With more than 85,000 Canadian charities to choose from, even experienced donors may not know where to start when it comes to their giving. Whether you want to see your name honoured on a hospital wing or prefer to make more modest strategic gifts, the landscape can seem overwhelming.
It’s a familiar challenge for Danielle Robinson, National Director of Philanthropic Advisory Services at BMO Private Wealth. Robinson spends much of her time guiding clients through the early decisions that help maximize the eventual impact of their donations. “A lot of our clients know they want to help their community,” she says. “They just don’t know how to start.”
To get the most out of your charitable giving, here are a few points to consider before you donate.
Define your goals
Giving to a charity is often deeply personal, so start by choosing a cause that matters to you. Maybe you’ve seen a need in your community, or you want to give to a health-related cause after a family emergency. Setting your priorities early makes the rest of the process easier to navigate. When Robinson first meets with a family expressing interest in supporting a charity, she encourages them to think about the scope of their giving, the problems they want to address, their geographic focus and whether to support a grassroots community-based organization or a large, well-establish established charity or foundation.
If you’re considering a substantial gift, Robinson recommends getting your children and grandchildren involved as early as possible to ensure everyone is on the same page. “Charitable giving is just so personal,” she says. “You really want to start with things that you’re passionate about. It might help to bring your family together to hear their thoughts first.”
Choose your charities
Once you find a cause you want to support, you’ll need to decide which organization is best suited to make the most of your gift. With so many charities to choose from, it’s important to look under the hood to see how they’re being run, explains Robinson. Apart from ensuring a charity is legally registered and meets the Canada Revenue Agency’s eligibility requirements, take some time to make sure you’re comfortable with the way it’s governed and how it uses its resources.
There are a few websites that can help you verify an organization’s compliance, financial health and overall track record. The Government of Canada makes it easy to access financial data and other reports, but there are additional resources you can turn to as well, including CanadaHelps, CharityData and Charity Intelligence Canada.
From there, evaluation becomes more nuanced. That’s because relying on simple metrics such as overhead ratios rarely tells the full story, Robinson says. Many expenses that may be labelled “administrative” are often tied to program delivery. A mental-health organization, for example, may show high staffing costs because licensed therapists are providing frontline care. A complete assessment means reviewing past results, annual reports, audited financials and the charity’s T3010 filings, which paint a fuller picture of how an organization operates. “You really need to understand what the charity does, because looking at overhead alone doesn’t tell you everything,” she says. “You have to look at the totality of the picture.”
As you review organizations, look out for warning signs. Charities that avoid questions about their results may struggle with frequent leadership turnover. If they can’t clearly explain how donations translate into real-world impact, they might require closer scrutiny.
Build your relationships
The most effective relationships rarely begin with large gifts. Starting with a smaller donation is a good way to get a better idea of how an organization communicates, handles money and follows through on commitments. Some donors approach philanthropy as a partnership, not just a one-time transaction, and then ramp up their giving as their confidence in the organization grows.
Once you trust that an organization shares your values, then you may consider moving toward a “trust-based giving” approach. This recognizes that charities doing the work usually know what’s needed most. As relationships deepen over time, some donors explore legacy commitments such as endowment contributions, naming opportunities or planned gifts that extend the impact across generations. “It really is a relationship-building process,” Robinson says. “Seeing is believing. You should visit the organization, talk to its leaders and learn how your gift will make a difference.”
Think about the impact
It’s also important to consider the type of support you want to provide. Some donors prefer programs with measurable results, while others give unrestricted operating funds, so charities have the flexibility to respond as priorities shift. “Charities that are smaller in nature usually have smaller budgets, and a $10,000 gift will likely go further there than it would elsewhere,” Robinson says.
For instance, you might be able to work with an organization to ensure that your $10,000 donation is used to buy sports equipment for families in need, so you can see your gift at work. Alternatively, you might direct that gift to a larger organization to fund cancer research, in which case you may have less say over how that money gets used, or may not see a specific impact beyond knowing you’re supporting something that one day could have wide-reaching benefits. Both are worthy recipients of your support, but the choice depends on what’s most important to you.
If you want to make a large donation, also consider whether the charity can handle it. “A massive amount of money all at one time can be problematic,” explains Robinson. “If you’re going to make a sizable contribution, you want to be having conversations with that organization to help prepare them for what that gift could look like.”
Good intentions aside, a large gift to a smaller charity or volunteer-run organization can introduce governance challenges at the board level as they try to figure out the best way to use those funds, she says. It can also affect the money and support they receive from the government and others. Before making a large gift, it’s worth having a conversation with the organization and considering giving the funds out over time, Robinson suggests.
Be strategic
For donors planning larger or ongoing contributions, the right structure can make philanthropy easier to manage. Donor-Advised Funds (DAFs) are a great option. You can open a DAF with $25,000 and decide later which organizations you want to support, Robinson explains – plus the money grows tax-free within the account, which can help you make an even greater impact.
“A donor-advised fund is really great for somebody who intends to create a journey around charitable giving,” she says. “If you’re already donating to multiple charities in a year, it’s a nice solution because it’s an account where you can organize everything.”
Private family foundations appeal to donors with significant assets who want more hands-on involvement. Setting up a foundation takes time and ongoing management, but it allows you more control over how gifts are structured and distributed. “A private foundation is for folks who have a million-plus dollars to put into the capital part of the foundation,” Robinson says. “It’s really an asset for people who intend to do strategic, longer-term, multigenerational grant-making.”
Some families choose to go beyond their own giving and team up with other donors. An organization called Philanthropic Foundations Canada helps facilitate these connections by hosting conferences and networking events throughout the year. “This is a great way to fund bigger projects,” Robinson says. “It helps donors create a lasting legacy and make a meaningful difference for the causes they care about most.”
