Celebrating the season of charitable giving

For charities, it’s the most wonderful time of the year! The start of the holiday season, when many people turn their thoughts – and actions – to charitable giving. Thanksgiving, November’s “Giving Tuesday” and religious holidays can all inspire a spirit of generosity. There’s also a measure of pragmatism – as people rush to take advantage of tax deductions before the calendar year is up.

And statistics show there are a lot of last-minute givers – more than three quarters of donations are made in the final quarter, 36% are made during the month of December, and over 5% are made on December 31st alone!

Still, we are seeing a trend among clients who want to take a more planned and pro-active approach to their charitable giving. And most are surprised when we tell them how easy and accessible it is to establish a Foundation structure to facilitate this. You don’t need millions to do it. In fact, we’re helping client families establish their own Foundation accounts with a minimum $25,000 donation to start. The arrangement is through Canada Gives, a registered public foundation that simplifies and administers the process of giving.

With a Foundation account at Canada Gives managed by Newport, families enjoy the financial and philanthropic benefits of having their own private foundation – without the administration and governance or tax and legal liabilities. Here, briefly, is how it works:

When you make a donation of cash and/or securities to your Foundation account, you receive a full and immediate tax deduction on the fair market value of your contribution(s). The assets invested in the Foundation account grow tax free, except for a required minimum 3.5% annual disbursement to one or more qualified charities. There is no limit on the maximum disbursement you can make.

A major advantage of this arrangement is it allows donors to gain the full benefit of a tax deduction in the current year while affording them the time to make thoughtful, longer-term decisions about where to direct their charitable giving dollars. For anyone with a large capital gain from, say, the sale of a business, a property, a major bonus or portfolio that has risen in value, it is a sure way to reduce your tax bill.

And with assets growing tax free inside the Foundation account, so does the size of your contributions and the potential impact you can make. As Denise Castonguay, CEO of Canada Gives likes to say, “you move from being a cheque writer to a philanthropist.”

Canada Gives does all of the administration and reporting, and Newport invests the assets according to the Foundation guidelines, so donors have only to choose the charities. Canada Gives can help with that too if donors are looking for direction, but most people have a keen sense of the causes they want to support. Unlike a private foundation, where the information is made public, your charitable giving can be done anonymously or with attribution. Donor’s choice.

In next week’s post, we will do the math on the tremendous tax advantages of contributing securities versus cash. After all, charitable giving is an exercise of heart and mind.

In the meantime, feel free to get in touch if you would like to explore the possibility of establishing your own Foundation account.