Donating into deprivation
This happens when someone donates so much to charity that it puts their personal financial stability at risk. It’s an extreme situation but it does happen. Unfortunately, risk of this happening increases with age. Older donors may be tempted to maintain past levels of charitable giving even after their income or health circumstances have changed. Couple that with increased longevity and some older adults are drawing income from a rapidly depleting nest egg. The descent into financial trouble can be swift. Older individuals may also be less willing to invest their available capital in growth instruments such as equities making rebounding difficult.
Late life marital status changes
Widowhood or divorce can result in reduced income from pensions, government benefits and other sources. Many newly single retirees want to maintain charitable giving levels regardless of their ability to do so. Friends and family members, as well as charities that have personal relationships with their donors, should be aware of this possibility and confirm with older donor that their donations aren’t putting their financial health at risk.
|Marital Status from age 55 to age 80||% Income at age 80 based on level at age 55|
Source: Statistics Canada
Dazzled by donation opportunities
The promotion and marketing skills of charitable organizations can result in increased pressure to donate, especially at fundraising events where attendees may feel obligated to make on-the-spot donations. Loneliness and isolation in older populations is a risk factor and the attention from charitable organizations can overwhelm. Family, friends and charities should encourage a cooling off period between events and donations to give the individual a chance to consider the transaction in the context of their entire financial situation.
A well-intended older donor may, due to issues such as depression, cognitive change, or low financial literacy, place a charity’s needs ahead of their own. Giving to charities that represent important causes is powerful. For some older individuals, this may be one of the only ways they feel they can exert their independent decision making ability and influence. Again, family, friends and charities, when they have personal contact with donors, should consider whether an older donor is able to fully appreciate the consequences of their donation actions.
- See MoneySense’s 2013 Charity 100 ranking the top charities in Canada
Lee Anne Davies has worked as a consultant for insurance, wealth management, banking and financial education companies. She has a PhD in Aging, Health and Well-being and a Masters of Arts (MA) in Gerontology and Health Studies from the University of Waterloo and an MBA from Athabasca University’s Information Technology Management program. She’s also successfully completed the Canadian Securities Course and the Professional Financial Planning Course. To read more from Davies, visit her blog Agenomics.