Charitable Gifting

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Gifting to charities was once the perceived responsibility of the wealthy such as high income professionals and retirees however; we are undergoing a transformation of who contributes to charities. Leaving a legacy is not only for the wealthy. We can all plan a legacy gift regardless of our assets or income.

Think about the charities or causes you would most like to help, maybe ones you have benefited from like a community service or organization. Perhaps an organization you volunteer at, or perhaps you may wish to leave a gift in the memory of a loved one.

Legacies are sometimes referred to as planned gifts and can have a significant contribution to a charitable organization. The greatness of planning a gift is that it enables people to match their philanthropic goals with their personal goals of providing for their heirs.

How do you do it?

Firstly, you need to determine what is important to you and your values. Next you would want to identify where your planned gift will align with your values. Then, we need to implement a program to achieve favorable financial outcomes to your situation. Charitable planned giving in my opinion should be considered in the context of a financial plan. Different vehicles that can be utilized are life insurance, cash, RRPS’s and RRIF’s, wills to name a few.

Why would I do it?

Perhaps, recognition, a tax receipt, or the possible change your contribution will make to a particular charity and its endeavors.

Whatever an individual’s reason is for giving something back, the financial aspect of planned giving shouldn’t be dismissed. The federal and provincial governments offer incentives through tax credits for us to give generously. Rules introduced in 2006 allow us to donate publicly listed securities to charity that result in significant advantages in regards to taxes.

When could planned giving be the right time?

Year end tax planning- charitable donations are a powerful way to reduce taxes
Sale of a business- when capital gains result from the sale of a business, charitable planned giving can effectively relieve some of the tax
The sale of real estate, again planned giving can reduce the potential tax issues from the sale
Inheritance- Once the inheritance is received the funds will generate new taxable income. Tax credits from charitable gifting can help offset the liability
Appreciated securities- donating publicly listed stocks, bonds, mutual and segregated funds does not give rise to a capital gain
Succession planning- you may wish to establish a tradition of philanthropy by creating a charitable fund and naming children or other family members as a successor

It is a great feeling to support charitable causes that are important to you and some of the ideas below can be considered.

Leave a gift in your will for the organization that made a difference in your life
Consider using assets for your charitable gift. These can include cash, stocks, mutual funds, term deposits, real estate, vehicles, art, jewelry or insurance
Name a charity as a beneficiary of your RRSP, RRIF or pension
Name your favorite charity as the beneficiary of an existing or paid-up life insurance policy
Purchase a new life insurance policy naming your favorite charity as the beneficiary
Ask your financial advisor to include charitable giving as part of your plan
Make a donation to the charity in memory of someone who dies. The family receives an acknowledgement of your gift and your gift and the deceased will be remembered
Make a donation to a charity as a wedding, anniversary, birthday or Christmas gift. You will receive a charitable tax receipt; your gift will benefit the community forever
Honor an employee on retirement with a scholarship in their name. The employee's name will live on forever, and a student will obtain help with post secondary education