For many people, giving to charity is not only part of their moral code, but also a part of their overall financial plan. If we have the means to help others as well as ourselves, it can bring not only a sense of satisfaction, but can also be helpful to someone less fortunate. The tax deduction certainly doesn’t hurt.
Leaving the debate on altruism for another day, let’s look at the act of giving. The moment a donation is made, two of the above elements are met. We feel pride for having done something, and the government will recognize that act in the form of a reduced tax bill. The real question left unanswered, and probably the most important, is if your donation was able to help someone or not.
It is, of course, quite difficult to track your specific dollar, but there are some websites that can help to get an idea of how your donation will be used. If you give $100 to a charity, which in turn uses $30 of that for fund-raising, and another $25 to pay for administration and salaries, then you have to question if your donation was used effectively.
Charity Navigator has been a great tool for looking at American charities. It assigns a rating based on how effectively a charity uses the money it receives. There has been a lack of such a site in Canada.
While the Charities and Giving section of the CRA offers some good information, it is not necessarily easy to compare charities.
Starting last year, however, Money Sense magazine started The Charity 100, a list of the top charities in Canada. They set out criteria and graded the charities based on how effectively money was being used. It certainly isn’t as extensive as Charity Navigator, but it does offer a great starting point for Canadians trying to decide where their money will help the most.