The newly proposed First-Time Donor’s Super Credit (FDSC) is popular with Canadians, according to a study by Toronto-based BMO Harris Private Banking, and advisors can help client’s fit their first charitable donation into their budgets.
A recent study by BMO Harris Private Banking shows that 93% of respondent believe the FDSC will increase or maintain the number of charitable donations made by Canadians. As well, 70% of Canadians support the FDSC, which was introduced in the 2013 federal budget.
Budget 2013: Temporary charity tax credit introduced
The proposed super tax credit offers first time donors a one-time additional tax credit of 25% for donations of up to $1,000. In other words a first-time donor would receive a 54% tax credit, up from 29%. For donations of $200 or less a first-time donor would receive a tax credit of 40% up from 15% for regular donors. The tax credit is a temporary measure and will only be available until 2017.
According to the survey, roughly 50% of 18 to 34-years olds, the demographic most likely to be first-time donors, say they will contribute more to a charity because of the new credit. Financial advisors can help this younger demographic stick to their donation plans by having clients take a look at their budgets.
“You have your expenses you want to save for, whether it’s a house or pay off your student loans or whatever it is, but also your giving,” says Marvi Ricker, vice-president, managing director of philanthropic services, BMO Harris Private Banking. “If you think in terms of putting aside each month a small amount, $100 say, it doesn’t take that long to make that a significant amount to give to something that’s important to you.”
As well as introducing Canadians to charitable giving, the new tax incentive is also meant to bring back past donors. According to Ricker, the number of people who made a charitable donation in 2011 is six per cent lower than in 1990. The tax credit can help to bring back donation levels because it is available to any Canadian who has not given to a charity since 2007.
“In ’08 we fell off some sort of economic cliff and so I think a lot of people really retracted [from giving] at that time,” says Ricker. “This tax incentive will help those people feel more comfortable to coming back to doing some giving.”