Charitable giving survives economic woes

Today marks National Philanthropy Day and the fact that end-of-year giving accounts for approximately one-quarter of national not-for-profit contributions annually proves Canadians have their heart in the right place.

Despite the recent market volatility and the challenging economy, the majority (71%) of Canadians plan on donating the same amount or more than they did last year, according to a BMO Harris Private Banking study.

The study showed that in the past 12 months, Canadians gave an average of $487 to charitable organizations. However, more than half of Canadians (54%) don’t have a strategy when donating, and instead give on an ad hoc basis.

It is important to plan your giving, said Marvi Ricker, vice-president and managing director of philanthropic services, BMO Harris Private Banking on a conference call this morning.

“It is encouraging to see Canadians giving despite the current economic environment,” she said. “However, I do encourage those that donate to sit down with a financial professional and develop a giving strategy that can become part of a financial plan, including a disciplined and strategic examination of goals, objectives, interests and options.”

Giving can be classified into two categories—charitable giving and philanthropy—added Ricker. Philanthropy involves a longer term commitment and a wealth management and donating strategy aimed at a specific cause, while charitable giving consists of donations made on an ad hoc basis and may include a variety of causes and charities.

Highlighting the role of the media, Ricker said philanthropy today receives much wider coverage than it did ten years ago.

Still, individual giving in Canada can do a lot better, says Julia Gorman, vice-president, resource development, at The United Way. She said the percentage of Canadians donating has been declining in recent years.

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“This is particularly notable in the last few years because of the turbulent economy,” she said, “But we are seeing that the average gift has gone from about $448 in 2008 to $505 in 2010.”

Brad Offman, vice-president, strategic philanthropy, Mackenzie Financial, has been observing similar trends, but says that could be curtailed by economic uncertainty and lack of external motivation in the form of tax credits.

“[Economic] uncertainty, when it comes to making charitable donations, breeds a lot of hesitancy,” said Offman. “People are a little bit more cautious about making larger charitable donations.”

He added, however, that Canada as a nation has an extremely generous culture and “people are trying as best as they can to continue with the charitable commitments they have made in the past.”

“A stronger economy and new tax incentives that are designed to drive more charitable giving” can certainly provide the necessary boost to the current giving trends, he said.

According to some other industry experts, though, charitable giving is alive and well. In fact, things couldn’t be any better for Jo-Anne Ryan, vice-president, philanthropic advisory services at TD Waterhouse.

“We’ve had the best year ever [having had] almost $15 million donations come in this year,” said Ryan. “[The current market volatility notwithstanding], Canadians care and it’s an important part of [their] financial and estate plans and we’re still going to see generous gifts to charities.”

The BMO study also found that donors today are getting increasingly involved in the process of charitable giving and are screening charities, their objectives and operations more diligently.

Gone are the days of chequebook philanthropy, said Nada Ristich, director, corporate donations, BMO Financial Group.

“In the last decade or so we saw the transition towards giving to programmes or projects, or donations specifically designated to a particular initiative,” said Ristich. “Today we’re seeing a much greater emphasis by donors on what will be accomplished because of their gift.”