When giving this season, don’t ignore the inner Scrooge

Treat charitable donations more like an investment, reap the most tax benefits

More than nine in 10 Canadians follow the example of reformed miser Ebenezer Scrooge and give to charity every year, but experts advise taking a page from his tightwad ways and treat those charitable donations like an investment.

Philanthropy professionals and charity watchdogs say that as the holiday season sets in and the airwaves fill with messages of altruism, you should still analyze your chosen charities the same way you would research the purchase of mutual funds or property.

Financial adviser Kate Bahen, managing director of watchdog group Charity Intelligence Canada, says key things to look for include whether the charity’s financial statements are audited and up-to-date, if the charity has an independent oversight board and if it spends more on programs than administration and fundraising.

“People need to look at that giving as an investment,” she says. “If they could bring that business brain to the giving table, I think that’s where we would see such huge change in Canada for the good.”

Bahen says charities will often play on the heartstrings by telling one story of one client in need, but big businesses don’t ever limit their quarterly reports to talking about just one customer.

While Tiny Tim’s blessing brought a smile to Scrooge’s face, he would surely also be pleased by the charity tax credits offered by the federal government that can reduce your total income and therefore, your tax bill.

The Canada Revenue Agency gives a tax credit of 15 per cent on the first $200 you donate, rising to 29 per cent for amounts over $200.

If you haven’t donated before, you can claim an additional 25-per-cent tax credit for any donations made before the end of 2017, up to $1,000. The provinces have their own tax credits.

The CRA posts a searchable list of the more than 85,000 registered charities in Canada online and pro- vides a detailed breakdown of their finances.

Third-party organizations such as Charity Intelligence Canada also provide guidance on giving and ratings on individual charities.

Lawyer Mark Blumberg says people are happiest when their tax savings reflect their values.

“It would be nice if people would have a sense of how they want to give, so that at the end of the year when you look at all the receipts you have it is a fair reflection of what you want to support,” he says.

He says Canadians shouldn’t just rely on the grades given out by third parties to make their decisions.

The best way to get to know if a charity is worthy of your support is to volunteer, he adds.