The Joy of Giving Back

By Karin Mizgala, co-founder and CEO Money Coaches Canada

I think it’s safe to say that 2020 is a year none of us will forget. And even though we are optimistically making our way forward, the uncomfortable truth has settled in. Recovery from this pandemic—medically, economically and emotionally—is going to be a longer road than we had hoped

And as we travel this road, many Canadians are in need of support in a myriad of ways. But the charities and organizations that usually provide a lot of that support, are suffering also.

The Canadian research and educational institution Cardus reported in July that 69 percent of charities have experienced a significant decrease in revenues, down 30 percent on average, since the pandemic began.

COVID-19, if it can be said to have any upside, has made many of us reexamine what we value. And seeing the hardships faced by fellow Canadians, more clients than ever are asking me how they can use their resources to help, while still addressing their own worries and struggles.

It’s a balance, I understand, because I feel the same conflicts. With so much uncertainty ahead, we are naturally worried about our own livelihoods and the needs and security of our immediate family. But at the same time, there is a desire and a duty to help others however possible.

My favourite author Lynne Twist, The Soul of Money sums it up beautifully:

“Every one of us creates a legacy in the way we live now. We create a legacy of sufficiency – or scarcity – in many ways, but especially in our relationship with money.  We can deplete and take, accumulate and hold, or we can nourish, share, allocate and spend consciously and contribute.”

To help you along, here are three practical things to think about as you create a giving plan:

1. Take time to consider which charitable organizations or causes you would like to support.
2. Ask yourself: can I support these charities now and/or do I want to leave a legacy after I’m gone?
3. If you would like to donate now, review your cash flow plan to see if you can free up even a small amount to give to your favourite causes. If you set up a regular monthly contribution, you probably won’t even feel a pinch.

Here are 5 alternative ways to give beyond a monthly cash contribution:

1. Consider donating stocks or stock mutual funds that have a capital gain. If you donate publicly traded securities to a registered charity or private foundation, you will not pay any capital gains tax.
2. Meet with a legal advisor and discuss the best way to leave monies to your favourite charity. This could be a specific dollar amount, specific securities (like stocks which could save on capital gain taxes) or a percentage of your assets. Even if you have children, why not consider leaving a small amount to the causes that are important to you.
3. Name a charity as a beneficiary of your RSP, RIF, pension or insurance policy.
4. Transfer the ownership of a life insurance policy to a charity and receive a tax credit for the premiums you pay during your lifetime.
5. If you wish to donate a lump sum of money but still require the capital that money generates, you can establish a charitable remainder trust. You would collect the income for as long as you live, and the charity receives the remaining funds at your death.

Planning your estate

If you intend to leave a legacy, make sure you have a will and it is up to date. Without a will, you lose the ability to direct how you want your assets to be distributed.

There are many things to consider when creating or updating an estate plan; executors, guardians (if you have minor children), power of attorney, health directives, previous marriages, etc.

We have created an Estate Planning Checklist to fill out before you meet with your lawyer so that you can feel confident that nothing has been forgotten. If you would like a copy, we offer it as a free download.

We are living through difficult times and so many of us want to help. But before you make any decisions, revisit your financial goals and the best giving strategies for your unique circumstances, so you can be smart with your money and caring at the same time.

“Money carries the power and intention we give it. Endow it with your stand. Empower it to change the dream.” – Lynne Twist, The Soul of Money