Wealth Strategies: Charitable Giving

Charitable Giving

Giving to charities, fundraisers, and other causes close to our heart is a great way to give back to our community and use our assets to create a positive change for those in need. Whether donating locally or internationally these contributions can - and do - make a difference in our world.

There are different ways to contribute to causes, with different tax considerations. One popular example in recent years is GoFundMe – this is a great endeavor that allows direct giving to specific causes that might inspire one to help. Additionally, adding donations ‘at the till’ at many stores has become prevalent, with the option to add on a small amount of money when you are making a purchase. This too is an excellent way to raise money for a cause. However, it is important to realize that these forms of giving do not result in a tax benefit for the donor. 

Charitable Giving Tax Credit: 

In Canada, the federal government, as well as most provincial governments, offer a tax incentive to donate to a registered charity called the Charitable Giving Tax Credit. By donating in this way, one receives a tax receipt to apply against their income taxes for that year. In Alberta, the combined federal and provincial tax benefit is quite significant, with the tax credit amounting to 25% on the first $200 of donations, increasing to 50% on donations above $200. 

Strategies for maximizing the tax benefit: 

There are two strategies that one can utilize to maximize their donation, thereby maximizing the difference they are making in our world. 

1. Instead of donating $200 per year in total donations, consider making a lump sum contribution in one year instead. For example, if one donates $200 per year, they will receive back $50 in tax savings; over five years, that is $1,000 in donations, yielding tax savings of $250. If that person donated $1,000 up front, they would save $450 in tax ($50 on the first $200 plus $400 on the remaining $800). The total donation is the same, but the tax savings is $200 higher.
2. Keep an eye out for charities where an individual or company is offering to match contributions – this happens quite often. In this case, if one contributed $1,000 (receiving back $450 in tax savings), another entity will ALSO contribute $1,000. Therefore, a total of $2,000 has gone to a person’s favourite charity, but it has only cost them $550 ($1,000 less $450 in tax savings).

 ©2025 Milestone Wealth Management Ltd. All rights reserved. 

DISCLAIMER: Opinions and estimates are written as of the date of this report and may change without notice.  Any commentaries, reports or other content are provided for your information only and are not considered investment advice. Readers should not act on this information without first consulting Milestone, their investment advisor, tax advisor, financial planner or lawyer. This communication is intended for Canadian residents only and does not constitute as an offer or solicitation by anyone in any jurisdiction in which such an offer is not allowed.