Planned Giving Strategies
Source: CC&L Private Capital
Donating through your will
There are 6 common individual planned giving strategies that you can explore. The 5 individual strategies in the outer circle can be integrated together at any point in your life and also planned for in your estate:
- Donations in kind and appreciated securities
- Donating life insurance during your lifetime or after your lifetime
- Assigning a charity as one of your RRSP/RRIF beneficiaries or contingent beneficiaries, or even donating during your lifetime from your registered account directly to a charity or your own family foundation (without needing to pay withholding tax)
- Land donations — and if you have land to donate there is a lot of complexity and specialization in this type of donation, so I would encourage you to work closely with your professional advisors who have a philanthropic background
- Setting up a donor advised fund, also known as your family foundation charity structure, which is a fantastic way to leave a legacy for generations and create a collaborative family mission and values exercise
The last legacy-focused conversation, the circle in the middle, requires thought and planning now, but happens later. This is charitable giving in Wills, also known as bequests.
Will Power: Planning your legacy
You may have heard of a national campaign in Canada called Will Power, led by the Canadian Association of Gift Planners’ Foundation. Over 50% of Canadians do not have a Will, and there is going to be a lot of conversation to encourage Canadians to create, update, and leave a charitable gift in their Wills. I am a Founding Partner of the Will Power campaign and a Professional Advisor for the campaign and would invite a conversation to talk about your Legacy Planning!
Will Power shares that only 5% of Canadians leave a gift in their Will. With this national campaign, the long-term goal is to have 8.5% of Canadians leave a gift in their will by 2030. I know this sounds like a long time and a really small 3.5% increase, but that small increase will generate $40 billion of gifts to our charity sector. Visit www.willpower.ca for more information. It is a very easy website to use and has a lot of free resources on there. Start your conversation today and we work collaboratively with other Will Power Advisors to make sure your estate is planned out purposefully.
Remember, you don’t only need to choose family or charity, you can choose both. And even better, use these strategic charitable giving techniques to help plan your estate and reduce the tax burden for your loved ones. The CRA encourages good charitable behaviour and has endorsed all these different ways to donate to charity, but please talk to a financial professional before you do this to make sure everything is in place.
The beauty of these individual planned giving instruments is that you can combine them in a strategic way to make your legacy and planned giving have an even larger impact than doing them individually. But a good place to start is by doing some of these individual gifts.
Final three tips & tricks to leave your legacy
- Talk to your professional advisors (accountants, lawyers, financial professionals) about your philanthropic goals. They can help you get there in a more strategic and tax-efficient way.
- Use Donor-Advised Funds (DAFs) to create and maintain your family legacy. DAFs are easy to administer and help keep family giving organized. They may also help solve capital gains tax burdens if you donate appreciated securities to your own DAF family foundation.
- Don’t practice chequebook philanthropy (that’s giving using cash, credit cards or cheques!) Give efficiently by donating appreciated securities. You get a double win by not needing to pay tax on the capital gains, and you also get a tax receipt for the donated amount. Corporate and holding company donors get a triple benefit. The two just mentioned, plus a third: the dollar amount of gains is a tax-free withdrawal from their capital dividend account.
As all of these strategies can be complex. Please consult a financial professional before making any final decisions about how you want to leave a legacy.
