Think about this: only 4 percent of current wills contain bequests. Charities, as well as law, accounting, and financial firms that engage in estate planning with their clients, can play an important role in teaching the benefits of bequests. And although November, known as Make a Will Month, is fast approaching, there are still plenty of opportunities for you or your clients to start planning their legacy.

Why including a charitable bequest in your will is a good start to creating your legacy (CNW Group/Funding Matters Inc.)

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.

Many charities across Canada have seen the advantage of Giftabulator® acting like an extension of their own staff. You can also experience how creating smart philanthropic and tax-efficient solutions through estate planning will benefit your non-profit organizations and create satisfied client legacies for many generations.

Remember, charities play two primary roles: they provide programs and services to fill a large gap that governments can’t or won’t fill in communities; and they raise funds for these programs and services. The provision of support for people in need, for investments in science, and for cultural education have made a tremendous difference for many during the pandemic. Overall, charities perform very well in providing these programs and services with limited resources, day-to-day and year-to-year.

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.”

Petruck is concerned that 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.

Can you believe we’ve crossed the critical half-way point and in the home stretch for tax and smart charitable planning in 2022?

The good news is that, with four months to go, charities and advisors have a valuable runway to engage in discussions about tax planning and charitable giving with their donors and clients, and donors have the time to make a difference for themselves and their communities. But there isn’t a moment to waste. The big push toward year end begins now.

Ideally, a charity reaches out for funding armed with not only a strategy but also 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 their client’s tax exposure: in essence, helping the donor trade a donation in exchange for tax reduction or elimination on their taxable capital gains.

With the stock market still hovering near all-time highs and unlocked capital gains still in investors accounts, individuals should be looking well beyond simply donating from their chequing account with after-tax dollars. Instead, their 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 current tax-efficient and planned giving strategies with their donors or clients, which in turn leads to expensive lost opportunities for all parties.”

Petruck knows many donors “could give 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.”

Petruck is concerned that 96 percent of current wills do not include a bequest. He emphasizes that charities need to educate donors about giving now or looking to endow 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.

Addressing the importance of current or 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.

Giftabulator’s purpose is to democratize charitable giving by providing everyone with access to smarter ways of making better donation decisions and, in the end, to raise more money for charities while reducing the cost of donations for donors.

At FUNDING matters® Inc., we understand how important an effective major donor and legacy program is to the success of your organization. We also understand that you need access to an online tool like Giftabulator® to help you make compelling gifting illustrations and proposals.

Giftabulator® provides a virtual donor-engagement process and maximizes your efficiency and productivity. Many organizations across Canada have seen the benefit of Giftabulator® acting like an extension of their own staff. Contact us for a demonstration of what Giftabulator® can do for you.

Click here to set up a 20 min demo

One of the special days of the year that can’t be forgotten is a tribute to the wonderful women in our lives.

Mother’s Day celebrates those who gave us life, love, guidance, and encouragement each day of our lives. These women are seen today as front line during one of the most devastating periods in our history. They are front line health care workers, community supporters, they are the face of retail and the home-schooling monitors.

We know the names of these amazing people as great-grandmother, grandmother, mom, aunt, godmother, sister and friend.

Find a special way to celebrate this important day on the calendar! Perhaps by ordering a Mother’s Day dinner for takeout and delivery from a restaurant that is special to her. Pair with a nice tea light for ambiance and a playlist of her favourite music. Just imagine the women who are working on Mother’s Day to make these meals, you will be giving them encouragement that their jobs are vital and your order will help them and their restaurants stay viable.

If you can’t celebrate with your mom, think of someone who would appreciate this special gesture.

Finally, a donation in your mom’s name to her favourite cause will bring hope for someone who deserves it.

Be well, stay safe and have a wonderful Mother’s Day!
Bill

The illustration above shows an example a $10,000 donation of mutual funds after they appreciated in value from the original cost of $50,000 to $100,000. As you can see the net cost of a cash donation of $10,000 is $6,700 and the net cost of an asset based donation is $3,854.

To discuss Giftabulator® or other funding issues, please contact:

 

William Petruck
President and CEO
FUNDING matters® Inc.
(o) 416.249.0788 (c) 416.579.0870
wpetruck@fundingmatters.com

www.fundingmatters.com
www.giftabulator.com
ca.linkedin.com/company/fundingmattersinc
linkedin.com/in/williampetruck
twitter.com/funding_matters
800-856-1354

Major gift strategies on Cinco de Mayo!

Cinco de Mayo celebrations across North America will be a little different this year again, with many of us having a margarita (or two) on an outdoor patio rather than inside our own homes over a zoom cocktail party (phew!).

A very, very brief Cinco de Mayo history:

The Battle of Puebla took place on May 5 1862, near Puebla City during the Second French Intervention in Mexico. The battle ended in a victory for the Mexican Army over the French Army.

Celebratory Cinco de Mayo beverage:

Tequila is king during this celebration, and with spring in full swing, the best Cinco de Mayo drinks are fun and breezy. Margaritas, Palomas and other refreshing cocktails will get you going throughout the entire day and will elevate the victory at the Battle of Puebla.

General Zaragoza’s Mexican army outside repels French forces during the Battle of Puebla on May 5, 1862. Painting by Patricio Ramos Ortega. National History Museum, Mexico City

 

So what does that have to do with fundraising and your organization?

Like the Battle of Puebla, another challenge takes place everyday for charities like yours. The battle for your donors’ attention and their investment in your program, campaign or organization.

Every battle has its special tools and plans for accomplishing your goals. As a charity your goals are delivering your programming and raising the funds to do so. The need to explain how your donors can give smarter can be accomplished with an illustration and help from Giftabulator. Simply and quickly illustrating an asset based gift might just be what your donors and their advisors are looking for.

Giftabulator offers graphs, charts and reports that easily explain the benefit of an asset gift from stocks, mutual funds and registered assets to name a few.

Imagine illustrating and calculating the net cost of your donor’s gift and showing the power of the net-net cost of an asset based gift in a matter of seconds. Giftabulator’s dynamic features are ideal for your charitable giving discussions or offer your donor the opportunity and their advisors to see for themselves affordability in making an impactful gift to your organization.

The illustration above shows an example a $10,000 donation of mutual funds after they appreciated in value from the original cost of $50,000 to $100,000. As you can see the net cost of a cash donation of $10,000 is $6,700 and the net cost of an asset based donation is $3,854.

For more information please feel free to book a demonstration
https://calendly.com/fundingmatters/giftabulator

 

Enjoy Cinco de Mayo responsibly!

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.”

Bill Petruckl

 

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.”

James Murphy

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 focusedfundraising 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 the Canada Revenue Agency 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.”

Trevor Parry

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.

Why advisors and charities need to explore charitable planning techniques to benefit their clients in the year ahead

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 the Canada Revenue Agency 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.

To discuss Giftabulator® or other funding issues, please contact:

William Petruck
President and CEO
FUNDING matters® Inc.
(o) 416.249.0788 (c) 416.579.0870
800-856-1354
wpetruck@fundingmatters.com

www.fundingmatters.com
www.giftabulator.com
ca.linkedin.com/company/fundingmattersinc
linkedin.com/in/williampetruck 
twitter.com/funding_matters

Is all charitable giving equal? 

The simple answer is “no.” One of the main reasons that giving isn’t simple or equal is that all charities lump giving into a single pot. As a donor, you may think that a donation is a donation but that isn’t the case.

Every donation has its own unique characteristics, qualities, objectives, and motivations. Without the ability to illustrate the benefits of a donation, the impact that donation will have for that organization (as well as its programs and missions) will usually result in a small or negligible donation — or worse a non-donation. On the contrary, when donors can see that large donations help to solve signicant problems, then they are more inclined to donate larger sums.

That said, this isn’t a “one-size-fits-all.” Instead, charities face another large obstacle. Most charities want their donors to offer a large donation. Yet, the larger donation that these individuals can give is often in the form of a bequest from their estate. To do this, however, they must wait for the person to pass away, to think of their charitable organization specifically, and to leave you something in your estate.

Ultimately, this leaves a lot up to chance. After all, charitable giving has been on the decline for the past ten years, which means you’re never guaranteed any donation at all (let alone a large donation!). It’s a sad fact that 96 percent of people who die don’t leave anything for charity at all, and this can leave charitable organizations in a tough spot.

See our solution below to help your organization!

Start Your Legacy Here

A charitable bequest is a donation outlined in your will that comes into effect after your lifetime. It can offer a number of personal, financial and legal benefits to you and your estate.

Because you’re immersed in donor engagement, I’d be grateful to hear your thoughts about our online platform, Giftabulator®.

We designed it to work as a virtual major gift and planned giving app working hand-in-hand, to make strategic charitable giving as straightforward as typing a few keystrokes.

The proven result is increased major and planned gifts for our clients.

I’m happy to schedule a brief call or an online chat at your convenience.

This year, take “stock” in your charitable giving!

Donating appreciated shares can make a great difference for you and your charity.

Giftabulator shows you the best ways to give now by minimizing taxable capital gains and maximizing impact for your charitable giving.

The Giftabulator app compares equivalent giving from cash versus appreciated share donations and offers charts, reports and share transfer forms for ease of donating.

Giving appreciated shares makes sense for you and your charity.

I thought you might be interested in reading my interview in this week’s Globe and Mail. Joel Schlesinger’s article addresses charitable giving and the role advisors play on behalf of their clients and the charities they support. The FUNDING matters Giftabulator is profiled as a tax-efficient philanthropic giving app for charities, advisors and donors.  Giftabulator illustrates how the Canada Revenue Agency contributes to donations when they are made from appreciated assets such as stocks and mutual funds. 

Please enjoy Joel Schlesinger’s article.

Season for giving makes the holidays a good time to discuss strategic philanthropic planning

People often have charitable giving on their minds during the holiday season, and advisors can play a role in determining the impact of those donations and ensuing tax credits on their clients’ overall financial health. Yet, this time of year also presents an opportunity for advisors to discuss how clients’ wealth could have a greater impact through long-term philanthropic strategies.

“Charitable giving typically involves being contacted by a charity and providing a gift by cheque, cash or credit,” says Lydia Potocnik, vice-president, philanthropic advisory services at BMO Wealth Management in Toronto. “But strategic philanthropy is really about sitting down and assessing what clients’ values are as individuals and as families so they can make a bigger, longer-lasting impact.”

It’s likely a lot of clients are open to the discussion too given Canadians are generally, and perennially generous, she adds.

Statistics Canada data show an average of more than five million Canadians donate annually. For the most part, donations are small – although the amount increases with age as donors who are at least 65 years of age and older gave an average of more than $2,800 in 2019.

Yet, it’s likely many could and would do more with a little more help and insight. After all, Canadians are wealthier than ever. Statscan figures show the nation’s collective household wealth reached $14.2-trillion in the second quarter of this year, up more than 19 per cent from 2020. Canada’s wealthiest people – about 20 per cent of all households – own more than two-thirds of that amount.

Advisors have helped many families manage, grow and preserve a large portion of that wealth.

Here lies an opportunity for them to help more Canadians create philanthropic legacies while assisting in determining assets to donate and how best to give them, says Michelle Connolly, senior vice-president of advanced wealth planning at Wellington-Altus Private Wealth Inc. in Toronto.

“It really comes down to asking two questions,” says Ms. Connolly, a trust and estate practitioner (TEP). “How do you want to live? And to whom do you want to give?”

After helping clients accumulate and understand they have enough assets to fund their retirements and even support loved ones financially – while alive and after they die – strategic giving should be the next conversation, she adds.

Private foundations and DAFs

Advice involves not only helping clients maximize tax credits and overall tax efficiency associated with, for example, donating securities in-kind. Increasingly, advisors should be able to assist clients in building sustainable, long-term strategies that may include a private foundation or donor-advised funds (DAFs).

Nicola Elkins, chief executive officer and founder of Benefaction Foundation in Montreal, private foundations are the gold standard of philanthropy, allowing families to set aside significant sums – generally several million dollars – to disperse over time to various causes.

“For clients who want to involve their families more in philanthropy with them as board members of the foundation and have total control over investment decisions [among other considerations] … then a private foundation is the way to go,” Ms. Elkins says.

In contrast DAFs are offered, for example, through community foundations like the Winnipeg Foundation, financial institutions, or umbrella organizations like Benefaction Foundation. They’re used more commonly than foundations because they provide many benefits of private foundations at a smaller scale, with reduced complexity and less responsibility for donors.

“It’s like having your own private foundation without the accompanying cost and administration,” says Ms. Elkins, adding that DAFs can be set up for as little as $10,000 in some cases.

Depending on the organization, assets in the DAF can remain under the advisor’s control, often serving as an important link between clients and their families, says William Petruck, president and CEO of Funding Matters Inc. in Toronto.

“It becomes a smart way to involve children with philanthropic goals,” while forging a broader relationship between the advisor and the next generation.

Building that relationship is important considering these adult children are likely to inherit significant sums in coming years, he adds.

A J.D. Power survey released in May shows that almost $700-billion in assets in Canada will transfer from one generation to the next by 2026. That represents a challenge and opportunity for advisors. On one hand, advisors with aging clients stand to lose assets under management when those clients pass away, Mr. Petruck says.

On the other hand, advisors, who bring clients’ adult children into conversations about wealth and philanthropy are establishing a relationship that may lead to those younger family members becoming clients, too.

How to bring up philanthropy with clients

In this respect, strategic giving discussions with families can be facilitated using a growing crop of sophisticated online tools. Among them is a web-based philanthropy calculator that Funding Matters offers called the “Giftabulator,” Mr. Petruck says.

“People are visual learners, and that’s why we created this tool, so they can see the difference in impact between donating cash and different assets in the portfolio, and how strategies involving DAFs or a foundation can create a meaningful legacy,” he says.

“It’s also a subtle way to bring up philanthropy,” Mr. Petruck says. “Advisors can e-mail the link so clients can play around with it.”

Indeed, broaching the subject can feel awkward for advisors typically more at ease discussing retirement planning and portfolio allocation, Ms. Connolly says.

“But once you’ve had that experience a few times, it becomes a very comfortable discussion.”

Another issue involves knowledge of the mechanics of philanthropic strategies surrounding foundations and DAFs.

Consequently, more advisors are seeking additional education, including a TEP designation, or a master of financial advisor in philanthropy that’s offered in partnership by the Canadian Association of Gift Planners, the Knowledge Bureau Inc., and the Donor Motivation Program Canada, says Ms. Elkins, who has both designations.

Advisors with a deeper knowledge of this space are often able to serve clients better, especially as their client roster ages alongside swelling investment portfolios, Ms. Potocnik says. Many clients themselves now recognize they have more than enough and want to give back.

“Clients are wealthier and more financially sophisticated than ever before,” she says. “They’re reading about philanthropy in the news, and so they’re often asking advisors more and more about it.”

No better time for in-kind donations

Surging markets and charities in need create a planning opportunity

By: Rudy Mezzetta | Source : Investment Executive

This article will appear in the December issue of Investment Executive.

High-net-worth clients holding appreciated securities in their portfolios are increasingly choosing to make charitable donations “in kind” rather than giving cash. This strategy enables those clients to avoid realizing large capital gains after a banner year for equities markets.

“With record markets and record prices on most securities, now is probably the best time that there has ever been to donate a portion of those [appreciated securities] to registered charities,” said Jamie Golombek, managing director of tax and estate planning with CIBC Private Wealth Management in Toronto.

As of Nov. 30, the S&P 500 composite index was up by 25% over the previous 12 months, while the S&P/TSX composite index was up by 19%.

With an in-kind donation, a client receives a charitable tax receipt equal to the fair market value (FMV) of the appreciated security while also eliminating the potentially large capital gains taxes associated with selling that investment.

“[Clients are] saying: ‘I pay a lot of tax, I think tax rates are going to increase, and I really need to start managing and coming up with solutions for this because I’m worried about my tax bill,’” said Mark Skeggs, vice-president of wealth planning with Gluskin Sheff + Associates Inc. in Toronto. Charities’ needs have increased during the pandemic, he added, and clients want to support those organizations.

Individuals who donate publicly traded shares, mutual funds, ETFs or segregated funds in kind can achieve significant tax savings relative to selling the same investment and then donating the cash proceeds. For example, a client donating publicly traded shares worth $5,000, with an adjusted cost base of $2,000, would eliminate the taxes on the $3,000 capital gain, half of which would be included in income. For a client in Nova Scotia in the top marginal tax bracket, for example, an in-kind donation would save the client $810 compared with selling the same asset held in a non-registered account.

That client also would be eligible to claim federal and provincial non-refundable donation tax credits, just as they would for a gift of cash. If a gift is made to a charity before the end of the calendar year, the tax credit can be applied against taxes in the current year or carried forward for up to five years. Donation tax credits claimed can’t exceed 75% of a person’s net income in a taxation year, or exceed 100% on their terminal return or on the return for the taxation year preceding their death.

Malcolm Burrows, head of philanthropic advisory services with Scotia Wealth Management, said he’s worked with many older clients who have held stocks for decades and are “gobsmacked by the cumulative gains” and “terrified of the tax implications from selling.” These clients, Burrows said, often are open to donating these shares as part of their broader charitable giving and estate planning, which “enables, sometimes, quite significant donations.”

Financial advisors can raise the topic of charitable giving in general, and in-kind donations in particular, as part of year-end discussions with clients about rebalancing portfolios. One common strategy is for clients to donate a portion of an appreciated security in kind — enough so the tax credit associated with the donation will offset the capital gains taxes realized from selling the remainder of the position — and then to use the proceeds of the sale to rebalance.

“People are saying: ‘I’ve given the government enough money. I really want to look at other opportunities for charitable giving and estate planning,’” said William Petruck, president and CEO of Funding Matters Inc. in Toronto, a charity consultancy firm that offers an online calculator for determining the most tax-effective way to make a donation.

Clients who wish to make a charitable donation but still want to hold onto a particular security can donate the security in-kind and then immediately buy it back with the cash they would otherwise have used to make the donation. This strategy allows for tax savings while maintaining the position in the client’s portfolio.

“There are superficial loss rules, but there are no superficial gain rules,” Skeggs said. “If it is a situation where it’s a stock that [a client] likes, that is a strategy we look at.”

Business owners can consider making in-kind donations from their private corporations rather than doing so personally, said Carol Bezaire, senior vice-president of tax, estate and strategic philanthropy with Mackenzie Investments in Toronto.

In-kind donations from a corporation generate a triple tax benefit: they eliminate the accumulated capital gain on the donated security; generate a charitable receipt for the FMV of the security, which results in a tax deduction for the corporation (as opposed to a tax credit for a donation made personally); and increase the corporation’s notional corporate dividend account (CDA) by an amount equivalent to the non-taxable portion of the capital gain. Amounts in the CDA can be paid out as tax-free dividends to Canadian-resident shareholders.

Bezaire said there has been “a big pickup” in business owners choosing to make donations from their corporation’s retained earnings to mitigate the effect of recent tax changes.

As of 2019, a corporation’s access to the small-business deduction is gradually reduced once the corporation’s passive investment income for the year is above $50,000 — and the deduction is eliminated entirely once passive income reaches $150,000. Many advisors, therefore, counsel their business-owner clients to make in-kind corporate donations to receive the deduction against income and “clear out [their] corporations so [they’re] below that $50,000 in passive investment income,” Bezaire said.

Clients unsure about which charities to support can consider giving to a donor-advised fund (DAF), a separate charitable account the client can establish as part of a larger charitable foundation, in order to receive a charitable tax credit for the donation, Golombek said. DAFs are required by law to disburse at least 3.5% of their assets each year to charity.

By making an in-kind donation to a DAF before year end, the client would eliminate the accumulated capital gains taxes on the security and receive a donation receipt that can be used on the current year’s tax return in order to claim the tax credit. “Then [the client] can decide, over the next 20 or 30 years, where the money [in the DAF] actually goes,” Golombek said.

Advisors who engage their clients regarding charitable giving during financial planning discussions may establish deeper connections with their clients as a result.

“When clients have [charities] that they want to support, there’s usually a story behind it, and usually it’s a very deep and personal [one],” Skeggs said. “Having these conversations just helps to enhance your relationship.”