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Nov 12, 2023

Should you donate to charity when you’re asked at the checkout counter? Here’s why it’s OK to say ‘no’

You’re next in line at the supermarket to pay for your groceries, which are far

You’re next in line at the supermarket to pay for your groceries, which are far more expensive than usual thanks to inflation. After you load your items onto the conveyor belt, the cashier makes direct eye contact with you and says:

"That’ll be $163. Do you want to donate $2 to charity today?"

We’ve all been there. The frustration of having to fork over a ton of money for basic necessities juxtaposed with the guilt and embarrassment of having to refuse to donate a small amount to charity, in front of a line full of people.

The practice of having a donation tacked on to your bill at checkout — whether it's when you’re buying groceries, movie tickets or even coffee — is called point-of-sale fundraising and it has become widespread in the retail sector.

Still, a $2 donation can certainly add up over time when hundreds of thousands of consumers participate. Over the last three decades, the charity checkout strategy has raised more than $4.9 billion in the U.S.

Some consumers, skeptical about growing donate-at-checkout requests, have even questioned whether supermarkets and other retailers are reaping the tax credits from your donations while also making record profits.

So what's a consumer to do — and when does it make sense to donate at the cash register?

As it turns out, no one is getting a tax benefit for point-of-sale fundraising — not even the companies asking for the donation, experts say.

"Stores do not receive any benefit of any kind," confirms Aurèle Courcelles, assistant vice-president, tax and estate planning, with IG Wealth Management. "The money goes to the charity. The store simply serves as a collection agent and a conduit for the money to go to an organization."

Loblaws recently came under fire on social media for asking its customers to donate to charities targeting food insecurity, amid accusations that the supermarket giant was profiting from inflation. (The chain has repeatedly denied that it does.)

A photo circulating on social media showed a sign at a Loblaws checkout counter reading "would you like to make a $2 donation to President's Choice Children's Charity to help feed kids here in [province]?"

One Twitter user offered up some advice, suggesting that Loblaw would benefit by collecting the tax deduction for your donation, but Jennifer Button, head of philanthropic advisory services at RBC Wealth Management, says that's not true.

"It's incumbent on that recipient charity to issue a donation tax receipt to the true donor who gave the assets. So it's the same as if your grandmother gave you money and then you tried to claim it, it technically should go to your grandmother," Button says.

"So in this instance, the charity shouldn't be issuing the donation tax receipt to the corporation because they are not the donor of those assets."

What companies often do is set up a matching campaign and say they’ll match customer donations and give it to the charity. "They may get a corporate donation tax receipt for that [matching amount], but not for what the customer contributes," Button says.

While checkout philanthropy can rake in a lot of money for charities and raise awareness about important causes, Button urges customers to research before donating.

"Familiarize yourself. Is this a legitimate charity? Where is this money going? Look into that charity if you want to learn more about the work that they’re doing," Button says.

Charity Intelligence Canada, a watchdog, cautions against donating at the cash register.

"People need to do their research on charities before giving. At the checkout there isn't enough time to make an informed giving decision," said Charity Intelligence's managing director Kate Bahen in an email. "Plus, with all the social pressures of being asked in public, people feel embarrassed to say ‘no thank you,’ " Bahen said.

On the plus side, charities can benefit greatly from the exposure of point-of-sale fundraising.

"The great thing about these larger corporations is that they reach a large amount of people with very small dollar transactions in a pretty short period of time," Button says. "It's really easy to activate on that large amount of people going to places they’re going to every day. It's a huge amount of money going to organizations really quickly which can be incredibly powerful."

However a downside to donating at the till is that is doesn't give you the same tax benefits as donating directly to that charity.

"If you’re donating at the checkout level, you’re not getting a charitable receipt for that amount versus if you took the initiative on your own to make a donation to a charitable cause, then you get the tax receipts that you can claim on your taxes," Courcelles says.

There are of course more effective ways to donate and it's always better to be proactive with your chartable-giving strategy rather than reactive, says Button.

"Being proactive allows you to create those greater connections to what's important to you and what's important to your family," she says.

Charitable giving can mean many different things, whether it's supporting organizations through donations or by volunteering time.

The first step is to set up a charitable giving strategy that works for you and one that can stretch your charitable dollars by thinking hard about what you’re donating and where you’re donating to.

Ultimately, the approach you choose depends on your personal financial goals, Button says, and various options can offer immediate or long-term tax benefits. These include direct donations of cash, a private foundation, donations of non-cash gifts such as capital property, donating publicly listed securities with accrued capital gains, or making a gift upon death by naming a registered charity as the beneficiary of certain plans like an RRSP or TFSA.

At the end of the day, there are more than 87,000 charities in Canada and the smaller ones are not often showcased in point-of-sale fundraising.

"Often companies create relationships with big organizations. Getting to know some of the smaller ones is also a great strategy," Button says. "They may be charities that are close to your heart and can benefit from impact in different ways."

Ghada Alsharif is a Toronto-based business reporter for the Star. Reach Ghada via email: [email protected]

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