The holidays are a great time of year to review the goals you have when it comes to the organizations and charities you support. If you are new to charitable giving or would like to begin, there are some important considerations.

Steps to consider

Identify your values. What key issues, causes, and experiences are important to you? This will help you determine who you want to support. Select your geographical location. This could include local, provincial, national, or global organizations; or some combination of these.

Research your options. Visit some organizations and speak to the people who work and volunteer there. Reach out to family and friends that share similar values and find out who they support. As you evaluate your choices, what do their reports and financial statements tell you about them? What are their programs and initiatives?

Designate your donations. Once you have determined which organizations you want to support, you can begin.

Determine how to make donations. Are you going to gift money or assets? An asset gift could be something of value like art, coins, stamps, or cars. Be mindful when providing your thoughtful gift, particularly large gifts, not to attach “strings” to the gift, or get too specific as to what the charity must do with the money. There are different tax consequences or advantages associated with different types of donations.

Making your donation

There are many ways to donate to charity. The most common are to use beneficiary designations on your registered investments (RRSP, RRIF, and TFSA), which effectively bypasses the estate and the timeframe associated with settling the estate; and making bequests via your last will and testament, which clearly identify the cause(s) near and dear to you for assets that you didn’t name directly with a beneficiary designation.

Charities can also be named as beneficiaries on life insurance policies, which also bypasses your estate and can allow for the charity to receive the proceeds in a very short period of time.

For investments that have appreciated significantly in value, there may be an opportunity to make a gift “in-kind” (you don’t sell before donating). The charity receives the gift at Fair Market Value and bases the donation receipt on that same amount.

Impact on your tax return

If you are looking to maximize your donation’s impact on your tax return, there are a few additional considerations that may help. Firstly, consider combining donation receipts with your spouse or partner. Applying all receipts to one party’s return could result in a larger impact at filing time. Secondly, carry receipts forward. Charitable contribution receipts can be carried forward for up to five years and can be applied against higher income years. Lastly, delay claiming receipts until the year of death. In that year, donation receipts can be used towards up to 100% of net income. If you have even more donation receipts, you can carry them back for up to 100% of the previous year’s net income towards re-filing that year’s return.

Charitable giving starts with you. Donations do not have to be fancy or complicated. Consult your tax, legal, and financial professionals to determine the best way to contribute to what is important to you, based on your personal values and unique financial circumstances.

This article was written by Edward Jones for use by your local Edward Jones financial advisor, Nicolle Lalonde.