Giving Australia is interested in how our giving compares with other nations’. Thanks to 2016 ACPNS Ian Potter Foundation Fellow Bob Wyatt, CEO of Canada’s Muttart Foundation for this blog.
Trying to figure out how much Canadians give to charities each year is a bit of a confusing exercise, depending on which data you wish to use.
Statistics Canada annually reports the amount of money individual taxfilers claim by way of charitable-donation tax credit. (In Canada, any donation to a registered charity is eligible for a tax credit; there is no subset of charities such as exists in Australia with deductible gift recipients.)
But there is also a study undertaken by Statistics Canada as part of the General Social Survey (GSS) that asks Canadians how much they donated to charities and nonprofit organizations in the previous 12 months.
The numbers are substantially different.
Chart 1 below shows the amount of donations reported by taxfilers on their annual returns. For the latest year for which data is available, those donations totalled almost $8.8 billion. In 2013, that number was $8.6 billion. But the GSS, carried out in 2013, reported that Canadians said they had donated $12.8 billion – almost 50% more than was reported by taxfilers.
There are equally significant differences in determining how many Canadians make donations. As shown in Chart 2 below, the percentage of taxfilers claiming any charitable-donation tax credit has been on a downward trend for a number of years – a disturbing phenomenon for charities. But in the GSS, 82% of Canadians aged 15 years and older said they made donations to a charity or nonprofit organization in the previous 12 months.
There are a number of possible explanations for the differences, ranging from self-reporting bias in the GSS to the possibility that a number of people claim they are making donations when the money they provide is not, in fact, a donation but rather payment for goods or services. It’s also possible that people are making donations to nonprofit organizations that are not registered charities; those donations do not qualify for the charitable-donation tax credit.
Another possible explanation – somewhat supported by the GSS – is that people do not claim the charitable tax-credit for smaller donations. Fewer than half (48%) of donors said they would claim a tax credit. Not surprisingly, the likelihood of claiming a credit increased proportional to the size of the donation. While only 25% of those donating less than $100 during the year planned on claiming a tax credit, 78% of those giving $500 or more said they would claim the credit, which reduces the after-tax cost of giving by about half.
While the average donation reported by taxfilers in 2014 was just slightly less than $1,600, the median donation amount reported by taxfilers was $280. Indeed, to be in the top 10% of all individual donors, one only had to donate $1,150. (Interestingly, the average donation reported by respondents to the GSS was only $531.)
Of even more concern to Canadian charities is the trend line of the number of donors. As shown in Chart 2, the percentage of taxfilers who claim a tax credit for charitable donations has been decreasing. According to Statistics Canada, the top 10% of donors donated two-thirds of the total amount of donations.
The GSS has some useful information about where donations go, and why people give or don’t give.
Religious organizations received 41% of the total amount of donations, according to the GSS. This was more than triple the percentage of donations for the next highest category – health charities (at 13%) and social service organizations at 12.4%. The lowest percentage of donations went to groups involved in law, advocacy and politics (1.1%), development and housing (1.2%), or arts and culture and universities and colleges (1.3% each).
The GSS report said that of the seven possible answers respondents gave when asked about why they donated, but most common were a feeling of compassion towards people in need (91%) and to provide help to a cause in which they personally believe (88%). Only 26% cited the tax credit to be an important factor in their decision to donate.
Most respondents said they didn’t give more money because they were happy with the amount they had given or they couldn’t afford to give more. But about 30% of donors said they did not give more because they did not think the money would be used efficiently or effectively. Of that group, respondents most often cited the inability to explain where or how the donation would be spent, or that the organization had spent too much money on its fundraising efforts. Whether respondents had any factual basis for these feelings may be an interesting question, but whatever the answer, it is their perception and thus their reality. Interestingly, the so-called “donor fatigue” was not a major reason cited by respondents.
“The views and opinions expressed in this blog post are those of the author and do not necessarily reflect the position of QUT or ACPNS”.
