The Business of Giving

Having just survived the frenzied fall season of solicitation as both a collector and donor, I thought it would be appropriate to examine how Islanders respond to the barrage of requests for donations. Statistics Canada keeps tabs on what is reported but there are countless activities that go unrecorded due to the size and method of the donation.

The first source of information to examine is the Fraser Institute’s annual “Generosity Index”. In 2005, this index focused on two primary measures the percentage of tax filers who donated to registered charities and the percentage of all personal income donated to charity. This study concluded that Canadians are less generous than our American counterparts on both accounts. Keep in mind; Americans also have a much lower taxation burden which may account for increased disposable income and a greater tax advantaged propensity to give.

The study also reveals some characteristics of those who give. On Prince Edward Island, 25.9 per cent of people who filed tax returns made charitable donations. This generosity allows Islanders to rank fourth in the country behind Manitoba, Ontario and Saskatchewan. We also donate roughly 0.72 per cent of our annual income.

Although Islanders do not donate as much per person as some of our provincial counterparts, our donations as a percentage of income has steadily increased over the last number of years. This generosity may be explained by our smaller and closer communities and our general willingness to support community fundraisers in aid of special causes. For instance, benefits in aid of individuals, group activities or centers of interest such as local hospitals.

In comparison, when Statistics Canada’s most recent information is examined, Islanders are shown on average to be moderately more generous than the national average. The average charitable donation per person across Canada is $230, while on Prince Edward Island it is $340 annually. This amount appears even more generous when one compares the Island annual median income of $35,000 to the national median of $44,000.

Donations are a vital source of revenue for most charities. The generosity of Islanders is impressive and consistent. However, the funds available for charitable giving is finite and organizations must be increasingly creative to capture a share of this pie. The more creative the organization, and the more dynamic the team of fundraisers, the more successful the organization will be in raising money. Charitable giving has transformed from a loosely structured cause to a well-managed business.

The next evolution for the enterprise of charitable donation is Social Entrepreneurship (more on this in subsequent articles) where creative entrepreneurs offer their business expertise for the benefit of a socially conscious charity. When business aligns with charitable causes the results are often self-sustaining charitable enterprises and a much-enhanced opportunity to accomplish the objectives of the charity.

Businesses are motivated to support the community in which they serve; the more vibrant the market area, the greater the potential for profit. This obligation is accomplished through multiple levels of taxation. In addition to taxes paid many businesses do support charitable community initiatives.

The personal benefits of making a financial contribution go beyond the gratification of assisting a cause of interest. There are taxable benefits to making contributions as well. Depending on your personal income and the amount of your donation from 25.8 per cent to 32.7 per cent of your total charitable contributions may be deductible from your taxes payable. The maximum allowable amount of donations in a given year is 75 per cent of your income.

There are many dimensions to generosity and charitable donations, but at the end of the year Islanders remain among the most generous in the country.