment fund at the time of her death.

"The RRSP would normally go to my estate and get divvied up and there would be the tax implications, whereas [this way]that piece of money won't get taxed," she said. "Let's say it's $50,000, which would get taxed and might end up at $30,000 or whatever, so you would have lost a percentage of it."

Canada Revenue Agency has a number of resources to help you make tax-wise choices when it comes to donating and avoid fraud.

Most importantly, before giving anyone any money, you need to ensure that your charitable organization is registered with the CRA and has a valid registration number (eg. 123456789RR0001), Also, make sure your official donation receipt has all the mandatory information you will need to claim a tax credit.

As well, CRA has a handy charitable donation tax credit estimator, which allows you to plug in your province or territory and the amount you are donating to find out what tax credit you can expect.

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