People have come up with many creative ways to help charities. Take “cow patty bingo,” for example, which was recently played at Charles P. Allen High School in Bedford, N.S. In the game, a field is marked with numbered squares. Then, a cow is fed and released into the field. If the cow does its business on your square first, you’re the lucky winner – and the charity wins, too.
The only drawback of cow patty bingo? Folks won’t receive a donation tax credit for playing. As we near year-end, thousands of Canadians are looking to make donations – some for the tax benefits, but many simply because they want to help. And many people have questions about donating.
The “why”
I want to encourage you to understand why you give, because it answers other questions that you might have about being charitable: Who (which charities) should receive my donations? What should I donate (cash, securities, or other assets)? Where should I donate from (my personal, corporate, trust or foundation pocket)? When should I donate (today, upon my death, or both), and how much should I donate?
To understand why you give, consider the Seven Faces of Philanthropy (from a book by the same name written by Russ Alan Prince and Karen Maru). These seven faces can be thought of as “donor personalities” or reasons why people are motivated to give. It’s likely that more than one face of philanthropy will apply to you. Sure, there can be other reasons why people give, but these are the most common:
1. Communitarians: These folks are involved in their local community, and they focus on how to make it a better place to work and live. This is the most common face of philanthropy.
2. The Devout: These are people who give for faith reasons. For them, it’s only right to share what they have been blessed to receive, and giving is a moral and faithful imperative.
3. Investors: These donors see giving as good for business. For these folks, there may be multiple purposes for donating: to help charities, gain tax relief and raise the profile of their businesses.
4. Socialites: For these people, charity is fun. They genuinely have a good time giving back. They often accomplish this through planning and participating in events and look to use their social networks to help their favourite causes.
5. Altruists. These folks give out of a sense of moral imperative. They believe that giving back is simply the right thing to do. They often give anonymously.
6. Repayers. These donors give from a sense of gratitude. It’s often because they have received much from a particular non-profit, sport, artistic endeavour, or community in the past and want to return the favour.
7. Dynasts. These folks give back because it’s a family tradition. They are accustomed to the importance of supporting charitable causes. It may even be a family expectation that they give back.
The story
Here’s an example of how knowing your why can answer the who, what, where, when and how of donating. Consider Jake and Sarah. Jake owns a manufacturing company in his town. His wife, Sarah, had been diagnosed with cancer a few years ago, and the local hospital took good care of her, so the hospital is important to their family. Jake has had good business success and wants to raise the profile of the business by donating to the local hospital building campaign.
What are Jake’s faces of philanthropy? He’s a Repayer first. He wants to give to the hospital for the care Sarah received. But he’s also an investor and wants his business to benefit from his giving.
Jake is going to give cash (the “what”) to the hospital since the funds are coming from his corporation (the “where”), and he wants to give today (during his lifetime – the “when”) so that he can see the hospital and his business will benefit. As for how much, he’s setting aside a percentage of his business profits for the next three years to donate. He’s made pledges to the hospital (the hospital knows these gifts will be coming) and his company name will be displayed on a wall there alongside the names of other donors.
Jake’s wife, Sarah, is very involved in the community, volunteers with more than one charity in town, and has planned fundraising events for the hospital and other charities in the past. What are Sarah’s faces of philanthropy? She would call herself a communitarian and a socialite. In addition to the funds donated by Jake’s business, she has donated securities to her favourite charities because it’s tax-efficient to do this.
This year, take the time to assess your own faces of philanthropy and let that guide how you give.
Tim Cestnick, FCPA, FCA, CPA(IL), CFP, TEP, is an author, and co-founder and CEO of Our Family Office Inc. He can be reached at tim@ourfamilyoffice.ca.