Several recent events have highlighted the importance of charitable organizations. We spontaneously think of the COVID-19 pandemic, the homelessness crisis that has made headlines recently, or the arrival of immigrants.
The recent cries from the heart of these organizations about their financing lead us to reflect on their sources of financing, namely companies and individuals on the one hand, and on the other hand the State which finances them directly and indirectly through deductions for charitable donations.
Donations from many large corporations are at 1% of pre-tax profits, the “generous corporate” standard promoted by Imagine Canada, an organization that supports charities in their role in the communities they serve. serve.
Concerning donations from individuals, there is no definition of a generous person. The most relevant data from Statistics Canada and the Institute of Statistics of Quebec, although dating from several years ago, are clearly food for thought.
The first data concerns the proportion of household income that a Canadian donor gives to charities: 2.1% for households with the lowest income (lowest quintile) and 0.8% for households with the highest income (top quintile).
The second data indicates that 22.8% of Canadian donors come from Quebec, but that this percentage drops to 9.1% if we only consider the 10% of the most generous Canadian donors.
But the figures indicate that we do not have as many generous donors as in Canada given our population and that our generous donors are fewer than in the rest of the country.
We can therefore remember two things: households in the bottom income quintile give a lesson in generosity considering their little room for maneuver for discretionary spending, and the best-off in Canada give a second lesson to their Quebec counterparts.
These observations concern me. Indeed, if the bottom quintile of household income gives 2.1% of their income to charity, shouldn’t the other quintiles aim for 3%, or even 5% for the top quintile?
From 2024, Ottawa plans to modify the calculation of the alternative minimum tax with, among other impacts, reducing the ability of the 10% of most generous Canadians to make large donations.
Why reduce the charitable donation tax credit when the need is enormous and, in my opinion, charities play a major role in our society and compare favorably to the private and government sectors in terms of efficiency, accountability and engagement of their employees? Will the government have no choice but to inject the missing dollars into charities itself?
