Charities want Harper to increase tax credit – living – Charities want Harper to increase tax credit
January 20, 2009. Stuart Laidlaw, Faith and ethics reporter

Ottawa should boost the tax credit for charitable donations in its upcoming budget as a way to stimulate the economy while helping those most hurt by its downturn, at least three proposals before the federal government argue.

“It helps charities right across the spectrum, from the very large to the very small,” says Ray Pennings, research director at Hamilton think-tank Cardus.

Cardus wants cash donations of $200 or more to be eligible for a federal tax credit worth 42 per cent of the donation – a 45 per cent jump from the current 29 per cent.

Meanwhile, a proposal from Imagine Canada, a national umbrella group for charities, calls for a federal tax credit of 50 per cent for donations between $200 and $15,000. That’s a 72 per cent increase over the current rate.

The federal government brings down its new budget on Jan. 27.

Imagine Canada says the boost should be in place for three years, while Cardus wants the increased tax credit to be permanent, with a possible review after five years. Neither group recommends changing the rules for donations under $200, which get a 15 per cent credit.

The idea also has the support of the influential Canadian Council of Chief Executives, which last month included in its budget brief a call to increase the charitable tax donation for at least a year, though it did not say by how much.

“The voluntary sector provides essential services in ways that are flexible, creative and highly efficient,” the group said in its submission to the federal government.

“The idea is gaining support,” says Teri Kirk, vice-president of public policy and regulatory affairs for Imagine Canada. Increasing the tax credit, she says, would encourage more people to donate to charity, just as the groups need it most.

“Even before the downturn, the number of donors was declining.”

A 2006 Statistics Canada study found that 53 per cent of Canadians polled would donate more to charity if the tax credit were increased.

The Cardus proposal would cost between $400 and $600 million, Pennings says, stressing that the work of charities lessens pressure on government services, thereby easing costs to the taxpayer.

“The actual cost to government doesn’t come until a year later when people fill out their tax returns,” Pennings says.

Imagine Canada did not provide a cost estimate for its proposal.

In the wake of the recent downturn, several charitable groups have reported a drop in donations. The development is all the more troubling, they say, because the need for their services jumps during turbulent times.

Earlier this month, United Way Toronto issued a special call for donations. With its current fundraising drive coming to a close, it reported being $4 million behind reaching its $110 million goal. An update of its final appeal will be made tomorrow.

Canada’s 161,000 charitable organizations and non-profit groups account for about 8.5 per cent of gross domestic product and employ more than 2.1 million people.

That makes boosting the charitable tax deduction not only a way to help those most hurt by the downturn, but a tool for stimulating the economy as well, advocates say.

“Collectively, they employ a lot of people,” Pennings says. “This is a shovel-ready proposal,” he says, stressing the ease of increasing the tax credit. This is about changing a number in a computer program.”

Imagine Canada is also urging the government to maintain its funding to non-profit groups and to earmark a portion of any new infrastructure money to community and social service agencies, arts and sports groups and environmental retrofit initiatives.

The full Cardus proposal can be seen at

The Imagine Canada proposal is at

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