[Update: Every year I make some comments on Statistics Canada’s release of tax data. While in this note, I will discuss their normal release, we have also posted some custom data that we have received from Statistics Canada that are discussed elsewhere for individual donors and also aggregated by family.]
In this article, we will discuss the normal annual data put out by Statistics Canada and our concerns with that data. It is located at Charitable Donors, 2021
Stats Can every year puts out this information. It is presumably easy for them, and then the media picks up that information and uses it for numerous articles. This yearly process and focus on this particular data is a concern as there is almost no context.
In the past, Stats Can had gotten better at putting in certain caveats, but they have also removed some of the previous caveats I had suggested they should include in the past. Below I have links to various articles I have written on this annual ritual. But for just a little bit of extra work, they could do so much better to provide context.
Stats Can looks at the data from the T1 returns. So it does not include the T2 return, which is gifts from Corporations. Most importantly, it does not include funds donated to actual registered charities, then receipted, but not claimed on the T1 personal returns, which is many billions of dollars.
The high-level summary from Stats Can is as follows:
“In 2021, tax filers reported giving to charitable organizations more than $11.8 billion (+11.5%) and their median annual charitable donations increased to $360 (+5.9%). Meanwhile, the number of tax filers claiming a tax credit for charitable donations continued to decrease, as there were fewer than 5 million (4,967,050; -3.2%) tax filers that made donations. This decrease might be related to the increased use of crowdsourcing platforms and other methods of funding that do not provide donation receipts for tax purposes.”
The caveats they put out are:
Donation data in this release are based on a preliminary version of the T1 Family File (tax filer data).
Statistics on changes in amounts between years do not take inflation into account, which was 3.4% in 2021.
Canadians contribute in many ways to charitable organizations. This release reports only on donations to charities and approved organizations for which official tax receipts were provided and claimed on tax returns. To verify whether a charity is registered under the Income Tax Act, tax filers can consult the charity listings available on the Canada Revenue Agency website. It is possible to carry donations forward for up to five years after the year in which they were made. Donations reported for the 2021 taxation year could include donations that were made in any of the five previous years. According to tax laws, tax filers are permitted to claim both their donations and those made by their spouse to receive better tax benefits. Consequently, the number of people who made charitable donations may be higher than the number who claimed tax credits.
The median is the value in the middle of a group of values (e.g., half of people make donations above this value and half of people make donations below this value).
Here are some of my further comments and concerns:
- So Stats Can has very detailed information on $11.8 billion of donations claimed on the T1 tax form. That sounds like a lot of money but it actually only covers about 3% of the revenue of the charity sector. Perhaps Stats Can should ask the Charities Directorate for the total amount of receipts issued in 2021 which as you can see from our Blumbergs’ Snapshot of the Canadian Charity Sector 2021 that it is over $20.7 B. Also total revenue of the sector is $334 billion. With Stats Can knowing how the media will use this data, the lack of context is unfortunate.
- The normal boring media coverage is usually looking at 1) was there an increase in giving? 2) Which area of the country has the most generous donors? 3) Are fewer people donating to charities? None of these questions can really be answered with this dataset. With respect to the first question, as we note above receipted donations were $20.7 billion and there are many donations that are not receipted, for example donations below say $20 typically. Many charities receive gifts in kind that can be valuable that they do not receipt that GIK in many cases. Secondly, looking for who are the most “generous” people using tax data is a fools errand. Some neighbourhoods that have a lot of religious people who send their kids to private religious schools would receive large receipts, but most people don’t view sending your own kid to private school as making you ‘generous’. Also some people are donating large amounts to private foundations that they will still control. The generosity part may come in later when they actually move it to operating charities who are actually doing the work. As we have discussed on numerous occasion.
- With respect to the declining number of donors claiming their donations on the tax form, there was an increasing amount of funds donated but by fewer people. Stats Can posits “This decrease might be related to the increased use of crowdsourcing platforms and other methods of funding that do not provide donation receipts for tax purposes.” Yes that is possible but there are many other explanations including that our society has become increasingly unequal and many people don’t have funds to give to charity with all the other expenses they are dealing with and many people not earning a living wage.
- Also in terms of context it might be interesting for Stats Can to do a little more digging and ask some other questions: a) how much of these donations are going into DAFs and private foundations versus actually going to operating charities? b) How much are say the top 100 donors or 1000 donors donating and how much tax benefit would that translate into? I would not be surprised if most of the tax benefit goes to a few hundred or a few thousand people. At the moment Stats Can only divides people into two categories – total income less that 20,000 and total income of $80,000 or more. That is absolutely ridiculous and appears to just be a way of shaming poor people. They also noted how much each of these two groups gave as a percentage of the total 11.8B and yes those under $20,000 in income gave 1% and those over $80,000 in income (which includes lots of wealthy people) gave 67% of the $11.8 B. Maybe they should also list how much income the very wealthy earned and how much their donations were in comparison to their earnings (see note below from 2015). Certainly, I have seen studies that show that poor people more as a percentage of what they have. The T1 data is divided into percentiles so Stats Can should be able to easily show how the different percentiles gave.
Percent of donors with total income of less than $20,0002, 8 Percent of donors with total income of $80,000 or more2, 8 c) how many people who had over a million in income gave nothing to charity and how much of that was because their spouse gave or neither gave?
- You have to look back many years to archived material from Stats Can to see”The amounts that donors give annually to charitable organizations represent a variable proportion of their annual household income. Generally speaking, donors whose household is in the highest income quintile tend to give a smaller proportion of their income to charitable and non-profit organizations, even though their donations are on average higher.In 2013 in particular, donors whose household was in the highest income quintile had, on average, donated 0.4% of the value of their total household income. In contrast, this proportion was 2.1% among donors whose household was in the lowest income quintile (i.e., an annual income of $43,200 or less).”So poorer people are giving about 5 times more as a percentage of this household income to charity compared to those who are earning much more than them.
- If you look further into the data you see that men gave 7.5 B vs. 4.3 B for women. If donations =generosity (which I don’t think it does) would this mean that men are more generous than women? Perhaps some Alt-right troll might think so, but no thoughts or explanation from Stats Can. Why even note that there is that division? Probably this relates to, in many cases, men maybe earning more in a relationship with a spouse and then the couple, with the advice of an accountant, puts the donation on the male higher earner tax return. Maybe also men are more focused on tax incentives rather than helping other people!
- There are some other questions I have about Stats Can’s explanations. They say “Donation refers to the total of all financial donations given by the person to a charitable or non-profit organization in a specified time period, regardless of whether or not the donation resulted in a tax credit.” I don’t think that this is accurate. I think it should be donations to qualified donees (which includes registered charities and some other types of categories). You cannot claim a “donation” to a “non-profit organization”.
- Some people have argued that Stats Can should be more involved in data for the charity sector and not the Charities Directorate. As you can see from the very limited understanding that Stats Can has of charities, donations and their operations that could be a big mistake.
Here is some earlier coverage of Stats Can and their annual donor information:
Statistics Canada report on charitable donors in 2019 (2021)
Stats Can releases 2018 tax filer charity donation information for Canadians (2020)
Stats Can releases information on charitable donations and it is as meaningless as always (2019)
Statistics Canada says total Canadian donations down in 2016 (2018)
Did charitable giving in Canada really hit a 10-year low? (2016)
Statistics about giving tell you so much and so little! (2015)
Statistics Canada’s “Note to readers” on charitable giving is more important than the numbers (2014)
Statistics Canada has released further information on Canadian donors for 2011 (2013)
StatsCan stats on charity sector interesting – but notes even more interesting (2012)
Here is an example from Stats Can from 2018 with a better disclosure of caveats:
Charitable Donations
Start of text box
T1 Line 340 – Allowable charitable donations and government gifts
End of text box
This data set provides information on tax filers classified as charitable donors. Charitable donors are defined as tax filers reporting donations on T1 line 340 of the tax return.
Canadians contribute in many ways to charitable organizations. The data set on charitable donors provides information on tax filers who claimed a tax credit for charitable donations on their income tax return in the reference year. These data may include donations that might be denied by the Canada Revenue Agency (CRA) after an audit. To find out more about why donations might be denied (i.e. tax shelter gifting arrangements, false receipting) please go to the Canada Revenue Agency website.
Persons making charitable donations, but not reporting them on their personal tax return are not included in this data set. These include donations for which no receipt was provided and donations for which the receipt was lost. No estimate of such donations is included in these data.
Only donations made to approved organizations are allowable as deductions in the tax system. Donations are eligible if made to Canadian registered charities and Canadian amateur athletic associations. They are also eligible if made to: prescribed universities outside Canada; certain tax exempt housing organizations in Canada; Canadian municipalities; the United Nations; and certain charities outside Canada to which the Government of Canada has made a gift.
It is possible to carry donations forward for up to five years after the year in which they were made. In the reference year, it is possible to claim donations made in any of the previous five years, as long as they were not already claimed in a prior year. The donations made in the reference year could be claimed the same year, or could be carried forward to any of the next five years. According to tax laws, tax filers are permitted to claim both their donations and those made by their spouses to get better tax benefits. Consequently, the number of persons who made charitable donations may be higher than the number who claimed tax credits.
A change was introduced in the 2016 tax year for tax filers with a taxable income over $200,000 who made charitable donations of over $200 to a recognized charity (as outlined above). They now qualified for the following higher charitable donation tax credit:
- 15% of their donations up to $200;
- 33% of lesser of (1) their donations over $200, and (2) their taxable income over $200,000; and
- 29% of their donation over $200 not qualifying for the 33% tax credit rate.
Tax filers who contributed to a recognized charity with a taxable income of $200,000 or under continue to calculate their credit at 15% of donations up to $200 plus 29% of their donations over $200.
First-time donor’s super credit (FDSC) (line 343 of Schedule 9)
Since 2013, first-time donors can claim up to an additional $1,000 of yearly donations made. The credit is 25% of the eligible amount of the cash gift, up to $1000, for a maximum credit of $250. To qualify as a first-time donor, neither the tax filer nor their spouse or common-law partner can have claimed and been allowed a charitable donations tax credit for any year after 2007.