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Tim Cestnick is president of WaterStreet Family Offices, and author of several tax and personal finance books. tcestnick@waterstreet.ca

From the time our kids were small, Carolyn and I have been talking to them about three key priorities for their money: saving it, sharing it, spending it.

The spending part comes easily for most people. Even saving it, although a little more challenging, is something many people can do. Sharing it – that is, giving some of it away – is another matter.

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I liken the habit of being charitable to stepping into a hot bath. It may be too hot to be comfortable at first. But if you dip your toe in just a little, then step in a little more, you get used to it. In fact, you start to enjoy it after a short while.

I also suggest that there's a difference between charitable giving, and strategic philanthropy. A big difference.

Charitable giving is what you do when someone comes unexpectedly knocking at your door asking for donations and you donate a few dollars because you don't want to be a bad neighbour, or because you genuinely want to help. Don't get me wrong, a certain amount of this type of giving is just fine.

Strategic philanthropy, on the other hand, is taking a longer term approach to giving, and results in much more meaningful gifts. Meaningful for both you and the charity.

This type of giving involves spending time thinking about what's important to you and your family, searching out charities that align with your values, deciding how much you'd like to give over the next two or three years, deciding how much and how you might give at the time of your death, possibly discussing your plans with the charities you've chosen and carefully considering the most effective way to give from a tax perspective.

I have a question for you: Why do you give?

Some people, for example, are "communitarians" and give simply because doing good makes sense to them. Then there are "the devout" who give because they believe it's God's will. Others are "investors" and give because it's good for their business. There are also "socialites" who give because it's fun. "Repayers" give because they're doing good in return for what they have received. There are also "altruists" who give because it feels right. Finally, there are "dynasts" who give because it's a family tradition. (Thanks to Russ Alan Prince of Prince & Associates for his thinking on these "faces of philanthropy.")

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Assessing your motivation to give is smart, because it can help you to better design your giving.

If you're an "investor," for example, I expect you'll value giving today more than at death. If you're a "dynast" you may be best served by using a private or public foundation (such as the Aqueduct Foundation, or a community or similar foundation) to make your gifts. "Socialites" often want to give in a manner that provides recognition, which can dictate how much they give and when. You get the picture.

What about the tax motivation to give? The fact is, for every dollar you give to charity, you'll still be out of pocket some amount, and so you should have charitable intentions.

Now, I realize that there are some donation schemes out there that propose to provide you with much more cash in return than the value you have donated. Almost all of those schemes should be looked at with skepticism; you should know that the taxman doesn't look at most of these very favourably, which creates tax risk that many are keen to avoid. There are, of course, ways to give that are more tax efficient, which can make good sense. This is a topic for another day.

An interesting thing about giving is that it's contagious. When we see others give, or hear stories of generosity, it often leads to generosity. If you're looking for a little inspiration by hearing or reading the stories of others, make a visit to ilikegiving.com – the video I Like Car is my favourite.

It's also worthwhile looking at chimp.net, a great resource site where you can give to any registered charity online, track your giving history, raise money with others for a cause, set a giving budget and timetable, search and research any charity in Canada, among other things.

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In the next two weeks take the time to ask yourself whether you're engaged in charitable giving or strategic philanthropy. Assess what face of philanthropy fits you best, and make a commitment to giving back before the end of the year – for the tax breaks, but more importantly because it aligns with your values.

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