There's making a charitable donation and then there's making a smart charitable donation. There's a big difference.

It’s in our nature to want to help. According to Statistics Canada, total charitable donations reported by Canadians filing their taxes in 2017 rose to $9.6 billion (an increase of 7.7% compared with 2016). Fewer people gave in 2017, but those who gave donated more. The increase in Alberta in 2017 was 9.1%.

There are currently 85,897 registered charities in Canada, according to the Canada Revenue Agency.

“It’s always been ingrained in Canadian culture to give back,” says Scott Lundell, Manager Community Engagement, Servus Credit Union.

Scott has more than 20 years of experience working in the non-profit community, most recently as executive director of the Volunteer Centre in Sherwood Park.

“Albertans are no different than the rest of Canada,” he says. “We want to look out for each other. We know our members are good stewards of their money as well as their communities. As a company we want to support them in fulfilling that generosity if we can.”

How do you choose a charity?

With so many causes and charitable organizations out there, how do you choose which one to give to and how do you know your donation will have the intended impact?

Scott has some recommendations to maximize the impact of every dollar you donate.

Pick a cause. What speaks to you? What is important in your life? What do you value, and what does your family and the important people around you value? It could be animal welfare, the environment, health, or poverty reduction.

Be focused on that cause. Don’t just toss your money wherever. “The more focused you are, the more difference you will make at the end of the day,” he says.

Do your research. Look at which organizations are working towards alleviating that issue or that cause. “The difference is finding the organization that is actually moving the needle,” Scott says. “Once you decide on an organization or two, that’s when you start really getting into what they do. Is that organization actually making a difference where they say they're trying to make a difference? How has the world changed since they came into existence?”

Do more research. Go right to the mission statement for an organization you're considering giving money to. Have a look at their financial statements. Talk to some of their people – volunteers, staff, executive director and board members. Ask those people what difference they've making, what impact they've had. “Listen carefully to their answers,” Scott says.

Have a plan for how much you want to give. Charitable donations are an expense like anything else. “If you can’t afford to be making too large a donation, then you shouldn’t be,” Scott says. (And don’t give out any of your personal information – like a credit card number, bank account number or social insurance number – if you have been contacted by a group).

Make it part of your financial plan. Talk to your financial advisor about a giving strategy, and how it fits into your entire plan. Stick to your goals.

Canada Revenue Agency has a list of all the registered charities in Canada and their financial status, and you can access their reports online. That’s a good place to start.

A closeup of someone writing out a cheque to make a donation to charity.

Find out where your money goes

It’s important to find out how the charity (or charities) you ultimately choose will be using your gift.

The issue of how much a charity spends on overhead, particularly a CEO’s salary, is a stickler with some people, Scott acknowledges.

However, an important point to keep in mind when looking at something like administrative costs and management salaries, according to Scott, is whether they're serving their cause well.

“We commonly reward CEOs across industries,” he says. “We reward CEOs of cigarette companies, and casinos, and massive breweries. But for some reason we penalize the CEO of a charity because we think they shouldn’t benefit financially from doing good in the world.

By all means look into that. By looking at their financials, you might find the charity is spending less on programs and services than it should. It could be a sign the charity is in financial trouble.

But Scott cautions against placing too much emphasis on that. “I don’t care how much a CEO gets paid,” he says. It’s worth every penny if that charity is making an impact for good in the world, he says.

The benefits of giving

There are many reasons to give. Top of the list is that it makes you feel good and research[1] shows it makes us happier. There are also tax benefits for donating to a charity or organization (just make sure you get receipts).

“You get a feel-good bump from making donations,” Scott says. “It’s important to be looking after each other as people. We're the only ones who will look after ourselves, and charities are a vehicle where we can do that.”

[1] Source: Dunn, Elizabeth W., Lara B. Aknin, and Michael I. Norton. "Prosocial Spending and Happiness: Using Money to Benefit Others Pays Off." Current Directions in Psychological Science (forthcoming).