I'm Late, I'm Late, For a Very Important Date... Year-End Donations for Tax Credit

The last week of December is the final push that charities make for year-end donations.  Even with this added push, it does not mean that donors should rush into a major decision because they realize they have to get the tax credit taken care of.  Strategic giving is as much about finding the right charity partner to execute on your social vision as it is about financial planning.

 

Here are some things to keep in mind for these end-of-year charitable transactions:

1. SMART Philanthropy - Specific, Measurable, Actionable, Realistic and Time-bound

2. Donor Advised Funds (DAF) - These accounts allow you to make your charitable contribution, get your tax receipt and buy some time as you research and get to know charities you want to support.  There are different types of DAF’s ranging from those managed by boutique firms, to financial institutions to virtual platforms.

3. Community Foundations - These organizations are designed to help you identify the critical needs in your home community.  Just like DAF’s there are different types of community foundations.  Things to consider: fees for opening accounts, fees for using them as a “flow through” (i.e. temporary donation structure) and flexibility to drive donations outside of the community.

4. Communicate with the recipient organization BEFORE a major transaction occurs.  Make sure there is a clear understanding of use of proceeds and accountabilities.

This is a list of charities we have helped donors contribute to this past year (as of Nov. 1). Our year-end review will be published in early 2016.  Place2Give Foundation is a registered charity in Canada and Place2Give Foundation - US is a registered 501c(3) in the United States.  

The first step to smart giving is to understand the type of donor you are.  Are you the type of donor who wants to give to a start-up charity? Or perhaps one that has a limited track record? Or maybe you want to give a one-off emergency donation?  If this describes you, we would call you a Maverick Donor.

If you are like the 80% of North Americans, you are a Steady Donor; you likely donate to the United Way, your Alma Mater, the local hospital foundation.  Organizations that you know are responsible and have a long history.  

For those of you who look at your philanthropy as an investment and see the opportunity to use these funds for systemic change, you do your research and work with an organization to come up with solutions instead of just funding the problem.  If this describes you, you are an Informed Donor.

Once you know the type of donor you are consider the charities you support by rating the importance of the following:

• Governance - Policies, proceedures, donor stewardship and risk management

• Program Implementation - How does the organization determine their approach and/or Theory of Change

• Leadership & HR - Right people sitting in the right seats on the bus, staff turn-over, board composition

• Volunteer opportunities - Weighted differently depending on the interests of the donor and the type of agency

• Community Engagement - What do others in the same field offer, how respected is the agency in the sector

• Financials - Diversification of funding, donation management policies and proceedures, reporting

 

Becuase we look at agencies from the perspective of our donor clients, we don't say which charities are good or bad. We identify the charities that match your giving profile.

There are several ways to manage the tax question when it comes to charitable giving. Year-end donations is but one option. If you are interested in learning more, we would be happy to chat. In the meantime, if you are unsure about where to direct your funds, but you know you need the tax credit consider opening a DAF or donating through your community foundation. This will at least give you some breathing room to articulate your social vision and determine the best fit charity for your goals.