Are you a more generous giver than your neighbour?
How much do you give to charity? How do you compare with your friends and neighbours? Who are you giving to?
These questions, while not always asked in polite company, loom large among curious Canadians who may wonder whether they are indeed giving enough money or time to support worthwhile causes.
One of my first glimpses into how much people give – or don’t give – was as a young accountant lost in a pool of junior tax preparers in a large, international accounting firm during tax season. We prepared the tax returns of senior executives of major corporations along with those of various professionals and other wealthy Canadians who often had complex personal situations and diverse investment income to report.
Each April, many an evening and weekend was spent on our clients’ tax returns, which included entering multiple donation receipts into the software package that would ultimately calculate and generate the tax return to be filed.
I recall one taxpayer in particular who donated more than $60,000 to a variety of charitable organizations.
Of course, that was nearly double what I made in income that year and I considered that level of charity extraordinarily generous – until I input his T4 Slip, which reported employment income of more than $10-million. This individual donated about 0.6% of his net income that year to charity.
Using tax return data just released from the Canada Revenue Agency for the 2010 tax year, it turns out that while this percentage may seem low, it’s not that far off what the average Canadian reported donating to charity in 2010. It is however, significantly less than the percentage donated by the wealthiest of tax filers.
The data shows that as an individual’s income increases, the percentage donated to charity also rises. For example, individuals with income of under $25,000 reported donating about 0.3% of their income to charity while those making more than $250,000 donated about 2% to charity.
A study earlier this spring by Martin Turcotte of Statistics Canada looked at how much was given to charity in 2010 along with which charities Canadians supported.
That study found that in 2010, Canadians donated $10.6-billion to charity, with the average amount per donor being $446 while the median amount was $123. (The median amount means that half the donors gave more and half gave less than $123.)
Donations, of course, can take many forms other than monetary donations and the study found that while 84% of Canadians did indeed make a financial gift, 79% made a donation of clothing, toys or other household items while 60% made food donations. In aggregate, 94% of Canadians indicated making some level of gifts to charity in 2010.
Quoting earlier studies, Statistics Canada said being employed, having a university degree and belonging to a higher-income household all increase both the probability of giving to charity and the amounts given. These studies also show that high-income individuals are approached more often for donations and often face social pressure to donate.
So, where do our donation dollars end up?
Perhaps not surprisingly, of the $10.6-billion donated, 40% of it landed in the hands of religious organizations. There is some regional disparity among the provinces when it comes to donations to religious organizations. Saskatchewan leads the way with 52% of all residents’ donations going to religious charities.
Quebec residents, on the other hand, only direct 20% of their donations to religious organizations.
After religion, health (excluding hospitals) accounted for 15% of the total amount donated while social services charities accounted for 11%.
The study also looked at reasons for making a financial donation. The top reason? Ninety per cent cited “feeling compassion towards people in need” as their motivation for donating. Second on the list was that the donor personally believes in the cause to which she is donating followed by the desires to make a contribution to the community.
And finally, what role do tax considerations play in the decision to make a charitable gift? After all, donations below $200 are eligible for a 15% federal non-refundable credit while amounts in excess of $200 annually attract a 29% federal credit. Provincial or territorial credits can bring the total value of donation credit up to 50%, depending on the province.
Yet only 23% of survey respondents cited getting a the tax receipt as a reason for giving. In fact, less than half of donors intended to claim a tax credit for their donations. This amount varied by province with donors in Nunavut (22%), Quebec (35%) and the Northwest Territories (37%) least likely to claim a donation credit versus Saskatchewan (56%) donors and those in Manitoba and Prince Edward Island (53%).
This unpredictably low level of donation credit claim may be related to the fact that since the donation credit is non-refundable, many low income donors don’t need the credit to reduce their tax to zero since they are already non-taxable.