Charitable giving higher than ever in Canada, but dominated by high-income earners

CALGARY, Nov. 29, 2012 /CNW/ - In a report released today by The School of Public Policy, author Abigail Payne examines the landscape for charitable giving in Canada; an analysis that is particularly important given the federal government is currently reviewing tax credits for charitable giving.

"Once we have a better understanding of the giving landscape in Canada, only then can we better evaluate whether and how to change it," Payne writes.

To help steer public policy in this area, Payne presents several key findings related to charitable donations. First, is that giving is at an all-time high in Canada. Between 1992 and 2008, contributions to charitable organizations went from $4 billion to over $9 billion.

Second, charitable giving is by-and-large dominated by high-income earners, who predominately give to a small number of large charities and foundations rather than a large number of small organizations.

Third, donations from low- and medium-income earners are on the decline.

What does this mean for government? The answer depends on whether government wants to encourage more charitable giving through the tax system or whether it wants to support charities and charitable activities directly.

If it decides that it wants to boost donations amongst low- and medium-income earners, it may choose to offer greater tax credits as incentives. Of course, this will reduce the amount of tax revenue the government receives.

If the government decides it wants to promote further donations from high-income earners, it may choose to extend tax credits for the donation of publicly-traded securities. However, once again the government is faced with a tradeoff: it would lose any capital gains tax that would have otherwise been paid once the donating individual sold the asset rather than transferring it.

Payne argues that before policy decisions are made around these issues, a great deal of investigation into people's behaviours around donating must be carried out. Otherwise, public revenues could be surrendered through measures that do not in fact result in an increase in charitable giving.

The report can be found at www.policyschool.ucalgary.ca/publications

SOURCE: The School of Public Policy - University of Calgary

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