When money is tight, don’t neglect those who are the most in Karen Bjerland

In difficult economic times, it’s natural to search for ways to cut expenses and reduce the pressure on your family income. Among the many ways to lower expenses, it may seem the easiest to stop making donations to your favourite charity.

If we truly believe we are our brothers’ and sisters’ keepers, discontinuing our financial support for those who are homeless, starving and generally in need of assistance would be a rejection of that idea. What happens to our personal values when we reject one of the primary principles by which we live our lives?

We must remember that when times are not easy for us, they are even more difficult for those in need. The organizations designated to assist them must accommodate increased demands and decreased revenue during economic stress. The numbers tell the story: Charities across the country have reported a drop in donations of as much as 30 per cent, even as the number of people dependent upon their assistance rose steeply.

Government expenditures may have helped some industry sectors, but who is helping individuals in personal distress? How do those individuals cope in geographic regions where these industries aren’t located? The key source of assistance continues to be Canadians like you, giving from their hearts.

Tax benefits soften the impact of charitable donations on the family budget. The first $200 of a contribution to registered charity qualifies for a federal tax credit of 15 per cent of the amount donated; amounts beyond the $200 level earn a 29 per cent tax credit. Provincial tax credits may also apply; the amount varies from province to province.

Take advantage

In order to take advantage of the larger tax credit for donations in excess of $200 donations, married or common-law couples may pool their donations and claim them on a single return. Another hint: If your income varies widely from year to year, you can carry your charitable donations forward as many as five years when, thanks to a higher taxable income, you could receive a larger tax benefit.

You may also assist a charity and earn tax credits by donating real estate or a life insurance policy. A life insurance policy will generate a tax benefit based on its cash surrender value. You could consider transferring an existing life insurance policy (or open a new policy) with the chosen qualified charity as the owner and beneficiary. Each premium payment qualifies as a charitable donation and is eligible for a tax receipt.

Though practical aspects of charitable donations are not to be ignored, it is the human factor that inspires our offerings. Those in need of food, shelter and emotional support continue to depend upon assistance from you and your neighbours.

Our communities may need repaired roads, extended parklands and various bricks-and-mortar aspects of our lives. We should never forget, however, that our spiritual lives are equally important. The assistance we provide to others less fortunate than ourselves helps define who we are and the values we treasure.

Giving is essential. We are called to give to the poor, the marginalized and the disenfranchised financially. Giving also includes giving time to God by working and witnessing to people, reading the Bible, spending quiet time with God. “The Lord Jesus himself said: ‘It is more blessed to give than to receive” (Acts 20:35b).

I encourage you to connect with financial advisors who can help you protect your economic future by living your Christian values in tangible ways.

Work with companies that can help you build a financial plan based on biblical financial principles and provide you with competitive investment and insurance solutions that can help you meet your goals.


Note: This article was written in 2011. Some of the statistics and tax rules may have changed since then, and should not necessarily be taken as fact.


Karen Bjerland is president and CEO at FaithLife Financial.

Photo credit: JD Hancock / / CC BY