MAKING YOUR CHARITABLE DOLLARS WORK FOR YOU
The Collins English dictionary defines “Charity” as the act of giving to those in need. Centuries ago that act of giving most likely came in the tradition of providing food to a hungry person. In this era, one form of giving is the donation of money to a charity. According to Statistics Canada, in 2010 Canadians’ generosity amounted to a staggering 10.6 billion dollars donated to charities and other non-profit organizations. Donors range from pensioners on a fixed income to the wealthy. Currently, there are over 86,000 charities registered with the Canada Revenue Agency (CRA). With so many charities, how does one decide on which charities to support?
When contemplating which charities to support, a good place to start would be to think about what issues or causes matter to you. There are hundreds of charities that focus on health, environmental, and animal issues, for example. A good way to learn more about a charity and their programs is to volunteer your time with them. Another, is to proactively pursue research on the charity. The CRA provides potential donors with valuable information about all registered charities in Canada (only registered charities can issue official donation tax receipts). Information provided online (http://www.cra-arc.gc.ca/chrts-gvng/lstngs/menu-eng.html) by the CRA includes the charity’s registration number, in addition to their T3010 tax return filings showing a summary of the charity’s revenues and expenses. Within the last couple of years, the CRA has added a quick view feature which provides the public with a visual representation of a charity’s revenues and expenses in the form of a pie chart; however, these figures are purely summaries and not detailed accounts.
As a donor, you obviously want to maximize your donation contributions so it is
important to examine a charity’s donation revenues (not revenues raised from the sale of their property or the transferring of funds from their foundation or vice-versa); their expenses (i.e. their
operating costs, salaries,
administrative costs); and how much is actually spent on their programs. A charity may claim, for example, that 85% of all donor revenues go directly towards funding the programs; however, if 65% of that amount derives from salaries and operating expenditures, then the monetary aid for the programs is disappointing to say the least. If the compensations (salaries) are greater than the management and administrative costs, then the charity has included salaries within their charitable program costs. It is only when subtracting the compensation amount from the program costs that a better idea of what a charity spends on its programs emerges. The primary function of any charity should always be to fund their programs and research (if applicable), and not their salaries and administrative costs. With billions of dollars donated to charities each year, charities have a moral obligation not to waste donor money and to be accountable to those donors who fund them.
All donors, including potential donors, have the right to ask questions, including questions about a charity’s expenses. Donors have the right to decide how they want or don’t want their dollars to be spent. Increasingly, more charities are featuring celebrities in their television campaigns, thus a question any donor might want to ask a charity is if the celebrity endorsing the charity’s campaign is being paid (services rendered) by the charity? If they are, then as a potential donor you have to decide if you are comfortable donating your dollars to a charity that pays celebrities to endorse them. Would you be comfortable donating to a charity if they give generous severances to laid-off staff? (Remember, charities are not corporations.) Does the charity use donor money to fund staff Christmas parties, for example? Again, you have to decide what your comfort level is when donating, and don’t be afraid to ask questions.
One way of making the most out of your donation is to take control of your giving by designating your donation to a specific program run by the charity. Thus, for example, you can dictate that 75% of your donation be directed to the program of your choice, while the remainder is then allocated towards the charity’s administrative/operating costs. Obviously programs where medical research is involved require greater administrative / operating costs. By designating donations, this ensures the programs you support are being funded. Donors may also want to follow-up at a later date with the charity to enquire which program their donation was allocated to. The larger charities with multi-million dollar revenues have this information at hand in their database.
Social media has changed how many donors opt to give to charities. Online giving
permits people to donate at their leisure from the comforts of their home. Still, prior to entering any personal information online always make sure the website is legit and secure. All registered
Canada should indicated their CRA # number on their website, which typically resides on the home page. Some websites have chip-in options, but again if the site has no CRA # then they are not a
registered charity, thus the actual beneficiary of your donation may not be an organization, but rather a dishonest person attempting to solicit funds fraudulently. Some charities only include a PO Box address on their website; however, unless there is a protective need not to disclose the location of the charity, i.e. some animal shelters or women’s shelters do not, then do some investigating prior to making a donation. In theory, a donor should be able to visit a charity’s office, thus there should be a street address visible on their website.
Sometimes charities rely on third-party companies to fundraise on their behalf; however, never disclose your credit card information to any caller. Instead, ask the caller to mail you a pledge form, or inform them you will contact the charity directly to make your donation. Always, decline any request to wire transfer a donation. If a person or group is soliciting funds for XYZ charity, don’t hesitate to contact the charity to verify the legitimacy of the campaign/solicitation. Cheques should be made payable to the charity and not the individual seeking donations on the charity’s behalf.
When a humanitarian crisis occurs, the federal government often implements a
dollar-for-dollar matching program to encourage Canadians to contribute financially towards the overall humanitarian aid being delivered. Prior to making your donation, check with the federal
(previously this was CIDA) announcing the matching donation incentive to verify the charity you wish to make your donation to is eligible for the matching program. Ideally, after the program has passed it would be helpful if the federal government agency published the names of the charities that participated in the matching gift program.
There has been an increase in mail solicitations from charities but the sad reality
is that one cannot support them all. The increase in mail solicitation most likely derives from charities selling your name and address to other charities as a means of raising revenues. Donors have
every right to request to be removed from the mailing list of those doing the soliciting, in addition to advising the charities you support not to sell your information. Another source possibly
contributing to the increasing number of
mail solicitations are online petitions. Online petitions are important, but they shouldn’t be used as a means of selling people’s addresses or to equip charities with a direct means of soliciting funds. To avoid receiving mailed out solicitations when signing online petitions, instead of providing your street address enter “private address” in the address field. Some charities include “gifts” in their mail-outs, the most common one being address labels which end up in the landfills since very few people use the postal system anymore; these gifts are examples of donor money being wasted, and nobody
should feel obligated to donate to a charity in receipt of a sent gift. Remember, you never asked for the gift!
Charitable giving is important because programs that save lives, provide education and healthcare, and improve communities both locally and abroad quite simply would not exist without the aid of charities and the generosity of donors. Many charities do not receive government funding, while some receive little in comparison to what they raise. Individuals and businesses give to charities because they want to make a difference in the lives of others, the welfare of animals, or to help the environment. But while the act of giving makes donors feel good, our philanthropy necessitates that as donors we also have a responsibility to play an active role in how our donations are spent wisely. Likewise, charities have an ethical obligation to guarantee donor money is not wasted; rather, the monetary donations fully support the programs they strongly advocate for.