The season of giving is upon us, and like many individuals, you may be beginning to think of causes that are important to you or how you’d like to give back this holiday season. Charitable organizations have most likely started running their campaigns in which organizations and individuals can support through donations of time, money, or wisdom. Whether you have a cause that is important to you or you’re not sure how much you can afford, it’s essential to take steps to determine how much you can contribute.

Budgeting

At Sagium, we believe that the first step in determining what to give back is understanding what you and your family require for financial security and what amount can be allocated to the community or the greater good. Depending on your age and stage in life, this may be as simple as working through a budget exercise. Excess dollars can be contributed on a monthly or annual basis and can be adjusted just as easily.

The Bigger Picture

Depending on your situation, you may want to take a bigger picture approach. If you’ve accumulated wealth in your lifetime, financial planning may reveal that much of what you have built is not required for your financial independence. Rather than donating from cash flow, you may consider donating wealth that you have built within an investment portfolio, life insurance policy, or other assets. Donations can be made in your lifetimes or by Will at death.

Don’t Spoil the Tax Man

The most common beneficiaries of excess wealth are surviving family members and the taxman. Of course, no one (that we know of) has ever named the CRA in their Will or as a beneficiary on their life insurance policy or RRSPs. Unfortunately, in the absence of proper financial planning, a disproportionate amount of your wealth may end up going straight to taxes. A trusted advisor who understands your objectives and the tax, legal and financial implications of different strategies will help to make sure that you don’t miss out on any opportunities. Check out some common charitable gifting strategies from our recent Insight update.

Making the Decision

Once you understand the requirements for your financial independence, you can consider how and how much to allocate to charitable causes. If you are looking to be more active in your contribution, donating your time and wisdom to a charitable organization or foundation might be the right approach.  Or, if you have accumulated wealth in your lifetime, you may look to identify a cause and use donor-advised funds or other financial tools to direct your financial contribution to where you believe it will have the most impact.

Living in Canada, most of us have access to necessities and luxuries; however, there is also a great need both locally and globally. If you wish to understand your financial independence so you can plan ways to contribute to a better world, please reach out to one of our Wealth Strategists, who will be happy to start you on your philanthropic journey.