Skip to main content
Open this photo in gallery:

People who think like philanthropists have already set money aside for the causes they want to support – whether that’s in a private foundation, donor-advised fund or bank account – so they’re less likely to change their plans based on current market conditions.donald_gruener/iStockPhoto / Getty Images

Are you a professional financial advisor? Register for Globe Advisor and then sign up for the weekly newsletter on our newsletter sign-up page. Get exclusive investment industry news and insights, the week’s top headlines, and what you and your clients need to know.

Canadians often make charitable donations toward the end of the year, both as a seasonal tradition and to take advantage of a tax deduction in the current taxation year. But, in the face of inflation, rising interest rates, market volatility and a potential recession, some may be scaling back their charitable plans.

That makes it all the more important for advisors to point out strategies to their clients that make each donated dollar go further.

“In general right now, people are, of course, more cautious with how they choose to spend their money,” says Jennifer Watson, managing partner at Watson Investments in Oakville, Ont., and an advisor with Aligned Capital Partners Inc.

“We want to help our clients do what they want with their money, and help them do that in the way that’s going to preserve as much money as possible and help grow their money. … It’s no different with charitable giving.”

One of the most tax-effective ways to give, Ms. Watson says, is to make an in-kind donation of a security that has a capital gain. Although financial markets have been rocky this year, there are still some of those out there. Transferring a security directly to a charity means there’s no capital gains tax and results in a donation credit for the current market value.

For those who are business owners, Ms. Watson says it’s worth looking carefully at whether it makes more sense for the company or the individual to make the donation.

If the money has to come out of a corporation to cover a personal donation, it’s important to have other reasons to incur the associated tax. That may make sense, for example, for someone who will be applying for a new mortgage and needs to demonstrate a certain amount of personal income. If there isn’t a good reason to take money out of the company, making a corporate donation may be a better option.

“You’re looking at it … from the perspective of what else is going on, and then how can I get access to money with the least amount of taxes paid but still achieve the value we’re trying to achieve,” Ms. Watson says.

Take a strategic approach

Thinking like a philanthropist – rather than making one-off, modest donations – can stretch charitable dollars, says Marvi Ricker, managing director of family philanthropy and legacy planning at BMO Family Office in Toronto.

She says philanthropy needs to be “carried out in a manner that is meant to have an impact on an issue, and it should be measurable and [driven by] a thoughtful process over a long period of time.”

People who think like philanthropists have already set money aside for the causes they want to support – whether that’s in a private foundation, donor-advised fund, or bank account – so they’re less likely to change their plans based on current market conditions.

Ms. Ricker adds that people can stretch their charitable giving dollars by looking for matching opportunities. For example, to support recovery after Hurricane Fiona, the federal government announced it would match personal and corporate donations to the Canadian Red Cross for at least 30 days after Sept. 25. And, periodically, wealthy donors step in to match donations up to a certain amount to encourage giving to health care and education fundraising campaigns. Matched donations mean every dollar donated is worth two dollars to the charity.

“My role in advising people isn’t so much to say, ‘Give to this versus that,’” Ms. Ricker says. “It’s to help [clients] figure out what’s important to them. What are their passions and aspirations? What are their interests in the charitable sector? And then to help them do it in an efficient and effective manner and in a way that they know they’re having an impact.”

Systematize charitable giving and get creative

Charlie Spiring, founder and chairman at Wellington-Altus Financial Inc. in Winnipeg, says that, in general, the wealthy are sticking with their philanthropic plans. It’s middle-class people who are feeling the pinch in the current environment. He also thinks a more strategic approach to charitable giving can help.

“The key is to do your planning in advance and put your [philanthropic] allocation away. Some people do 1 per cent, some do 2 per cent, and some do 5 per cent,” Mr. Spiring says. “But if you really, truly, strongly believe in it, planning will get you there. And when you put some money aside, you don’t seem to miss it as much.”

He’s seen this strategy work in practice. As an example, he points to the United Way campaigns that encourage people to donate a little from every paycheque. Systematizing charitable giving makes it a habit, and habits are hard to break.

It’s also possible for people – including advisors – to leverage their time and creativity to amplify charitable contributions. During the pandemic, Mr. Spiring approached his larger clients and explained that he and his wife planned to buy meals from struggling restaurants to feed people in need. In the end, he raised $1-million that helped keep restaurants afloat, their employees working, and people fed.

“It was great to match up those that had time, money, or both to make it work,” Mr. Spiring says. “There’s always a way if you have the will.”

For more from Globe Advisor, visit our homepage.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe