Charitable giving is an essential part of Canadian society, with millions of people donating to various worthy causes every year. However, it’s no secret that the end of the year can be a stressful time for both donors and charities. Every December, Canadians are bombarded with requests for donations, and many feel pressure to give before the end of the month so they can claim the tax deduction for that year. This puts small charities at a disadvantage and creates an uneven playing field. It also creates “donor fatigue,” demotivating potential donors who are overwhelmed with requests during a short period.
But there is a simple way to spread out charitable giving more evenly and make it less stressful for everyone involved: By allowing charitable donations made in January and February to be claimed on tax returns in the current or prior calendar years - like the option currently available for RRSP contributions - we can create a more equitable and efficient system for both donors and charities.
Extending this option to charitable donations would give Canadians more flexibility in when they give and allow them to support worthwhile organizations at a less busy time of year. It would give charities an additional two months to solicit donations through their campaigns and make it easier for donors to spread out their charitable giving over a longer period. Donors would have extra time to research charities, learn about the causes they are being asked to support, and plan out their giving in a thoughtful manner in conjunction with their annual tax filing.
Smaller charities would benefit significantly from this policy change. They don’t usually have the resources to compete with larger charities during the holiday season, and the extended timeline would allow them to develop detailed campaigns that could span several months, rather than being constrained by the year-end rush. It would also allow charities to develop greater consistency in their fundraising efforts, providing them with a more stable funding base to support their causes.
It is worth noting that this policy change would not have any negative impact on the federal budget, as taxpayers would not be able to claim a tax credit more than once in respect of the same donation. In fact, it could even lead to an overall increase in charitable donations as Canadians are given more opportunities and incentive to give.
Charitable giving is an important part of our society, and we need to make it less stressful for everyone involved. Introducing the option for claiming donations made in January and February for the prior calendar year is a simple change that can have a significant impact on the way we support charities through the income tax system in Canada. It would make charitable giving more convenient for Canadians and potentially enhance the number of people who donate. It’s a win-win for everyone involved and it’s time for tax policymakers to explore this option.
Benjamin Alarie holds the Osler Chair in Business Law, University of Toronto and is co-founder and CEO of Blue J, a leading legal technology company.
Daniel Lyon is a board member of the Canadian Artists Network (formerly known as CSARN), a registered charity dedicated to ensuring that the creativity and vibrancy of Canada’s senior professional artists in all disciplines are valued.
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