The director of a small-town charity recently shared a funny story with me. He mentioned that the charity had never received a donation from the town's wealthiest man, and so the director approached the gentleman, hoping to get a contribution.
"Our research shows that your income is at least $500,000 annually, yet you never give to charity. Wouldn't you like to give back to the community in some way?"
The wealthy man replied: "Did your research also show that my mother is dying after a long illness, and has medical bills that are several times her annual income?"
Embarrassed, the director mumbled, "Uh, no."
"Or that my sister's husband died in an accident," the man continued, "leaving her penniless with three children?"
The humiliated director said simply, "I'm sorry, I didn't realize."
The man responded: "So if I don't give any money to them, why should I give any to you?"
When it comes to charitable giving, many of us tend to fall short. Some of the numbers published by the Canada Customs and Revenue Agency may surprise you. Of those who reported between $50,000 and $70,000 of income on their tax returns in 2000, 49.7 per cent claimed charitable donations, and they gave an average of 0.67 per cent of income to charity. Between $70,000 and $100,000, 59.5 per cent claimed donations, and gave an average of 0.76 per cent of income. Finally, 69.3 per cent of those earning more than $100,000 claimed donations in 2000, and gave an average of 1.4 per cent of income to charity.
The most concerning statistic to me is that nearly one third of Canadians earning more than $100,000 in 2000 did not claim even five bucks in donations. While there may be many reasons for this, there is one issue -- a mindset really -- that I think is worth talking about. I call it the poverty mentality.
First, let me say that I'm certainly not the standard by which all Canadians should measure their charitable giving. Far from it. Believe me, I've seen how generous some Canadians have been, and there is a very high bar that has been set by others that I aspire to. I've been dealing with the poverty mentality, too. I can best explain it by sharing an experience I had three years ago.
In 2000, I was asked to speak on estate planning at a conference -- which happened to be on a cruise ship in the Caribbean. On the third day of the cruise we stopped in St. Thomas.
Carolyn, the kids and I ate lunch at a café resting on a hillside, overlooking the harbour where we docked. This was one of the highlights for our son Winston who spent the better part of an hour watching some parrots perched next to us.
There had to be 20 parrots of different sizes and colours sitting on their perches. Not one was in a cage. Winston had no idea why these parrots didn't just fly away.
When the parrot-keeper came by, I asked him a question: "Why is it that these parrots never fly away? Have you ever lost one?"
"No, haven't lost one yet," he replied. "I trained them all to think that their perches are where they will be safe and secure. Once they believe this, they wrap their claws around the perch tightly, and they don't want to let go. They keep themselves confined. It's almost as though they have forgotten how to fly -- although I know they could fly if they tried."
As I think back to that trip, I realize that many of us are just like those parrots. We have been taught to cling tightly to our money, as if our money represents that perch of safety and security. And just like those parrots, we've trapped ourselves with the beliefs and emotions that we attach to our money. Clinging to our money doesn't bring freedom. It brings bondage of the worst type: The type created in our own minds.
You see, if you remain trapped by your insecurity about letting go of your money, you'll never truly enjoy the freedom that comes with greater wealth. Who do you think knows greater freedom in life: The person who hoards his money because he's concerned about having enough, or the person who gives generously because he recognizes that he has plenty?
The fact is, these two individuals could have exactly the same income and net worth. It's a matter of your attitude that will dictate whether you're truly free financially.
This year, give generously during the holiday season and know true financial freedom. Oh yeah, and save yourself some tax in the process.
Tim Cestnick, FCA, CFP, TEP is author of The Tax Freedom Zone, Winning the Tax Game 2004, and is managing director, National Tax Services, AIC Ltd.
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