Crowdfunding Your Child’s Education: All For One!

Loved Ones Can Contribute to the RESP Too

Have your parents and close friends gotten into the habit of giving your children money for their birthday? Do they know these gifts, even modest, could be transformed into contributions to fund your little ones’ post-secondary education? Welcome to the era of crowdfunding… education!

Post-Secondary Education: A Source of Financial Stress for Families

In a previous article, we mentioned that parents consider education to be a priority. Which explains why paying for their children’s post-secondary education is a growing concern for many—and one that is completely justified!

Post-secondary education is a major investment. For a child who doesn’t live at home, the cost ranges between over $35,000 for 2 years of CEGEP and nearly $100,000 for a 5-year education, as shown by our latest Education Savings Barometer, conducted in collaboration with the survey firm CROP.

These results also highlight how the registered education savings plan (RESP) can be a key source of motivation for students pursuing a post-secondary education.

So it comes as no surprise that more and more parents choose to benefit from the generous government grants paid into RESPs. But this begs the question: are parents the only ones who can save for school? Of course not, and that’s where crowdfunding campaigns come into play!

Supporting a Child Thanks to the RESP

You don’t have to be directly related to the beneficiary of an RESP to invest into the plan. For individual and group RESPs, contributions can be made by grandparents, an aunt, friends or even one of the parents’ employer! Paired with government grants, even small donations can earn you big!

If your family and friends are asking for gift ideas for your little girl, why not suggest a contribution to her RESP? Let them know they have access to your RESP and that they can contribute whenever they want, either directly or by giving you the money so you can deposit it yourself.

A Small Gift With Big Potential: Case Scenario

Let’s look at Juliet’s case*, who will soon turn 8 years old and whose parents already opened an RESP a few years ago. Let’s suppose that as of now her grandmother pays into her RESP the $25 she usually gives her on her birthday and that her godparents each add $20 into it annually.

This doesn’t seem like much, right? Yet, this extra $65 a year could add up to the tidy sum of $968 the year Juliet will turn 17. Time to spread the good news!

What are some special occasions for which you could gift an RESP contribution? Well, there’s obviously the arrival of a new baby, which is often celebrated with a baby shower. Or how about the milestones in your children’s school journey, such as their first day of kindergarten or the transition into high school? The holiday season is also a great time to offer money gifts.

But be careful if some of your loved ones want to open an RESP in your child’s name and contribute to it frequently. Don’t forget that RESP contributions are subject to an overall lifetime limit of $50,000 per child, regardless of how many RESPs are in the child’s name. So avoid having several subscribers—with good intentions!—contribute too much for your child.

A History of Crowdfunding

Collecting money within your social circle to fund a project is not novel, but crowdfunding completely transformed the concept of fundraisers in 2008, when Barack Obama’s presidential campaign team pulled off this type of fundraiser for the first time. Instead of seeking financial support from the usual big contributors, the young candidate’s team decided to turn to social media and collected donations, no matter how small, of over 3 million individuals.

Since then, all sorts of organizations—mainly SMEs—, associations, foundations and individuals successfully fund their projects by directly soliciting their personal and professional networks or through websites specialized in crowdfunding campaigns like GoFundMe or La Ruche in Quebec. And it works!

Create Your Very Own Crowdfunding Campaign for Your RESP

You’d like to invite family and friends to pitch in for your child’s RESP? You can try crowdfunding, by choosing any platform that works for you, or invite your loved ones to add to your child’s existing RESP with our gift certificates!

*Fictitious case. Calculations based on a $65 annual contribution, a 30% grant rate and a 3% annual rate of return.