Why charitable giving must finally embrace the financial tools we take for granted

In a world without financial advisors, investing would be prohibitively challenging for anyone lacking the experience and expertise needed to pick stocks with confidence. Yet that absurd fiction remains the reality across the charitable sector.

So many aspects of charitable giving seem like ideal fits for the financial tools Canadians take for granted. Bank accounts, for instance, provide us with repositories for funds waiting to be allocated to purchases, bills, savings and so on. They give us the time and space we need to make thoughtful decisions about spending and organizing our money, yet this capability is sorely lacking when it comes to giving our money to charity. Financial advisory services help us to make informed, confident decisions about investing our money, yet there is a glaring lack of resources for Canadians who want to learn about engaging with charitable giving more thoughtfully.

For too many Canadians, our philanthropic dollars still go directly from our pockets to charities in unengaging ad hoc transactions. Sometimes, this happens when donors are asked to give on the spot—at the cash register, for example, at their front doors, or, increasingly, on the street—when they don’t have the time or space to ensure they are giving to a charity, let alone a cause, they are personally committed to. Other times, this reactive generosity is overshadowed by unwelcome communication and correspondence from charities or fundraisers. Even when follow-up is welcome, all too often, there is no clear sense of the impact of donations. No wonder the charities surveyed by Imagine Canada for its 2023 Giving Report reported a 44.5-percent year-over-year decline in gifts from individuals.

The flipside of this occurs when donors are more educated or experienced about how to approach their giving. Education is vital to both engagement and confidence in just about everything we do, and charitable giving is no different. Imagine how daunting it would be for many Canadians to buy stocks or invest in mutual funds without the support and guidance of a financial advisor or all the websites and apps tailored towards helping investors, regardless of what stocks they want to buy. Yet, in the charitable sector, giving money to charities without any support or guidance is the norm.?

I have three core beliefs about charitable giving: That we all want something in the world to change, that we all have something to give, and that when we give, we get something in return. When that third belief goes unsatisfied, or worse, when returns feel negative, donor remorse often rears its ugly head.?

Like buyer’s remorse, a donor’s remorse often stems from being overwhelmed by choice, particularly when you don’t have a way to approach decision-making. With 86,000 registered charities operating in Canada, this can easily happen. In my experience, however, donor remorse more often stems from on-the-spot giving decisions, usually made in the presence of someone asking/fundraising. Donors making rushed decisions are less likely to give to charities that reflect their own personal interests and world views, deliver programs in their specific geographies or communities of choice, and that have the financial characteristics—fundraising and administrative costs, for example—that they believe are acceptable. After all, the joy of being charitable isn’t just about making a donation. It’s about feeling confident that the donation will make a difference for something you care about personally. The more time and/or talent we invest in giving back, the more confident we become in making a difference. Like all skills in life, experience and perspective help us take responsibility for our decisions and make learning easier.?

The good news is that increasingly accessible resources, particularly web-based donor-advised funds (DAFs), are now available to help donors understand their giving options, carry out gifts the way they want, and access their giving history to readily inform future decisions based on past experience. Each of these tools helps the donor understand their giving better and, therefore, changes how they think about the impact their giving can make.?

All DAFs enable donors to give first, receive a tax receipt, and then separately make decisions about how they want to use their donations. Individually or as part of a family, a company or any other group of people, this gives donors the ability to plan their own approach to giving. It also gives them the time and space to become more confident in the decisions they make about how to allocate the charitable dollars they’ve donated. In this respect, a DAF serves a similar purpose to a bank account. When you have a tool that helps you safely store and save your money, you can be more thoughtful about how to spend it.

When donors think separately about how much they want to donate and then spend their time thinking about what they want to do with those charitable dollars, they tend to take more responsibility for their decision-making. Taking responsibility is important because whether things go well or not, the donor is more able to reflect on what they did right and what they might change the next time they give.?

Like investment accounts for charitable giving, the most advanced and accessible DAFs enable donors to make, view, and manage donations of cash and non-cash assets online while giving them the time and space to choose “the best” charities through friends and social networks, self-directed online research, charities’ annual information returns , charity research publications to built-in digital tools , Cause Funds and so on. At Charitable Impact, where I work, donors can also access a team of Philanthropic Advisors, people who are free to call and can help you navigate and answer your questions about charity, think through your giving goals, and implement a strategy, whether it’s just for you or involves others as well.

Charitable Impact has taken a tool, the DAF, that was previously available only to the wealthiest — requiring thousands of dollars as a minimum contribution – and made it accessible to anyone. By allowing donations of as little as $5, we are creating new opportunities for individuals and groups to incorporate giving into their lives in a meaningful way. By moving the entire platform online, automating its administration and making it smartphone-friendly, we are making sure everyone has access to these resources, no matter how much they give, whom they give to, or how experienced they are with charitable giving.?

At long last, charitable giving is following the leads of the banking and investment communities. This transition may be very late, but I’m hopeful that it’s not too late. The next step involves showing Canadians that uninformed, unengaged charitable giving should no longer be an acceptable norm and that our natural generosity can become more confident, impactful and joyful than we ever thought possible. It just takes a little work, like everything else meaningful in life.