Philanthropy is a word you’ve probably heard—maybe you've donated to a cause yourself, or read headlines about high-profile philanthropists giving away large fortunes. But what is philanthropy, really? And more importantly, can it benefit you personally?

Many people assume philanthropy is reserved for the ultra-wealthy, but that’s far from true. In fact, Canadians of all income levels continue to give, even during periods of economic uncertainty.

According to CanadaHelps' 2023 Giving Report, 22.3 million Canadians contributed over $12.7 billion to charities and nonprofits in 2022—and 65% of that came from individual donors.

Going beyond the definition of philanthropy, many people don’t realize that it’s more than just writing a cheque. If you approach it strategically, becoming a philanthropist can strengthen your financial plan, engage your family in meaningful conversations, and help you leave a legacy you’re proud of.

This blog article will go over everything you need to know about philanthropy, including how it’s slightly different than charity and whether you should consider it as part of your overall wealth strategy.

Remember that not all advice will apply to you. Make sure that you do your research and consult a wealth management professional to make the most effective choices for your financial goals.

What Is Philanthropy?

Let’s clarify exactly what philanthropy is before we talk about its benefits and whether it’s a suitable option for your specific wealth plan.

To define the term simply, philanthropy is the act of promoting the welfare of others. People usually practice structured philanthropy that is long-term and creates lasting impact.

If you want to become a philanthropist, there are many avenues you can consider. Some of the most common causes people support include healthcare innovation, education, arts and culture, or even social equity initiatives. Your philanthropic pursuits can be in the form of large foundations, donor-advised funds, scholarships, or even informal community giving.

What distinguishes philanthropy is the intention and scope. Unlike other ways of contributing, philanthropy focuses on a more proactive and strategic approach.

Many high-net-worth individuals use philanthropic strategies to align their giving with their long-term vision and goals. Whether through tax-smart planning or intergenerational legacy building, philanthropy could be a smart way to strengthen your wealth strategy.

Philanthropy vs. Charity

One of the most common questions people have when talking about philanthropy is, “what is the difference between philanthropy and charity?”

While many people use the two interchangeably, these two concepts approach giving in different ways:

Here’s a good way to remember the difference: Charity is giving in the moment to solve a problem that exists now. In contrast, philanthropy is investing in the future, making contributions in the hope that the problem will no longer exist.

Philanthropy Can Strengthen Your Overall Wealth Plan

As we’ve mentioned, philanthropy isn't just good for the world; it can also be good for your wealth plan. When structured effectively, philanthropy offers several financial and personal benefits.

1. Tax Advantages

One of the most common reasons people integrate philanthropy into their wealth plan is to reduce their taxable income. 

In Canada, you can claim non-refundable tax credits for eligible charitable donations. This means that pursuing philanthropic activities can help reduce your overall tax burden. As a corporate donor, you also have options to deduct donations from your taxable income.

For example, creating a donor-advised fund (DAF) lets you make a large charitable contribution now, receive an immediate tax benefit, and distribute funds to charities over time. 

2. Legacy Planning

If you have an strong idea of the legacy you want to leave behind, philanthropy can support this. By choosing specific causes to contribute to, you can align your vision and values. This is especially powerful when integrated into estate planning or through establishing a charitable trust or private foundation.

According to Philanthropic Foundations Canada, Canada is home to over 10,000 foundations managing more than $100 billion in assets. This highlights how structured giving plays a key role in Canadian wealth planning.

3. Family Engagement

Philanthropy offers an opportunity to involve children and other family members in important financial and ethical conversations. If you establish family giving strategies, you can help instill shared values, enhance financial literacy, and foster family closeness.

4. Corporate Philanthropy & Business Alignment

If you’re a business owner, corporate philanthropy can boost your company's brand and help you make a positive impact. According to a study from Imagine Canada, over 50% of Canadian consumers prefer to support businesses that actively give back to their communities. 

Plus, corporate philanthropy can do more than just attract additional customers. In some cases, it boosts employee morale and overall community reputation. Whether through matching donation programs, community sponsorships, or social impact initiatives, your business can benefit while contributing meaningfully to society.

How to Start: Philanthropy Examples

When it comes to philanthropy, you don’t need to start giving millions to make a difference. 

What matters most is aligning your philanthropic actions with your values and goals. Here are some real-world philanthropy examples you could do as an individual:

• Set up a donor-advised fund to make ongoing contributions over time.
• Include a charitable bequest in your will—a simple way to leave a legacy without affecting your current lifestyle.
• Create a family giving circle, pooling funds and making joint decisions on the important causes that you all want to support
• Volunteer your time or donate professional services to non-profits and social enterprises
• Start a scholarship fund in your name or in honour of a loved one
• Host a charitable event to raise funds for a cause you care about

Here are other ideas if you’re a business owner:

• Sponsor local community initiatives or events
• Donate a percentage of annual revenue
• Organize an annual giving campaign with employee participation

If you're unsure where to begin, working with a wealth advisor can help identify causes that align with your financial goals and determine the best structure for giving.

Align Wealth and Purpose

Now you know the detailed explanation to the question, “What is philanthropy?”.

Philanthropy can be much more than a financial gesture. If done correctly, you can use it as a strategic tool to help you align your wealth with your values. Whether you’re just starting to build wealth or are planning your legacy, philanthropy offers a way to make a long-term difference.

From tax advantages and legacy planning to family engagement and community impact, philanthropy can be a key component of a comprehensive wealth plan.

Are you interested in exploring the integration of philanthropic strategies as part of your financial plan? Our team can guide you through tailored options that help you give with intention and strengthen your financial future at the same time. Contact us today for a free consultation.

This e-newsletter has been prepared by Christine LaLiberte and expresses the opinions of the author and not necessarily those of Raymond James Ltd. (RJL). Statistics, factual data and other information are from sources RJL believes to be reliable, but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities.

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