Canadians have a well-deserved reputation for responding with generosity to assist those affected by natural disasters, and the current humanitarian crisis inEast Africais no exception. To supplement that generosity, the federal government has announced that, for every eligible dollar donated by individual Canadians to registered Canadian charities for the purpose of famine relief,Canadawill set aside one dollar for the East Africa Drought Relief Fund. Those matching funds will then be allocated by the Canadian International Development Agency (CIDA) to established Canadian and international humanitarian organizations, to provide needed assistance for those most affected by the drought. There is no limit on the amount of matching dollars which the federal government will contribute to the relief fund.
The federal government has set certain parameters or criteria which donations must fulfill in order to qualify for the matching program. In order to qualify, a donation must be:
- made by an individual Canadian;
- monetary (i.e., not a donation of goods or services), and not exceeding $100,000 per individual;
- made to a registered Canadian charity that is receiving donations in response to the drought inEast Africa;
- specifically earmarked by such organizations for the purpose of responding to the drought; and
- made between July 6 and September 16, 2011.
Once a donation is made, the registered charity which receives it has until September 30, 2011 to make a declaration to CIDA. That declaration will specify the amount of eligible donations received, and the federal government will then set aside an equivalent amount for the Drought Relief Fund.
In the rush to help, the need to ensure that donations are made in a way that will most benefit those who need that help can sometimes be overlooked. As well, it’s an unfortunate fact that disasters sometimes bring out the worst as well as the best in people. In any such situation, a number of “instant” charities tend to spring up and begin soliciting donations for aid. Some of them are honest and well-intentioned and others are not. However, no matter how good their intentions, if they are not already registered charities (and most very likely are not—obtaining registration as a charity is not an overnight process), then any donations made to them will not qualify, either for the usual charitable donations tax credit, or for any matching funds which the government of Canada has promised to provide. As well, it’s not likely that such an “instant” charity will have the resources or the infrastructure required to provide help on the scale needed by victims of theEast Africafamine.
With that in mind, there are a number of resources available to Canadians who want to ensure that they are making their charitable donations in the most effective way possible. General information about making charitable donations can be found on the Canada Revenue Agency (CRA) Web site at http://www.cra-arc.gc.ca/chrts-gvng/chrts/drghtrlffnd-eng.html. As well, the CRA maintains a listing of registered charities (remembering that only donations to registered charities will qualify for the matching funds) on its Web site at http://www.cra-arc.gc.ca/chrts-gvng/lstngs/menu-eng.html. It’s also possible to verify a charity’s registration status by calling the CRA toll-free at 1-800-267-2384.
Canadians who donate to a registered charity for famine relief will also be able to claim a non-refundable charitable donations tax credit. The federal credit claimable is a two-level one. A 15% credit is available for the first $200 in donations, and donations over the $200 threshold are eligible for a 29% credit. Similar credits, in varying amounts, are provided by the provinces and territories.
Since the percentage amount of the credit rises as charitable donations increase, it may be advisable, where charitable donations made in a single year don’t exceed the $200 threshold, to defer making the claim. Charitable donations can be claimed in the tax year they are made or in any of the five subsequent tax years. Consequently, it’s possible to accumulate charitable donations for up to six years and claim them on a single return, thereby maximizing the amount of non-refundable credit received.
Canadians who are considering making a donation for famine relief in East Africa can find more information about the East Africa Drought Relief Fund and the humanitarian crisis in general on the CIDA Web site at http://www.acdi-cida.gc.ca/acdi-cida/ACDI-CIDA.nsf/eng/ANN-71910150-JQF.