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How to give with a passion and get the best tax relief

You gotta love it when kids tell jokes.

"Daddy, why did the rooster cross the road?" my son Winston asked the other day.

"I dunno," I replied.

"Because he was paper-clipped to the chicken!" Winston laughed. Boy did he laugh. In the end, his bad joke got a good response because he was having such a good time telling it. Enthusiasm can do that.

When it comes to your charitable giving, are you enthusiastic? Do you give with a passion?

It's the time of year when many of us consider giving to charity.

This year, I'd like to discuss giving with a passion, and how to gain the most tax relief from giving.

Passion benefits

In a survey conducted by The Philanthropic Initiative Inc. (TPI), a Boston-based non-profit consulting firm, donors realize instinctively that having a passion helps them commit more completely to philanthropy, to give more of their time and money, and to increase their personal satisfaction and impact. According to TPI, passion can support you as a donor in many ways, including the following:

Fuelling your initiative.

Giving becomes easier when helping with an issue that you believe is vital.

Deriving greater satisfaction.

Giving becomes more satisfying when you're making a difference in an area important to you.

Inspiring others to support the effort.

Your excitement about an issue can be contagious.

Having a greater impact on an issue or area.

If your giving is scattered, it will be more difficult to know if you're making a difference.

Passion found

How do you give with a passion? Let's face it, passion is not like a light switch that you can turn on and off.

Peter Karoff, founder of TPI, writes that "the alignment of one's passion to one's giving is often elusive, but worth the search."

It's a matter of determining what you're passionate about first. You can figure this out by asking yourself the question: What things do I value most in life? Don't shy away from this test.

There are no right or wrong answers. Simply list 10 things in life that you value most. These are your core values. My list includes: Faith in God, healthy family relationships, strong friendships, helping others, physical fitness, competition and career achievement, among other things.

Your passions will tie directly into your core values. Since I value physical fitness and competition, organized sports is a passion of mine -- hockey in particular. So, when I make a donation to help an underprivileged child play hockey, I'm giving with a passion. It also ties in with another of my core values: Helping others.

This year, don't just give. Take the time to determine your passions, then give to charities that are in line with those passions.

Passion exercised

When making donations, think outside the box. Consider these ideas to make your giving easier.

1. Donate your losers.

Consider donating some of your stocks or mutual funds that have dropped in value. You'll trigger capital losses that you can use to offset capital gains, and you'll receive a donation credit for the fair market value of the securities.

2. Donate your winners.

If you're thinking of selling investments that have appreciated in value, consider donating those securities to charity. Canadian tax law will reduce your tax bill by 50 per cent on the disposition, plus you'll receive a donation credit for the value donated.

3. Donate on-line.

This year, I've volunteered my time on the board of a wonderful charity called CanadaHelps. Consider donating on-line at http://www.canadahelps.org to simplify your giving. You can donate to any registered charity in Canada, and you'll get your receipt by e-mail in seconds.

Tim Cestnick, FCA, CPA, CFP, TEP, is author of Winning the Tax Game 2004, and The Tax Freedom Zone. He is managing director, Tax and Estate Planning, at AIC Ltd.

tcestnick@aic.com



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