Should you donate to religious institutions when in debt?

In some faiths, such as Catholicism and Islam, giving a portion of your income is a part of your religious obligation. Tithing in the Roman Catholic Church, for example, traditionally calls on parishioners to donate 10 per cent of their income. In Islam, zakat -- a compulsory payment of 2.5 per cent of your "excess wealth" for those who can pay -- is one of the Five Pillars of the faith.

When money is tight, though, you may find that once you've allocated a percentage of your income to living expenses, bills and debt, there's none left for tithing or giving. Before you fret, remember that your cause or faith doesn't want you to give up necessities or worsen your debt to give, and that there are alternatives to monetary donations, too.

"For some people, the key thing for them is their faith and they believe no matter what situation they're in, they have to tithe their money," says Judith Cane, an Ottawa-based financial coach.religious-tithing-and-debt

But if you're in the red or struggling to keep your family housed and
fed, don't worsen your situation for your faith, says Quentin Schesnuik, manager of planned giving and personal gifts with the Archdiocese of Toronto.

"We wouldn't want a person going into debt to support the church or a charity of their choice," he says. "There are some people who feel obligated to but we say no."

Budget for your giving
First, determine if your situation requires giving. In Islam, zakat is a "luxury tax" meaning the 2.5 per cent you have to pay only comes out of your annual excess wealth, explains Shamaila Arif, a Mississauga, Ontario-based expert with the Credit Counselling Society who is Sunni Muslim. Zakat is meant to help you appreciate what you have, she says. If you have debt, you shouldn't be paying zakat.

"It's not mandatory for those who cannot pay," she says. "It's mostly for the excess that one attains through life -- the home you're living in doesn't get added to the formula, or the basic necessities you need."

If you do have taxable assets -- such as a second home, second car or savings -- you need to work the tax into your budget to avoid any surprises. With zakat, it's fairly easy because the payment is made at the end of the lunar calendar. You know that at that time, you'll need to have enough set aside to pay the tax, whether that means saving a bit each month all year long or setting aside an annual bonus to cover it.

When Arif works with clients, she makes sure they earmark cash to cover zakat. "Budgeting is important," Arif says. "You need to plan if you want to give money and make space in your financial plans."

The budgeting rule applies to any Canadian who wants to donate to a cause, religious or not. If you plan to donate, Cane says, you need to include it in your annual budget. Once you decide on an amount for the year that fits within your constraints, stick to that budget, Cane says.

"Once that money is gone, it's gone, so don't feel bad," she says. "Feel comfortable in the amount you're spending."

If your current budget doesn't have room for donating, but it's a top priority for you, you'll have to make sacrifices. For example, Cane has one client who is steadfast in donating to her religion: she has a low income and debt, but she won't give up her 10 per cent tithing. After rent, her donations come second on her budget, followed by debt repayment. The client gave up travel, going out for dinner, and shopping to maintain her 10 per cent tithing.

What to do if you just don't have the funds
Schesnuik says Catholics don't necessarily have to donate their money, especially if they're in financial straits. There are three areas of giving: time, talents and treasure. If you can't give your treasure (wealth), there are still two other categories. You can volunteer or your skills and resources to help others.

Don't overstretch your budget or, worse, go into debt to donate to the church, he says. "Let's say someone has young children and they've got debt," Schesnuik says. "Their priority has to be their family. They have to make sure kids have shoes, put food on the table and that, if they get a flat tire, it doesn't ruin them."

In Islam, Zakat is used to help the needy, while Waqf applies to all charitable public facilities for Muslims, such as mosques, hospitals, schools, orphanages. It's not compulsory.  Finally, Sadqa is another way to help the poor and needy. Some believe that donating this way will ward off any evil and help you appreciate any goodness one is experiencing.

While you may not be paying zakat, you could make room to donate a sum you're comfortable with to this box, Arif says.

You should never create financial difficulty for yourself, nor should you feel guilty in any shape or form, Schesnuik says.

If you have any questions about your religious monetary requirements, seek help from someone versed in your religion, such as a priest or imam.

See related: How to deal with debt when serious illness strikes, What's first to go when downsizing budget?
Published February 24, 2016

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