Category: Uncategorized

Prime Minister Justin Trudeau’s resignation and the prorogation of Parliament have created significant uncertainty regarding proposed capital gains tax changes. These changes, introduced in the 2024 budget, aimed to increase the taxable portion of capital gains from 50% to 66.67% for individuals earning over $250,000 annually. However, with Parliament prorogued until March 24, the legislation remains stalled, leaving taxpayers in limbo.

Here’s the upside for donors as this presents a unique opportunity for donors to maximize their giving through tools like Giftabulator®. The proposed changes, which increase the capital gains inclusion rate from 50% to 66.67% for gains over $250,000, emphasize the importance of tax-efficient strategies.

Giftabulator®, developed by FUNDING matters® Inc., empowers donors to make smarter, asset-based charitable contributions, such as donating appreciated securities. By avoiding capital gains taxes and claiming tax credits on the full market value of their gifts, donors can achieve greater financial benefits while supporting their favourite causes.

This uncertain tax environment highlights the value of tools like Giftabulator®, which help charities illustrate the benefits of planned giving and guide donors through complex tax scenarios. Whether or not the proposed changes are enacted, leveraging such strategies ensures impactful philanthropy while optimizing tax outcomes for donors.

Giftabulator® and similar tools can increase the number of bequests for charities in several ways:

1. Educate donors: These tools provide interactive, secure online applications that educate donors about tax-efficient giving strategies, including bequests.
2. Illustrate benefits: They demonstrate the tax benefits of charitable giving from appreciated assets and estates, making complex concepts easier to understand.
3. Optimize donation processes: By integrating into a charity’s website, Giftabulator® guides donors through formulating gifts tailored to their unique financial situations.
4. Facilitate estate planning: They help donors explore ways to reduce or eliminate tax implications while maximizing their charitable gifts, both for current and future estate planning.
5. Convert annual donors: These tools can help turn annual donors into major and planned giving prospects more quickly by illustrating the potential of larger gifts.
6. Provide instant illustrations: They generate outcomes within seconds, showing the benefits of charitable donations based on various scenarios, income tax brackets, and types of appreciated assets.
7. Support advisors: Financial advisors can use these tools to have more meaningful conversations with clients about charitable planning, potentially leading to more bequests.
8. Increase donor engagement: By providing an interactive platform, these tools can increase traffic to a charity’s website and engage donors in the giving process.
9. Demonstrate achievability: The tools show donors that making a significant gift or bequest is achievable, potentially encouraging more people to consider this option.

By leveraging these capabilities, charities can more effectively engage potential donors, illustrate the impact of bequests, and ultimately secure more planned gifts for their organizations.

Giftabulator® and similar tools can significantly help secure major gifts in several ways:

1. Educate donors: Giftabulator® is an interactive, secure online application that educates donors about tax-efficient giving strategies.
2. This knowledge empowers donors to make larger gifts than they might have initially considered.
3. Illustrate benefits: The tool demonstrates the benefits of donating appreciated assets like stocks or mutual funds, showing donors how they can avoid capital gains taxes and claim tax credits for the full market value of their gifts.
4. Optimize donation processes: Giftabulator® can be integrated into a charity’s website to guide donors through formulating gifts tailored to their unique financial situations.
5. Increase major and planned giving opportunities: By illustrating the potential of asset-based donations, these tools can help convert annual donors into major and planned giving prospects more quickly.
6. Facilitate meaningful discussions: Giftabulator® enables nonprofits and financial advisors to have meaningful conversations with donors about complex topics like estate planning.
7. Provide instant illustrations: The tool generates outcomes within seconds, showing the benefits of charitable donations based on various scenarios, income tax brackets, and types of appreciated assets.
8. Democratize charitable giving: By making complex giving strategies more accessible and understandable, tools like Giftabulator aim to provide everyone with access to smarter ways of making better donation decisions.

By leveraging these capabilities, charities can more effectively engage potential major donors, illustrate the impact of their gifts, and ultimately secure larger donations while providing donors with valuable tax benefits.

Current Situation

The federal government announced its intention to extend the 2024 charitable donation deadline to February 28, 2025. However, Prime Minister Justin Trudeau’s decision to prorogue Parliament until March 24, 2025, has complicated the legislative process.

Implications for Donors and Charities

1. Despite the uncertainty, there are reasons to remain optimistic:
   Likely Implementation: Tax experts believe that even if the current government doesn’t pass the proposal before a potential election, the next government is likely to move forward with it. CRA Acceptance: If the Canada Revenue Agency (CRA) accepts tax returns based on the announced extension, it would be difficult for a new government to reverse the decision.
2. Extended Opportunity: This potential extension offers donors additional time to support causes they care about while potentially lowering their 2024 tax bill.

FUNDING matters® Inc. Perspective

As a leader in philanthropic services, FUNDINGmatters® Inc. advises clients and partner charities to proceed with cautious optimism:
Continue Fundraising: Charities should maintain their fundraising efforts through February, capitalizing on this potential extended giving window.

1. Donor Communication: Keep donors informed about the situation, emphasizing the potential tax benefits while acknowledging the current uncertainty.
2. Flexible Planning: Develop contingency plans for both scenarios – whether the extension is officially implemented or not.
3. Documentation: Ensure all donations received during the extension period are carefully documented, should retroactive confirmation be necessary.

While the prorogation of Parliament has introduced some complexity, the charitable sector remains resilient. FUNDINGmatters® Inc. is committed to navigating these changes alongside our clients and partners, ensuring that philanthropic efforts continue to make a significant impact in our communities.

To discuss this and other funding matters please contact us.

For charities, estate planning can be one of the best strategies for encouraging philanthropy. Many individuals who are significant donors to charities have already written wills and established financial plans. This type of planning allows them to support their favourite causes during their lifetime. The next step is to show these donors the tax benefits of a bequest to charity.

Strategic philanthropy usually takes place between family members, financial advisors, and tax and legal planners. Just as important as a retirement plan, a philanthropic plan can be drafted in tandem with the development of an estate and financial plan to include charitable giving now and in the future.

At FUNDING matters® Inc., we understand how important an effective major donation and legacy program is to the success of your organization. We designed an online tool called Giftabulator® – a virtual major-gift and planned-giving app that works hand-in-hand with you to make strategic charitable giving as straightforward as typing a few keystrokes. The Giftabulator® donor engagement process instantly illustrates the tax benefits of charitable giving from appreciated assets and estates, helping you make compelling gifting illustrations and proposals.

Bill Petruck, president of FUNDING matters® Inc., a consulting firm that advises charities on capital and endowment campaigns, and the developer of Giftabulator®, understands that planned giving can be intimidating. “Complex terms, complex calculations, and the risk of penalties if done incorrectly lead many fundraisers and financial advisors away from discussing planned giving strategies with their donors or clients, which in turn leads to expensive lost opportunities for all parties.”

Petruck knows many donors “could have given more in 2022 in order to save on taxes.” He developed Giftabulator® to make the concepts of major gift and planned giving easier to understand. “When charities and advisors can teach the core capabilities of strategic philanthropy, they provide value to their clients and that translates to value for everyone.”

96 percent of current wills do not include a bequest. He emphasizes that charities need to educate donors about endowing from the donors’ estate and current assets. “Rather than relying on a widely and often randomly focused fundraising appeal at the end of the year, both donors and charities would benefit financially from targeted discussions about the importance of donating – and from a tool that shows donors how they can afford a tax-efficient donation from taxable appreciated assets.”

Giftabulator® is that tool, pre-programmed with charitable giving scenarios based on region, household income tax brackets, and tax payable on appreciated assets such as stocks, mutual funds, registered investments, secondary property, and private company shares. Giftabulator® generates outcomes within a split second to illustrate the benefits of a charitable donation.

Planned giving can revitalize a fundraising program. With the right tool and with informed, supported staff, charities can sustain their giving programs and improve the financial position of their donors.

About Giftabulator®

Giftabulator® provides a tool for fundraisers and advisers in the charitable sector, helping them to explore and understand major gifts, planned giving, and endowments with a user-friendly client interface.

Giftabulator® is a social venture founded by FUNDING matters® Inc., dedicated to innovation in major and planned giving, philanthropy, and estate planning. FUNDING matters® is based in Canada with offices in the United States and a team of engineers, lawyers, accountants, investment advisors, fundraising experts, and communicators who find joy in supporting non-profits doing amazing work.

To date, FUNDING matters® Inc. has generated over $620 million in new gifts for hundreds of non-profit organizations. The innovation and evolution of Giftabultor® by FUNDING matters® founder Bill Petruck on how technology and donor motivation are changing philanthropy has been featured in BNN Bloomberg, The Globe and Mail, and hundreds of other media outlets.

Click here to set up a 20 min demo

Happy #Giving Tuesday

I thought you might be interested in reading about and sharing with your board and colleagues my Giving Tuesday interview in today’s Toronto Star about effective and smart charitable giving.

https://www.thestar.com/sponsored_sections/giving-tuesday/five-ways-to-stretch-your-charitable-dollars.html

Thanks for your interest!
All the best and look forward to connecting!

When fundraisers ask for “cash” donations, they’re not only selling their organizations short, but also selling their donors short. A credit card or cheque donation may be easy, but it comes from an account the donor has already paid tax on. The donation actually costs more than the donor is giving.

Illustration comparing the net costs of a cash donation versus a donation from an appreciated asset such as a stock or mutual fund. (CNW Group/Funding Matters Inc.)

To create win-win situations, charities, donors, and advisors should be exploring tax-efficient giving strategies that look beyond what’s in a donor’s wallet.

There’s no question about it: discussing donations can be intimidating. With complex terminology and even more complex calculations, it’s no wonder many fundraisers and donors choose to stay on the path they’re familiar with: cash donations. Unfortunately, this becomes an expensive loss of opportunity for everyone involved.

Discussing tax-efficient giving from stocks, mutual funds, and registered accounts like RRIFs can create significant donations where taxable capital gains come into play. When fundraisers and advisors understand the core capabilities of tax-efficient giving, they provide dramatically increased value to their donors and their organization.

At FUNDING matters® Inc., we developed Giftabulator® with the donor in mind. Our online tool instantly illustrates tax-efficient strategies for donating assets – today or in the future – and it’s now at the fingertips of donors, charities, and advisors.

November 29 is Giving Tuesday, the unofficial kick-off of the “season of giving.” A tax-efficient donation is a win for all involved, lowering taxes for the donor while contributing to a greater good and helping a charity get closer to its funding goals. Bigger gifts become possible and more affordable.

Lowering taxes can be complicated, largely because of national and provincial tax laws. Determining the best way to lower taxes depends on which taxes the donor hopes to lower. Using only the most basic asset information, Giftabulator® presents the donor with scenarios that can lower capital gains taxes, income taxes, and estate capital gains taxes.

Tax-efficient planned giving and major gifts have significant impact on charities. They are the secret weapon of fundraisers and savvy donors alike. When fundraisers ask for cash, they’re asking from the small bucket. The big bucket is filled with the highly taxable assets that have not yet been taxed.

A donor’s most valuable assets, such as real estate or tangible goods, can be inaccessible for the purpose of generating cash for donations. There may be legal or tax consequences associated with the untimely sale of these assets. Empowering charities to engage with their donors on a mutually beneficial path will achieve larger donations and satisfied donors.

Fundraisers, donors, and financial advisors deserve the tools they need to understand the complex benefits associated with making tax-efficient donations to charities.

For more than 20 years, FUNDING matters® Inc. has been a leading North American consultancy and technology company, advising not-for-profit groups, wealth management firms, and government agencies on building sustainable funding models. We also participate in strategic funding opportunities including feasibility/planning studies, strategic communications, and organizational financing.

Register today to hear about the new tool that increases smart charitable giving

Illustrating the benefits of major and planned giving is challenging – and often confusing to your donors. FUNDING matters® Inc. developed an easy-to-use charitable-giving platform called Giftabulator® to illustrate the often-overlooked tax benefits available from making larger annual donations and charitable bequests in the form of assets and registered investments like RRSPs and RRIFs.

Giftabulator® represents a significant breakthrough in the $10B charitable-giving market for non-profits and financial institutions. Charities, financial advisors, and donors use the Giftabulator® app to present complex tax calculations around current and estate giving and the benefits of smart asset-based donations versus cash donations, instantly illustrating new win-win possibilities to benefit their clients and their chosen charities.

Top 10 advantages of Giftabulator®:

1. Easily illustrate the immediate benefits that convince annual donors of post-tax cash to become donors of assets, including stocks, mutual funds, RRSPs, RRIFs, property, and private company shares.
2. Compare cash vs. asset donations in relation to tax savings and determine the percentage of an estate donation that will achieve a zero-tax payment.
3. An endowment calculator that easily illustrates asset growth based on the amount of the donation as well as the impact from the disbursed growth from the ROI.
4. Generate reports to easily illustrate how calculations were made.
5. Calculations are based on province or territory and income.
6. QR code for easy mobile uploading.
7. Customized logos and colours for client personalization.
8. Landing page with promotional text and videos for your external marketing, communications, and stewardship.
9. Complimentary buttons for inclusion in email signatures (“Click here to see the smartest ways to give”) and customized “Donate” buttons for positioning on specific areas of your website.
10. Weekly tracking of your organization’s Giftabulator® visits and clicks.

On November 8, 2022 at 12:00 p.m. EST, join our webinar with Bill Petruck, Giftabulator® founder and FUNDING matters® Inc. CEO, to hear more of the story and learn how this technology applies to multiple high-value approaches to increasing charitable giving.

Register in advance for this meeting

After registering, you will receive a confirmation email containing information about joining the meeting.

Giving season is upon us. Every year, Canadians contribute billions of dollars to charity, generously exceeding the $10 billion mark in 2021. With the holiday season approaching, and with the end of the tax year looming, many individuals and families are making their charitable giving decisions for the year.

If you, too, are planning to make charitable donations this year, be sure to consider these best practices and tips to help you maximize your social impact while benefiting from the resulting tax advantages.

Giving is always best when done from a place of altruism, commitment to a cause, or a desire to help. Not sure where to direct your gifts? Start with your own values and consider what drives you. Is it a desire to make a positive social change, to help your local community, or to assist those less fortunate? Perhaps you want to support the arts or education, or you have concerns about the environment. Giving from the heart isn’t just the most personally satisfying way to donate; studies have shown that when donors give to causes they truly care about, they are far more likely to make repeat donations, commit long term, and actively volunteer with organizations in other ways.

For many families, philanthropy is a shared activity and even a treasured generational tradition. Discussing your charitable priorities with younger family members is a great way to connect and demonstrate your values; this may be why philanthropy has been described as “family values in action.” Some families choose to include older children in the charitable decision-making process, giving the next generation a feeling of ownership in the family’s commitment to ”giving back.” There are many online resources to assist you in researching and vetting charitable organizations. Be sure to visit your chosen charity’s ebsite, which should include important details about current fundraising needs, spending priorities, and even audited financial statements.

Take advantage of charitable income tax savings

In addition to supporting worthy causes, charitable giving can also result in significant tax advantages. For donations made this year, donors may be eligible for a charitable income tax credit against their 2022 income. If you have a significantly increased income, perhaps from the sale of a business, it may make sense to make outsized charitable donations and use one of the charitable structures illustrated by the online app Giftabulator®. (see Giftabulator example more below).

To realize an income tax deduction for 2022, gifts of cash or assets must be made on or before December 31, 2021. Donations sent by mail must be postmarked no later than December 31. Gifts of securities, mutual funds, or illiquid assets require a longer lead time. –Reach out to your advisor well in advance to ensure funds can be transferred and trades settled before the year ends. Finally, to receive a charitable tax credit, you must itemize your deductions on your 2022 income tax return.

Selecting the right assets can yield further tax benefits

Donating cash is simple and fast, but savvy philanthropists take the time to evaluate which assets to donate and to understand the tax benefits of contributing assets other than cash. One generous donor was surprised to discover she could donate shares of stock that had significantly increased in value, thereby claiming an income tax credit for the full fair-market value of the shares; she also avoided a tax payment on the unrealized gain. Although not all charities accept shares of stock, many do, and the added benefit of a charitable deduction plus avoidance of gain can make this a very appealing donation strategy. In fact, depending upon the organization, you may be able to donate a variety of appreciated assets, including stock or cryptocurrency, or even a piece of real estate or tangible property like art or a car.

For longer-term commitments, consider planning your philanthropic strategy

For many truly philanthropic individuals and families, there may come a time when it makes sense to consider a planned giving strategy. “Planned giving” generally refers to an organized, thoughtful strategy for making charitable gifts beyond writing the occasional cheque or responding to a solicitation from a friend. Planned giving can include naming a charitable organization in your will or other estate planning documents. If you also want to give money in a thoughtful way during your lifetime, it can include opening a donor-advised fund account or establishing a charitable vehicle such as a private foundation.

Private foundations require the services of a lawyer and an accountant, which generally makes sense only for large contributions. There are other considerations, too, such as the ongoing administration and oversight of the entity, board formation and management, and ongoing tax-filing obligations. With these associated costs,however, comes a great deal of flexibility as you invest and ultimately give away funds, and a private foundation can serve as a permanent entity to perpetuate your charitable legacy.

Setting up a donor-advised fund (DAF) account, by contrast, is easy. Unlike private foundations, DAFs require no startup costs or ongoing tax filings, and they may be suitable for more modest initial contributions. Your investment choices are more limited than in a private foundation, but they can include a broad range of strategies, as well as customized portfolios. You may recommend grants from time to time, as frequently and to as many organizations as you wish, although the DAF provider has the ultimate authority to decide whether to make a grant. This reduced control is offset by the higher potential tax-deduction limit available for contributions to a DAF and by the ease of its administration.

Your accountant, attorney, and financial advisor can help you decide whether a planned-giving strategy is appropriate and if so, which vehicle makes the most sense for you.

Your advisor can help maximize your giving

Your financial advisor can help you advance your philanthropic strategy with information, resources, and experience. Working with you and your family, your advisor can help match your giving goals with charitable-giving best practices, taking into account these and other issues:

• How can I maximize my charitable impact this year?
• How does my charitable giving fit in with my overall financial plan?
• Am I incorporating the tax benefits of charitable giving into my strategy?
• What is the impact of inflation?
• Are planned-giving vehicles right for me?

With so many options for giving, engaging your trusted advisor is an important first step to achieving your charitable goals and realizing your philanthropic vision.

Click here to set up a 20 min demo

With tax season upon us, it’s not enough to just organize the shoebox of last year’s receipts, slips, and notes for our accountant or our online filing program. We need to take stock of missed opportunities and plan for the current year.

The good news is that, with eleven months to go, charities and advisors have a valuable runway to engage in discussions with their donors and clients, and donors have the time to make a difference for themselves and their communities.

In an ideal scenario, a charity reaches out for funding armed not only with a strategy but also with the information needed by a prospective donor to understand and unlock their giving potential. The donor’s financial advisor also plays an important role by helping to reduce the donor’s tax exposure: in essence, helping the donor trade a donation in exchange for income protection.

With the stock market hitting all-time highs, donors should be looking well beyond simply donating from their chequing account with after-tax dollars. Instead, advisors and fundraisers should illustrate the benefits of a donation from assets that will be taxed once sold. In this situation, the advisor transfers the donor’s shares to the charity, no tax is incurred on the capital gain, and the donor receives a tax credit for the donation. The result is a win for the client/donor, the charity, and the advisor.

Bill Petruck, president of FUNDING matters® Inc., a consulting firm that advises charities on capital and endowment campaigns, and the developer of Giftabulator® – an online app that instantly illustrates the tax benefits of charitable giving from appreciated assets and estates – understands that planned giving can be intimidating. “Complex terms, complex calculations, and the risk of penalties if done incorrectly lead many fundraisers and financial advisors away from discussing planned giving strategies with their donors or clients, which in turn leads to expensive lost opportunities for all parties.”

Petruck knows many donors “could have given more in 2021 in order to save on taxes.” He developed Giftabulator® to make the concepts of major-gift and planned giving easier to understand. “When charities and advisors can teach the core capabilities of strategic philanthropy, they provide value to their clients and that translates to value for everyone.”

James Murphy, director of philanthropy at Thrombosis Canada, has seen the positive impact of introducing Giftabulator® to donors at health care institutions. “Giftabulator was instrumental in showing annual major donors how they could make significant tax-efficient donations from their stocks, registered retirement funds, and mutual funds without impacting their lifestyle or that of their future beneficiaries.” Murphy continues to implement Giftabulator® with Thrombosis Canada. “Tax planning and charitable giving are important to medical professionals, donors, patients who have benefitted from the best funded treatment, and financial advisors.”

It’s important to remember that charities play two primary roles: the first is to provide services, care, and programs that fill the large gaps that governments can’t or won’t fund in communities; the second is to raise funds for these programs and services.

Overall, charities excel at providing their programs and services with limited resources, day to day and year to year. It’s in the second role of fundraising that they often encounter challenges.

Petruck emphasizes that charities need to educate donors about endowing from the donors’ estate and current assets. “Rather than relying on a widely and often randomly focused fundraising appeal at the end of the year, both donors and charities would benefit financially from targeted discussions about the importance of donating – and from a tool that shows donors how they can afford a tax-efficient donation from taxable appreciated assets.”

Giftabulator® is pre-programmed with charitable giving scenarios based on region, household income tax brackets, and tax payable on appreciated assets such as stocks, mutual funds, registered investments, secondary property, and private company shares. It generates outcomes within a split second to illustrate the benefits of a charitable donation.

Trevor Parry, lawyer and president of the TRP Strategy Group, faults the current federal government for “funding their reckless spending agenda by accelerating a punitive taxation regime targeting entrepreneurs, professionals, and ordinary investors – in other words, the middle class. Strategic philanthropy is the synthesis of altruism and prudent tax planning. Taxpayers wishing to replace Justin Trudeau with loved ones as their primary creditor will be disappointed to learn this isn’t possible. Charitable giving, particularly by those with large, accrued capital gains in their businesses and portfolios, is the last remaining option in tax relief.”

Planned giving can revitalize a fundraising program. With the right tool and with informed, supported staff, charities can sustain their giving programs and improve the financial position of their donors.

Click here to set up a 20 min demo