Are Canadians less generous?

The Fraser Institute issued in December its analysis of Canadian giving patterns. The analysis is based on 2007 personal income tax returns filed in Canada and the U.S.Although the number of filers who donate is similar in the two countries (26.6% U.S. vs 24% Can.) there is a large difference between the percentage of aggregate income donated. In this case, Americans donate 1.6% of their income while Canadians less than half this amount (0.73%). The conclusion is that Americans are more generous.

This may indeed be correct but cannot be proven by the Fraser Institute's study as it is flawed. The reason for this is Canada's system of taxation of companies differs markedly from the U.S. Many American small business operate out of a corporation (to limit liability) but the income is taxed on a personal tax return (it does not pay to remit corporate tax and then individual tax on dividends). Canada's corporate system is set up (integration) so that there is no or little penalty of earning income in a company (and with small business deductions even beneficial to be taxed in the company). Furthermore, the U.S. company is severely limited in its ability to make significant donations. In Canada a corporation can deduct for tax purposes up to 75% of its income for donations made.

Thus, comparing individual tax return data

between the countries

is like comparing apples and oranges-
they are both fruit and sweet but not identical.

For donations one has to add private corporate giving to the totals. Simply stated there is a much larger probability that a Canadian small business owner would make a $1 million gift to the local hospital out of his operating or holding company than via his personal tax return as compared to his cousin in the U.S. In the Fraser Institute data the $1 million  private company  gift does not count. Americans may be more generous than Canadians (and probably are) but the study does not justify this conclusion. 

What continues to be sadly illuminating is Quebec's place among the provinces. While Canada's number is 0.73%, Quebec's is 0.33%, placing Quebec in last place (Manitoba leads at 1.02%). I certainly expected this gap to close and the feeling on the street is that Quebecois charity is on the rise. One just has to think of Centraide's success. Hopefully future studies will yield better results.

For more on corporate giving, please have a look at the chapter on Corporate Estate Planning in the National Gift Planning Handbook.