Canadians Want to Give, but What's Holding Them Back?

Scot McLeod - Nov 16, 2016

 



They say it’s better to give than to receive. Judging by their actions, Canadians are big believers in that concept, with an overwhelming majority making financial donations to worthy causes. Not only does it make them feel good, it may also yield favourable tax incentives. Nevertheless, charitable giving in Canada is waning.

Canadians have long been known as friendly, welcoming and exceptionally polite. In fact, that’s partly why we consistently have the best reputation in the world.1 But our generosity is also gaining attention. A recent global survey of charitable giving in terms of time, money and acts of kindness ranked Canada fourth out of 135 countries,2 confirming that we truly are charitable people.

Most folks will admit that they give to charity because it makes them feel good. Research from Statistics Canada3 shows that between 2010 and 2013, the total amount donated by Canadians to charitable or non-profit organizations increased by 14% to $12.8 billion. In 2013 alone, the majority of Canadians (82%) made financial donations to a charitable or non-profit organization, with $5.2 billion (41% of the total given in that year) earmarked for religious organizations, $1.7 billion going to the health sector and $1.6 billion to social services organizations. The average donor is getting older, with 35% of all donors being over the age of 55 in 2013 compared to 29% in 2004.4

While the numbers are impressive, it’s not all rosy. The Canada Revenue Agency reports that the incidence of charitable giving is declining, with the proportion of taxpayers claiming donation tax credits down from almost 30% in the early 1990s to less than 22% in 2013.3 Top donors (the 25% of donors who donate the most money) contribute about four-fifths of the total annual amount of donations in any given year.3

BMO Wealth Management commissioned a survey of high-net-worth individuals in Canada to learn more about their propensity to give charitably.5 The survey found that even though Canadians want to give, many have doubts that prevent them from giving confidently; most notably, almost half (43%) are concerned that their donations or gifts won’t be used wisely.
 

Philanthropy vs. charitable giving – why people give?

Most people can and do engage in charitable giving, but not in philanthropy. What is the difference? Marvi Ricker, vice president for philanthropic services at BMO Wealth Management, explains that she regards charitable giving as an impulse to support a cause that is important to the donor or a friend.
 
"However, it (charitable giving) generally involves only writing a cheque and does not imply any ongoing involvement with the organization or cause. On the other hand, philanthropy is a more thoughtful, long-term process of giving to organizations with the expectation of having an impact on an issue that is important to the donor. The donor is expressing his or her values and aspirations, while giving in a measured fashion over a period of time." – Marvi Ricker

Whether it is called charitable giving or philanthropy, it is certainly personal and – much like many of life’s decisions – there is emotion involved. Research indicates that wealthy Canadians are more concerned about feeling connected to the organization they’re giving to than they are about getting a tax break. They are motivated by a wish to have an impact on their community (55%) and a desire to give back (50%) more than by wanting to reduce taxes (21%).4
 

What’s holding us back from giving?

With so many exemplary organizations and causes needing assistance, it can be daunting to figure out which ones to support. While the motivation for charitable giving is generally altruistic, the choice of the target for donations is often linked to a donor’s personal interests and values and the desire to fuel a passion for a cause.

It’s the survey respondents who have not yet explored philanthropic passions, don’t know where to start, or have no tradition of family giving that are of most interest to financial experts, and these situations may indeed provide clues for the reason for the decline in charitable giving.

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1 Canada’s reputation takes top spot in international survey. Lauren O’Neill, CBC News, July 16, 2015. cbc.ca
2 CAF World Giving Index 2015. Charities Aid Foundation, 2015. cafonline.org
3 Volunteering and charitable giving in Canada. Martin Turcotte, Statistics Canada, January 30, 2015. statcan.gc.ca
4 The philanthropic conversation: A guide for professional financial advisors. Canadian Association of Gift Planners,  2016. Sponsored in part by BMO. cagp-acpdp.org
5 BMO Wealth Management survey conducted by ValidateIt Technologies Inc. between the dates of August 16 and August 23, 2016. The online sample size was 502 Canadians of high net worth with investable assets excluding primary residence of over $1,000,000. The survey has a confidence interval of +-4.32% at the 95% confidence level.