Number of Canadians Claiming Charity Tax Credit Falls to Lowest Level Ever

The number of Canadians claiming a charity tax credit declined by 165,330 in 2021 to the fewest in more than 30 years, Statistics Canada reported Tuesday. Fewer than 5 million tax filers claimed 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 report said. Pandemic impacts may also have been a factor.

The number of charity tax credit claims peaked in 2005 at 5,833,930. The most recent figures put charitable donors at 4,967,050, a decline of 15 percent.

From the beginning of the COVID-19 pandemic, charities warned of dramatic losses due to lockdown impacts on fundraisers. In 2020 testimony at the House of Commons finance committee, charities appealed for more generous tax credits to stem job cuts and revenue losses, according to Blacklock’s Reporter. The Canadian Cancer Society estimated it lost half its budget, “between $80 million and $100 million,” CEO Andrea Seale said.

Doug Roth, CEO of the Heart and Stroke Foundation of Canada, said the charity was forced to lay off more than 200 employees, almost half its staff. It and also lost at least $25 million due to pandemic-related cancellation of fundraisers, Roth said. “It’s equally scary as we look to the months and years ahead.”

Charities also blamed fallout from the 2020 WE Charity scandal, which led to the resignation of then-Finance Minister Bill Morneau. Controversy arose after revelations that the WE Charity had previously paid Prime Minister Justin Trudeau’s family to appear at its events, despite making claims to the contrary.

“WE Charity ambassadors were A-listers from the world of entertainment, politics, civil society and the corporate world,” testified Gail Picco, editor of a trade publication The Charity Report. “They were supported by everybody that mattered. Board members of We Charity included senior bank executives from Scotiabank and RBC.”

Picco complained of “collateral damage being inflicted on the charity sector” by investigations. “The cream of the Canadian crop was identified with WE Charity,” she said. “So if I was a bureaucrat looking at an organization I would say, well, … the committee that hands out Orders of Canada thought they were OK. The executive vice-president of the Royal Bank thinks they’re fine.”

Charities have appealed for an increase in the basic tax credit for donations, currently sitting at a maximum of 29 percent. In 2016, the House of Commons defeated a private bill that would have raised the maximum credit to 75 percent.

“The bill would incur a cost for our government; there would be a dip in revenue,” Conservative MP Ted Falk , sponsor of Bill C-239 An Act To Amend The Income Tax Act, said at the time. “However, what would cost even more and what we cannot afford is a capability gap in our charities due to a lack of donations.”