Giving Generously & Wisely
by Stephen Whipp, CFP- Senior Financial Advisor
“Your mail from your favourite charities is starting to gather dust dear. What would you like me to do with it? We can’t afford to write them all a cheque this month,” says my Life Long Partner (LLP for short).
“Well at least they’re not bills. It’s not as if we owe anybody anything. I guess we ought to sit down and figure out what we can afford this month and write a cheque or two,” I say.
“I’m not sure the amounts on each cheque will be worth any not-for-profit’s time in walking it to their bank,” she replies.
Oh! Oh! I think. I guess I blew this one.
“Besides,” says LLP, “We do owe ‘anybody’ money, I’m surprised you’d say that. In fact they’re more than “anybody” – these are the organizations that work in the Sudan feeding and clothing the hungry, in the Democratic Republic of Congo helping to provide families with a safe place to hide from the violence and child slavery in the gold mines. And what about the food banks feeding more and more people, the woman’s organizations providing shelter and food, the environmental organizations trying to bring some sanity to a financial world chasing greed, and youth organizations trying so hard to make sure that kids, not as lucky as ours, get the opportunities that they deserve.”
“If we had thought of them as monthly bills at the beginning of the year, we would have given them more during the year than what we can give them now,” LLP points out.
She’s right, I think, as I turn my attention to opening yet another envelope, this one from a political party. What to do now? I feel overwhelmed – not sure if I should open up any more charitable request envelopes, what to do?
“So, one cheque you say?” LLP asks, smiling. “Okay,” I reply, “But we’ll have to come up with some kind of process to determine which organization gets our humble year-end amount. There are so many people and organizations with great need. Whatever happened to our governments? How did food banks ever become a fixture? How did we let that happen? And why isn’t the government providing the right amount of funding for women’s shelters? All this talk by governments about helping victims, if these politicians going on about their crime bill put half their energy into finding resources for women’s shelters it truly would be a ‘kinder world’.”
LLP nods knowingly at me, grabs a writing pad and begins to list the names of the organizations on the envelopes. “Okay, which of these do you want to send the cheque to?” she asks.
“Who needs it the most? Let’s see who offers the basics of life – you know – food and shelter. That narrows it down to two, three…and four. Alright, let’s write the cheque to this one.” I say closing my eyes and pointing my finger to one of the four names.
“Okay,” says LLP “I’ll write a cheque out to them for $150.”
“I thought we were doing way more than that?” I ask.
“Business revenues were a bit down last month and we are helping out all three kids with post-secondary costs again next semester,” says LLP, with her company comptroller hat on.
“This sucks. I guess we should have been making monthly donations, but I find it so overwhelming to choose the one or two or three or…” my voice trails off.
Then all of sudden I remember we could donate some shares of investments in our non-registered/cash account. Heck, given the market they aren’t doing us much good right now anyway.
“That would work,” I say excitedly, as if I’ve just discovered the next best thing to carbonless mechanized travel.
“What would work?” asks LLP patiently.
“Donating some of the stock that we have,” I say as I scribble down amounts.
“We can write a cheque to the one organization and donate shares of the investments we have to the others. This way we get to give to the charities we want and we get the tax credit I had hoped we would get this year.”
“What?” asks LLP.
I start jotting down numbers and illustrate how if we donate $150 to a charitable organization we only get a 30.09 tax credit, which means we pay 30.09 less in taxes. However, if we were to donate $1,500 in total -$150 in cash and $1,350 in investments we would get $602.50 back in taxes, meaning that the $1,500 donation really cost us $897.50.
“Of course if we lived in Alberta we would get back another $100 and we’d get back more than $150 more if we lived in Quebec,” I say authoritatively, at the same time wishing that B.C. would give charitable givers a bigger tax bang.
“But we don’t. We live in B.C. so now that you have me confused, what are we doing?” (She is still being really patient).
“If you write the cheque for $150 to the food bank, I’ll contact the other organizations and they will have forms we can use to transfer the shares to them. “
I make a big NOTE TO SELF to get charitable giving forms to transfer our shares to the charitable organizations. I explain to LLP that the transfer has to take place by December 31st in order to get a tax receipt. We also won’t know the exact value of the share donations until they have been put into the charitable organizations’ names.
“And then what?” asks LLP.
“Then it’s time to check my Christmas list,” I reply, cleverly.
“No, before that you are going to ask these organizations how we can set up a monthly or quarterly contribution plan. I don’t want to be doing this again next year.”