If you’re thinking about making a charitable donation this year, you may want to hurry: December 31 marks the 2018 tax deadline for charitable gifts. But which organization will you give to? There are more than 86,000 charities in Canada where your money can make an impact. Jo-Anne Ryan, VP of Philanthropic Advisory Services at TD Wealth, talks to Kim Parlee about how to build a charitable giving plan worthy of your hard-earned money.
Well, Jo-Anne Ryan is vice president of Philanthropic Advisory Services at TD Wealth. She's the best in the business. She's here to tell us about the things you need to think about. I say that as if-- this is not a made-up analogy. This is happening right now. There are people who are successful, who've done very well-- first time they've ever had to deal with this amount of money. They're looking at 86,000 charities and going, what do I do? So what do they do?
So you're right. There are a lot of people selling businesses. We're also finding a lot of our clients are doing financial plans and realizing they have more money than they're going to be able to spend during their lifetime. They're telling us they don't want their children to get it all. And so we're there to help.
So one of the things we encourage our clients to do, just as they do a financial plan, is to put together a philanthropic plan that reflects their values.
And what does that mean?
So, well, what we don't want to see is-- there's 86,000 charities in Canada. They're all asking for money. And so we don't want our clients to just react and give a little here, a little there, and, at the end of the day or the year, they end up with a pile of charitable tax receipts that represent a mishmash of different causes, but not ones that represent their values.
What's wrong, though, with spreading it out a little bit and just helping everybody along the way?
Well, so, number one, spreading it out-- if you're spreading it out, number one, you're not giving, as I said, in a way that reflects your values. And you're not going to have an impact. So if you want to maximize your impact, then it's important to go through an exercise understanding your values, understanding the causes that are important to you, matching those values with causes, deciding where you want your geographic focus to be, whether it's local, national-- a lot of our clients are supporting global projects now-- and then doing your due diligence to find out which are the good organizations that you want to support.
I'm curious because I know you've dealt with a lot of people over the years and helped a lot with this, too. Do people-- when they actually have to sit down and go, OK, what are my values, what is important to me, I'm sure that's, for some people-- we think we know. But when you actually dig into it, you surprise yourself.
We have exercises because that is a hard thing for some people to do. So we actually have a deck of cards. And on each card is one value. And so we can start with asking people to play cards. And if you had to pick the top three that were your most important values, what would those be? There's a lot of self-reflection. But that really helps people to understand what is important to them.
You're part psychologist and part planning this. So let's say that I've had some time for reflection and conversations with you. I'm figuring out what's important to me. Then I say, great. I've decided on this, this, and this. I have four or five charities that I'm looking at that I think I really want to do something with. Then how do you choose?
So you do your due diligence. So you're going to want to ask-- look at the leadership. Look and see if it's strong. Is there a strategic plan? Are the financials on the website? If they're not, you can find them on Canada Revenue Agency's website. You can look at what-- look at turnover and look at how they're demonstrating the impact that they're having.
What about admin costs? Because I know a long time, people will go, oh, it's 0.1% higher than this one?
So we find that a lot of people will look at admin costs and try to judge the efficiency of a charity by one line on their financials and/or they don't want their donation to go to higher admin costs. But you have to understand that charities want to hire good people. They have to pay them. You want them to work with computers that work. And they're going to have marketing costs. Otherwise, how will people know about the good work that they're doing? And so it's one factor to consider.
But there are charities that have no-- they pay no salaries. They're all volunteer-run. That doesn't mean they're any better than a sick kids foundation that has an army of staff. So it's the impact that they're having and how they can demonstrate that versus how much it costs.
And you also want to look at how they're raising their money, because there's different ways to fundraise. And some ways are more expensive than others. So one of the most expensive ways to fundraise is to have a charity gala-- and not to say they're bad, because it's a great way to raise the profile of the organization. But it takes an army of staff and volunteers to put those on. And the cost is usually well over $0.50 on the dollar in order to do those events. So if that's all they're having, their numbers aren't going to look very good. They need to diversify their sources of fundraising.
Let me ask you. I've got about a minute left. And I know this is one of most important questions. So let's say that I've got money. I haven't done a ton of planning in the way that I should. And as December 31 is approaching, what do I do?
Well, think of a donor-advised fund, like the Private Giving Foundation, because you can make your donation, get your tax receipt upfront, and separate the actual tax receipt from the granting-- sort of donate now, decide later. And then take the time, when things calm down and you have more time to actually work with your advisors or financial advisors, to develop a philanthropic plan.
Do people use that as much as the-- perhaps they should? I always think--
They're becoming a lot more popular. And probably one of the fastest-growing vehicles in Canada would be donor-advised funds.
Well, if they want know more about it, they can talk to you.
Jo-Anne, always a pleasure. Thanks so much.
Well, thanks for having me. Thank you.