Are you thinking about making an end of the year donation to your favorite charitable cause? If you said yes, you’re not alone. Statistics show almost a third of all charitable giving is done in December. Follow your heart and save money on income tax by contributing to charity this holiday season.
Giving to charity not only helps a good cause, but you can write it off on your 2018 tax return. But before you let go of your hard-earned money, make sure you do your homework.
Here are some things to think about before you make a donation to a charity:
Are you an animal-lover? A veteran? Are you concerned about the Environment? Is there a disease that you feel strongly about helping to eradicate? It’s best to find a charity that means something to you and is close to your heart. This will make giving the donation a pleasure and not a duty.
Do you already have a favourite charity? Only charities registered in Canada can issue Canadian income tax receipts for cash donations. Registered charities are also subject to Canada Revenue Agency (CRA) regulation over how they raise and spend their money and how they are structured. Typically, a charity will include its charitable registration number on all collaterals and in a prominent position on correspondence and their website, etc..
This time of year, there are a lot of scammers out there posing as charities, so be on the lookout for fakes. To check that a registration is still valid, search the name on the CRA’s “List of Charities”
Believe it or not, only about 1/3 or people who give to charities do any research! Most people give to organizations they have heard about or that have been recommended to them. Before you make a donation, do a little research. Just because it is a large organization or charity, that doesn’t always mean it is the right one for you. Consider giving to a reputable organization that does good work in your own community.
How much of your donation goes to overhead & admin? It is required by the CRA that a registered charity spend the majority of its revenues on its actual charitable purpose, not on administration and/or fund-raising, and must submit these figures annually. Most charities will publish this information on their website so check this out before you make a donation. In the CRA’s Fundraising by Registered Charities Policy, an overhead of 35% or less in a given year isn’t typically a concern. A percentage between 35% and 70% will prompt a review and, when this amount is over 70%, the CRA will demand a satisfactory explanation.
Be extremely cautious of any charity that only takes cash payments. Most legitimate charities have a valid credit card option. Do not send your information via text message or in an email, instead ask the charity if they have a secure website page for credit card donations. This will show as an “https” url in the top website address bar.
As bookkeepers, Green Quarter is all about the numbers. We help many of our clients write off many charitable donations throughout the year. But always remember to save your receipts when making a charitable contribution! Without an official receipt, we can’t deduct them from your tax return.
This will depend on which province you live in, but it could be a substantial amount. You can get an idea by having a look at the CRA’s Charitable Donation Tax Credit Estimator or call us at 778-791-2864 and we can help determine what this amount could be.
If you haven’t donated to a charitable cause, do it now! If you want your donation to count for 2018, you need to make it by December 31st!
Donating to a charity will not only help with your tax burden but it will also make you feel good. It is a true Win Win!
At Green Quarter Consulting - Accounting and Bookkeeping Services for White Rock, South Surrey, Langley and Surrey BC, we are here to help. We can assist with guiding you through some of the best practices discussed above and help you become more comfortable with your charitable donations and tax deductions.