Season of giving

Tips for making the most of your charitable donations this year

On the first day of each new year, Torontonians Joanna Newman and her husband, Rob, sit down to figure out their charitable donations for the coming year.

“It’s a time in our personal lives when we are relatively quiet. We’re through Christmas and all the travel and the family stuff,” she says. “It’s always been a time of year where we can relax and really focus.”

Newman is originally from Toronto and recently moved back to the city with her family from the U.K., where their donations were “hyper-targeted,” she says. That included donations to their community food bank back in Salisbury. “Rob loves scuba diving, so anything that involves tidying up beaches — there is a huge area of seagrass off the coast of Devon, which is quite polluted.”

Now, the couple is trying to figure out what charities to donate to in Toronto and Canada — questions that are taking on increasing importance as inflation eats into the amount

Canadians are able to give and charities are facing a downward trend in charitable giving.

Newman says she and her husband consider three points when deciding where to put their money: Do the goals of the charity align with their personal values?; What is the actual percentage of money spent on administration vs. the beneficiaries?; And lastly, what is the reach of the charity?

With the end of the year traditionally being a busy time for charitable donations (30 per cent of donations happen in December, according to CanadaHelps), the Newmans aren’t the only ones trying to determine where their charitable donations should go. Canadians are generous. The Charities Aid Foundation’s World Giving Index 2022 ranked Canada as the eighth most generous country, up substantially from No. 35 in 2020. In 2021, Canadians donated $11.8 billion dollars, according to Statista.

But when surveyed by multiple organizations including the AFP Foundation for Philanthropy, Canadians said they would donate more if they could see the realworld impact of their donations and transparency around costs.

The thinking is that if administrative costs are low, more money is going toward the charity’s beneficiaries. While it’s something to consider, measuring impact is more than looking at finances, according to experts.

Brad Offman, founder and chief executive officer at Toronto-based Spire Philanthropy, which specializes in providing philanthropic advisory services, says administrative and fundraising expenses aren’t the best way to evaluate an organization’s success, though the measures can help to evaluate a charity’s financial health and long-term viability.

When it comes to the good your money is doing, “there’s no definitive answer to (measuring impact),” Offman says, explaining that it often comes down to the philosophical question of whether it’s better to help 1,000 people a little bit or 10 people a lot.

While charities do have overhead such as salaries and other administrative costs, Bri Trypuc, the principal adviser and founder of Trypuc Philanthropic Office, says there’s no correlation between the administrative ratio and impact.

“You can have an entirely efficient program that isn’t effective or you can have an entirely effective program that isn’t efficient.”

Instead of focusing entirely on the administrative ratio, Trypuc says to examine a charity’s benchmarking. Are they being effective, having an impact and driving social change?

“If you look at the context of an organization that doesn’t know their impact or doesn’t know if they’re creating change, why are you paying people if they’re not achieving anything against their stated deliverables?

Both Offman and Trypuc say interested donors should reach out to charities and ask them questions that are personally meaningful.

“The best way to do it, frankly, in my view, is to talk directly to the organization, ask questions about their impact, ask what they’re doing and learn more about their programming,” says Offman.

Trypuc says charities are happy to talk about their mandate, and how much you’re able or willing to donate shouldn’t be a concern. “It doesn’t matter whether you give $50 or 50 million, your money is significant to you and it’s deserving of impact.”

For people who are interested in learning more about a specific charity, she says to ask the following questions: Is the charity communicating with donors? What is the problem it is trying to address? What is the size of the problem, and how many people are affected by it?

“Then, what activities have they put into place to address that problem? What is their theory of change around that problem and what are they achieving?”

Newman is continuing to research charities that speak to her family, with a focus on education and infrastructure, such as clean water for communities.

“We’re really just understanding where those specific issues are and where you can hyper-target. The localism side of it, the unsexy bit that’s boring, but actually contributes to the greater good — that works for us.”