According to Statistics Canada, 22M Canadians donate to charitable and non-profit groups each year. None of us donate on the scale of Bill Gates and Warren Buffett, and few of us can establish a foundation to evaluate worthy causes and monitor donation dollars. However, any well-run foundation will clearly define its goals and values. The above Stats Can report indicated that the biggest donors planned their donations so if they think it's worth the time and effort, then perhaps we should also do some planning.

Choose appropriate charities. This is of course a no-brainer, but we are inundated with requests from charities and non-profits - it is easy to make rash decisions. Establish a dollar budget in total and by charity, and develop guidelines. For instance, I refuse to donate to charities that solicit by telephone.

Question charitable groups as to whether they subscribe to the Ethical Fundraising and Financial Accountability Code. This has been adopted by most reputable charities and establishes some fund-raising rules. For example, fundraiser remuneration cannot be commission-based. The complete Code can be obtained from the Imagine Canada website.

If you have doubts about a charity, the CRA website has a list of all registered charitable organizations - almost 83,000 of them! You can search their financial information as filed in their most recent charity returns on-line. Registered charities have to meet certain criteria - they have to spend 80% of their previous year's receipted income (with some exceptions) on charitable activities.

Be politely skeptical when charities state that they spend x% on administration. There are different ways of accounting for admin expenses and charities know that they are evaluated on this. They will naturally present things in the best possible light. If you are considering a sizable donation, review the annual report and ask some pointed questions about salaries, benefits and other expenses.

If you have a specific cause, talk to your local community foundation. Most cities have these - they are formed with the express purpose of pooling and handling charitable funds. One of my clients uses the Calgary Foundation to administer a fund - he contributes regularly and has the final decision on fund disbursements. Administration costs are minimized and he benefits from professional investment and grant expertise - it is a real win-win situation.

Income tax considerations are secondary to most but it is a fact that tax policy encourages charitable giving. Clients frequently ask how much a donation will save in tax. With the tax credit system, it varies from province to province. In Alberta, we have one of the more generous tax credits – on donations exceeding $200, it is 50% of the amount of the donation.

CRA policy allows donation receipts in the name of either spouse. Therefore couples should combine receipts on one return to reach the $200 level for increased credit. Unclaimed charitable donations can also be carried forward five years. If you have your own business, you may be able to justify donations to non-registered organizations such as community associations as a business expense.

If you are considering a substantial donation, get professional help. There are special rules relating to gifts of property, especially ecologically sensitive land and Canadian cultural property. Consider gifting publicly traded securities - there is no capital gain when these are donated to a registered charity.

Finally, your estate plan should consider the income tax benefits of charitable donations. Life insurance premiums can qualify as charitable donations if you make an irrevocable assignment of the life insurance to a charity. The income tax rules for charitable donations are expanded for the year of death. If you have substantial assets, the tax benefit of charitable donations in your will can help offset taxes on the bequest of other assets. You might not be able to take it with you, but at least you can choose a worthy cause and reduce the hit on your final tax return.