What happens when the donor knows more than the fundraiser? The fundraiser better be on their A-game.

Imagine this scenario: you’re meeting with a donor about a major gift donation and they tell you they’ve set up a trust fund for their children and are in the process of setting up their own family foundation. The donor then says they like your charity and the work it does. The donor is a very successful owner of a multimillion-dollar annual-earning private corporation. He is also a trained tax accountant and has been growing his business for 50 years.

This might be the ideal donor or your greatest challenge. They have thought through their financial plans but have not included any significant provision for your charity.

I was just in a situation like this, where the donor had a rebuttal to every donation strategy I suggested. This donor was very successful and you would assume that the family has assets in public shares of stocks and mutual funds, which might be a good quick approach to giving if these assets have taxable capital gains. It was met with a tepid response since he was not heavily invested in the markets.

I asked him about considering donating his registered investments since he is in the RRSP age group going into the RRIF age group shortly. He shows some interest and acknowledges that it is a strategy that he had not considered, even though his registered beneficiary is his wife if she were to pass. With this strategy, the charity would receive the proceeds and his estate would not have to pay tax. He indicates changing the beneficiary from his wife to the charity might be of interest.

He revealed that several major multinational corporations had been sniffing around his business in the past few years. If he were to sell his business, the taxable capital gains would be significant and looking at additional strategies that would offset the tax would be very important. I gave him a few options available to help offset the taxable capital gains on his company shares. For example, if he were to sell his business, a donation of private company shares could be made to the charity to help offset the taxable capital gains..

The good news is he agreed to meet with me a few weeks following to explore how charitable giving and a family foundation can be realized to meet the family’s objectives. This shift in discussion was only possible after I was able to illustrate for him how asset growth and the corresponding tax on capital gains can be mitigated by charitable giving.

This entry was posted in Uncategorized. Bookmark the permalink.