Develop a family giving plan

Phone calls, visitors on your doorstep, letters in the mail, solicitations from friends and family… We are constantly flooded with requests for contributions to this or that good cause. It’s easy to donate a few dollars here and there, but is your money really going to causes that are important to you? And how do donations figure into your overall financial health?

If you want to gain more control over how you handle donations, consider developing a personal or family giving plan. This plan allows you to identify important causes and find meaningful ways to support them long term. You set financial goals and include donations in your budget rather than impulse giving. Important causes aren’t accidentally overlooked or left short, plus you have a process to track and follow up on contributions.

Also, if you are caring for elderly parents, creating a plan with them can help with money management and allow them the opportunity to communicate their wishes and priorities.

Not sure how to get started? Try these steps:

Consider your budget

As with any other aspect of financial planning, start with your budget and look at the year as a whole. Once all of your essential expenses are met, determine how much you feel comfortable giving and how you want to contribute. There are many options: Do you want to set up an automatic monthly contribution? Put money aside for annual fundraising drives? Keep funds available for natural disasters or local projects? Do you want to make smaller contributions to a variety of causes, or larger contributions to a select few?

Setting aside money in your monthly budget doesn’t mean you have to donate every month, but the funds will be available when you want to use them. For example, if you tend to give during holiday season, setting aside funds early in the year eases the strain on your holiday budget. Don’t feel you have to respond to drives or requests. Many organizations such as local food drives and humanitarian aid need money all year round.

If you’re considering making a sizable donation or bequeathing investments or life insurance in your will, it’s a good idea to speak with a financial advisor or accountant about the allocation of funds and the tax benefits.

Choose your causes

Choosing which causes to donate to can be tricky. Start by creating a list of projects or programs you would like to support. Do you want to help fund medical research for a particular illness or type of research? Support your alma mater? Provide food and shelter for those who need it? Support local teams, clubs and community programs? Put a star beside your top choices.

Next, make a list of all the charities and groups you have supported in the last twelve months. Look to see if the causes on your first list are represented in your second. Are the most important causes getting the largest contributions — or are they being overlooked? Adjust your spending to match what is most important to you.

Thinking long term means you don’t have to donate every year. You may choose to support a wider variety of causes by alternating years: donating to some one year, and others the next.

Protect yourself

You may not approve of how some charities spend their money, and there are many scams out there. Before you send money or give out your credit card information, you’ll want to know:

* Is the organization a registered charity?

* Does it spend its money wisely? Do the funds actually go to the programs and people you want to help? Are there high administrative or fundraising costs?

* Does it comply with accountability standards? Are there any penalties, suspensions or complaints against it? Has its status been revoked or annulled?

* Can it give you a tax receipt?

Where can you find this information? The Better Business Bureau Wise Giving Alliance offers reports on charitable organizations, including their purpose, programs and annual expenses. You can also use the Canada Revenue Agency Charities Listings search tool for registered charities.

Another thing to watch out for is tax shelters. These offers are tempting: donate one amount and receive a receipt for three or four times the value. The Canada Revenue Agency (CRA) advises people to avoid these schemes altogether. Participation is likely to be met with an audit, additional tax bill and penalties. (For more information, see Gordon Pape’s article Aggressive charities invite audits.)

Protect your information

Don’t expect your contact information and donation history to stay secret. Your information goes on a mailing list, and you may receive unwanted solicitations throughout the year. Charities may also exchange, rent or sell their mailing lists to other groups. When you donate, let the organization know you do not want your information shared or that you wish to be contacted only once or twice a year. Send the request in writing, and keep a copy of all communications.

Payment options

What’s the best way to pay? The FTC recommends paying by cheque for security and tax record reasons. Always make the cheque payable to the organization and not the individual collecting the money. In general, cash donations should be avoided — especially through the mail. Automatic monthly payments should be approached with caution, and should only be set up after researching the organization.

Should you respond to phone calls or direct mailings, or donate directly? There are many scams out there that seem legitimate and persuade people to give out credit card information. Watch out for similar sounding names to real organizations, high pressure tactics and a reluctance to answer your questions or provide information. Listen to your suspicions and look up the organization in the phone book or at and call to verify the campaign is taking place. You can donate when you call, and the organization will want to know if it’s being misrepresented.

There’s another reason to call directly: Many organizations hire professional fundraisers to handle telephone drives and other solicitations such as direct mail campaigns. The fundraisers keep a portion of the donation as payment for their services. When approached, you can ask if the person is a paid fundraiser and what portion of the money the business keeps. If you are uncomfortable with the arrangement, send a donation directly to the organization instead.

Donating stocks or securities: Donating publicly-traded stocks or securities directly to a charity can have significant tax savings compared to selling the stock and making a cash donation. Check your charity’s website for options and talk to a financial planner to calculate the net benefit.

Track your money

Whether you keep a running tally in your cheque book or use computer accounting software, you should have some means of recording to whom you made a donation, when you made it and how much. This strategy will help you avoid running over budget or inadvertently duplicating donations.

In addition, set aside a folder or file to collect all tax receipts and related documentation so you’ll have it ready at tax time.

Other ways to contribute

Don’t underestimate the value of volunteering your time and expertise. Organizations rely on volunteers to get things done whether it’s posting fliers or running a fundraiser. Whatever your schedule allows, there are many rewards for volunteering your time like learning new skills and meeting new people.

Donating goods can also be part of your routine. For example, pick up a couple of extra groceries for the door drive every time you shop. Donate used clothing and household items to a local shelter by keeping a bag or box in your closet to collect items. Look for meaningful ways to get rid of unwanted items such as old computers, electronics and hobby supplies to make a difference in your community.

Creating a personal or family giving plan doesn’t have to be complicated. Get the whole family involved to discuss options for giving and how you plan to track and manage contributions. Use your plan as a guideline for more informed giving, and leave room to be flexible.


Giving to charity: Information for donors page has information about tax savings, receipts and donor alerts for Canadians.

U.S. Federal Trade Commission’s Facts for Consumers offers information on reducing solicitations, guarding against scams and who to contact to file a complaint.

Better Business Bureau Wise Giving Alliance has reports on charities across Canada and the U.S., current alerts and support for filing a complaint.

Photo © YinYang

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