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Grasping Philanthropy

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There are so many heart-wrenching problems that are depicted in the media. In reality, you aren’t expected to help every cause you come across. But some of the most effective donors develop a philanthropic plan, and devote their money and energy to a few specific causes important to them.

Historically, “philanthropy” has been the domain of the wealthy. It’s important to distinguish it from charitable giving, which can be as simple as writing an annual cheque. Philanthropy is an exchange of values that results in a donation. It’s an investment in a cause and giving to a solution, and often represents a longer-term commitment.

The charities one selects benefit from a steady, engaged donor, and the donor benefits from a greater sense of involvement and satisfaction. You need to understand your goals and objectives and then research your options to determine what’s right for you. And, like a financial plan, the charitable plan will change with life’s events, meaning it should be reviewed and updated periodically. For those who don’t know where to start, here is a simple six-step process:

STEP 1 Identify the values important to you in everyday life. What are the causes you care about most or that have most affected your life? Examples could include such things as family, justice, dignity, etc.

STEP 2 What causes engage you: issues related to children, the environment, animals? Ask yourself if the causes you have identified address your values.

STEP 3 Decide whether you want to support local, provincial, national or global causes.

STEP 4 Do your research. Fortunately, the Internet can  cover a lot of ground, with many terrific websites. One is www.charityvillage.com. You can input causes and geographic regions, and it will provide a list of charities in those areas addressing those causes. Of course, most charities today will have their own sites.

STEP 5 Do your due diligence just as you would when considering an investment. Request copies of annual, audited financial statements. Find out who’s on the board of directors. Examine how much support the charity receives from government and how reliant it is on personal donations. What percentage of its funding goes to administrative expenses and what percentage to the end user of its services? Bear in mind that administrative costs are a necessary burden for the provision of services. Ask if the charity is keeping those costs under control. For help researching a charity’s financial strength, visit www.charityfocus.ca.

STEP 6 The final step: Talk to the charity. Most have gift-planning professionals on staff who can be instrumental in the planning process.

The LGBT Giving Network brings together organizations in cultivating and engaging donors to secure leadership gifts and long-term support for building stronger Canadian LGBT communities (visit www.lgbtgivingnetwork.org for more information).

Although tax savings may not be your primary motivation, it makes sense to maximize that savings. If you choose to donate directly to a registered charity, you’ll receive a tax credit when filing your annual return.

It should be noted that you don’t “make money” on chari­table giving. For example, for every dollar donated beyond $200, an individual in Ontario receives a federal and provincial tax credit equal to 46 cents. Further tax breaks are available if you donate stocks, bonds or mutual funds that have increased in value as the capital gains from the deemed disposition of the securities eliminated. Donations during your lifetime may be claimed up to 75 percent of your net income, and any excess may be carried forward for five subsequent years. Regardless of who made the donation, either spouse or common-law partner may claim it.

Thinking strategically about your giving is the point, not the size of your gift. Indeed, many wealthy individuals, including Bill Gates and David Geffen, have applied their business acumen to philanthropy. But you don’t have to be a celebrity tycoon to be successful at giving back. In fact, you may establish your own foundation with as little as $10,000 (for more information, visit www.tdwealth.ca/privategiving). Feel free to contact Jo-Anne Ryan, vice presi­dent, Philanthropy, TD Wealth, at joanne.ryan@tdwealth.com.

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