Lesley-Anne Scorgie Contributing
Oct. 1, 2019
Having a giver mindset is one of the top three characteristics of self-made millionaires (the other two characteristics are savvy spending and future-focused investing). And many wealthy people give an average of 10 per cent of their earnings. If you want to work a giving strategy into your financial plan, here are a few things to note.
Giving has a measurable rate of return (ROR): When you donate more than $20-$25, depending on the policies of the registered charity, you receive a tax credit (not a deduction) that positively affects your income. When you apply the charitable tax receipt to your taxable income, it is worth between 25 per cent (if you give fewer than $200) up to 45 per cent (if the value is over $200), depending on the province you live in. The receipt should have the charity's name and registration number, your name, date, the serial number of the receipt itself (similar to an invoice number), amount donated, the CRA website address and be signed on behalf of the organization.
Using the CRA's online charitable donation tax credit calculator is a handy way to calculate your total tax credit based on the province in which you reside.
Your ROR isn't strictly dollar-based: Giving has other benefits, such as expanded networks, increased sales, leadership opportunities, promotions, marketing, job offers, publicity and much more. For example, when I was 23 years old, I published my first book, Rich By Thirty: Your Guide to Financial Success. Six weeks after releasing the title in Canada, it became a bestseller. The people and organizations that I'd offered time or money to bought copies of my book - teachers, coaches, tutoring circles, youth groups, Habitat for Humanity and YWCA (where I volunteered). They posted about it on social media. They gave boxes of my books to local classrooms. They wrote reviews. They opened doors for me.
Pick the style of giving that suits your life stage: No matter your financial situation, you can give in the following three ways - through time (volunteering hours at grassroots charities such as a soup kitchen), through talent (leveraging your professional skills on a charitable board or committee to help lead a non-profit) and through giving your money to a registered charity.
Giving changes over time, and the way you give should change, too.
For example, you may have more money to give than time (or vice-versa).
Or, your talents are more valuable to an organization than your money. Still, at other times, you'll be able to give of all three. You can choose the best method of giving suited to your life stage.
Give more effectively by pooling your efforts: When you're starting your giving journey, it's completely fine to be a giving generalist - sampling the giving experience at various foundations or charities. But over time, you'll want to refine your giving and target it more effectively to fewer causes where you can make a bigger impact. Simply put, your impact will be minimal if you're donating $100 to a walk, $25 overseas, $80 to the local community centre, and so on. When you focus your giving on just one or two organizations, you will maximize your impact.
Work it into your budget: Donating monthly is simple and effective, and you can grow your giving over time. The charity can debit your bank account directly or can charge your credit card; just make sure you're not going into debt on your credit card. Major gifts (anything over $10,000), require advice from a philanthropic adviser or lawyer.
The more effective you are with your giving, the greater both your ROR and effect you'll have on the community. And remember to keep your charitable receipts; they're like gold when filing your taxes.
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