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To quote The Beatles in “Revolution: “we all want to change the world.”
Most people want to make a difference. Too often though, the demands of life and the pursuit of success take over our vision. We spend thousands of hours learning our craft, taking our skills to the market and taking a cheque in return. That is what we need to do in order to achieve our many goals. Deep down though, that goal of making a difference often takes a back seat to all the other priorities.
What happens though when we are successful in not only reaching our financial goals, but exceeding them by a long shot? Are we content with sharing half our excess income with the government, or is there a way to finally make our mark in this world?
I posed an interesting question to the family the other day: “If all your debts were paid and you had enough saved up for your future, which of the following would you choose if you had an extra $100,000 of taxable income: would you be content to pay $50,000 in taxes and be left with $50,000 of spendable money? Or would you rather have $100,000 of impact by making a charitable donation to an organization you believe in?
The answer was obvious: “make an impact.” Welcome to the world of the philanthropist.
A great financial plan will not only help you to achieve all the goals you have for your own family. It will also help you to make a difference in the lives of others. Our taxation system encourages you to help change the world through the charitable tax credit. There are many ways to support charities that align with your values:
1. Cash donation. In BC, your donation attracts federal and provincial tax credits of up to 43.65%. That means that if you are in the top income tax bracket and donate $10,000, you will only be out of pocket $5,635!
2. Donate shares. Many people have been holding onto shares that have very large, embedded capital gains that they would be taxed on if they sold them. Donating those shares to a registered charity is a great strategy. Not only will you get a charitable tax credit for the full value of the shares, but you will also avoid paying capital gains taxes!
3. Include charitable giving in your estate plans. There are many ways of doing this and I would recommend working with your financial advisors to build a strategy. Yes, we all want to leave money to our children and grandchildren. However, there comes a time in our wealth journeys where we realize that the kids will be alright and that there is a lot of suffering that we can help ease through our generosity. To help you in your charitable gift planning, feel free to use the Charitable Donation and Donate Shares calculators on our website.
Richard Vetter is a Certified Financial Planner and owner of WealthSmart Inc.
