Donation revenue is the lifeblood of charitable organizations. Thousands of organizations rely on the generosity of donors to sustain their charitable activities.
Donations to registered Canadian charities are eligible for a tax credit on an individual's income tax return or may be claimed as a deduction by a corporation.
For individuals, the Federal donation credit is 16% on the first $200 and 29% thereafter. The true tax savings must include the provincial tax component. In BC the savings levels are 22.05% and 43.7%.
With this preferential tax credit system, donors in lower income brackets receive extra tax savings. Income might be taxed, for example, at the marginal rate of 31.15% (middle bracket rate in BC), but the donation credit is at 43.7%.
Donation of publicly traded securities can provide even more favourable tax results where the security has an unrealized gain to the donor.