As the financial year comes to an end and the holiday seasons approaches, Mrs. SPF and I have been reflecting on our personal finances which are now very much under control and quite sustainable. As we plan for 2011 we recognized that our finances are strong but that we felt something was missing. We felt as though we were not giving back to the community in which we live with our human or financial resources. It is not as though we weren’t giving to charity, but we felt that we could, and should do more.
We sat down and looked at our current balance sheet and budget and determined we can afford to be giving to charity and that this is the time of year to do so. Why now? First, this is a time of year where many are in need. The holiday season can be extremely difficult for those who are less fortunate than ourselves. Second, we feel that we were too focused on purchasing presents for people who appreciate them, but are hardly in “need”. Third, we believe that investing in our community has great value. Lastly, we recognize that charitable contributions in Ontario/Canada are tax deductible so while we are out of pocket today, we will receive a significant portion of our donation back from the tax man. We decided that we would donate $1020 to charities in 2010 because giving to charity makes sense to us.
We decided to split up our donations relatively evenly. We gave:
- $150 to the local Women’s Shelter
- $150 to the Youth Emergency Shelter,
- $150 to The Alzheimer Society,
- $150 to a Children’s Foundation (for abused kids),
- $150 to the local food share,
- $150 to the AIDS network,
- $100 to the Humaine Society and a smaller
- $20 donation to “Mowvember” which is a cause where men in Ontario grow moustaches during the month of November to gain donations to raise funds for prostate cancer.
These organizations all have specific meaning for us and we felt that by giving to charity they could would receive financial assistance.
In addition to donating money, we also had some questions about boat donation. Basically, this is a service that allows you to donate an old boat to charity and receive a tax deduction for doing so. Since we have an old boat that just sits in our yard, it made sense to explore this option. Once you contact the charity and register your boat, it becomes part of an auction. If the boat is sold at the auction, it is picked up from wherever it is being stored and the seller receives a tax receipt in the amount of either the final sale price or the boat’s book value.
How does giving to charity work with tax deductions?
To encourage donations, the federal and provincial governments provide a two-tiered credit system. The amount up to $200 qualifies for a tax credit at the lowest tax rate. The amount over $200 qualifies for a credit at the highest tax rate.
For us, based on the $1020 figure we will get the following tax relief:
15% Federal + 5.05% ONT = 20.05% on the first $200 = $40.10
29% Federal + 11.16% ONT = 40.16% on the other $820 = $329.31
Total: $369.41 tax refund. We will be out of pocket $650.59. This investment in our community will return 36.5%.
We feel this is the right thing to do given our circumstances. We bought a house and a Subaru Outback this year and paid for our wedding in full in the Fall of 2009. We have been able to pay some lump sums against our mortgage and a personal loan. We replaced our computers this year, I bought some tools and Mrs. SPF purchased some hobby items. We can surely find room to give to our communities by donating to charity. We can surely find room to give to our communities by donating to charity instead of thinking about things like holiday tipping. For 2011 we are discussing running a contest on this site where we will donate $50 on the behalf of 5 readers as a contest.
Sustainability for our souls.