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Giving it Away. Linda Caisley, CFP CIFPs Vancouver Conference. Topics. Triggers What is a Gift? Giving Options & Types of Gifts Receipts & How They’re Used Recognition and Stewardship. Philanthropic Triggers. Philanthropic Triggers. Age Values/beliefs Financial situation

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giving it away

Giving it Away

Linda Caisley, CFP

CIFPs Vancouver Conference

  • Triggers
  • What is a Gift?
  • Giving Options & Types of Gifts
  • Receipts & How They’re Used
  • Recognition and Stewardship
philanthropic triggers4
Philanthropic Triggers
  • Age
  • Values/beliefs
  • Financial situation
  • Being asked to give
  • Being told to give
  • Several points in the lifecycle when a person might give money (usually big events)
    • Death or sickness of a loved one
    • Marriages
    • Estate planning
    • Pre-mortem planning for self
values beliefs
Research by Russ Alan Prince and Karen Maru File in the Seven Faces of Philanthropy identifies seven distinct groups of values or beliefs based donor motivations:








  • Give to support their community
  • Believe that it makes sense to have a strong community, supported by business, charity and government
  • Follow advice of community leaders and professional advisors
  • No particular sector of interest, other than charities that make the community better in some way
  • Give regularly, and in estates
  • Believe that it is God’s will for people to support others
  • Usually members of a church or religious group
  • Generally give primarily to religious groups or charities
  • Follow advice of religious leaders
  • Give regularly, but not necessarily big donations
  • Affluent, and want to give
  • Invest in philanthropy in the same way they invest their own money
  • Want to see the charity’s financials, know the senior management
  • Take advice from professional advisors, friends
  • Support a wide range of charities, often umbrella organizations
  • Give strategically, often larger gifts
  • Enjoy having a good time while they are giving money away
  • Have strong social networks
    • Want their philanthropy to further these networks (to look good in front of their friends)
    • Use these networks for quid pro quo donations
  • Take advice from social networks
  • Support the arts, education, religious groups
  • Give regular gifts, usually relatively small amounts
  • Doing good in return for good done to them
  • Give from loyalty or obligation
  • Usually support medical or educational charities
  • Seldom rely on advisors
  • Wide range of gifts, regularity depends on nature of service used
  • See themselves as selfless givers; giving is a moral obligation
  • Often want to remain anonymous
  • Usually focus on social causes
  • Rarely use advisors
  • Have been taught to give as a family tradition
  • Usually have inherited wealth, but not always
  • Different generations support different interests
  • Most likely sector to use advisors
  • Regular givers, like to be involved in researching causes
donor s personal financial situation
Donor’s Personal Financial Situation
  • Donors make smaller gifts any time
  • Larger gifts will only be made if the donor:
    • Knows they have enough money
    • Feels they have enough money
being asked or told to give
Being Asked or Told to Give
  • Some people will give of their own accord, others need to be prompted to do so
  • Donors will usually make a donation if asked
  • Sometimes advisors tell their clients to make a donation as part of their tax planning
  • Sometimes advisors discuss giving as part of an overall tax plan
what is a gift
What is a gift?
  • A gift must:
    • be given freely and voluntarily
    • be made with “charitable intent”
    • be of property, not services
    • not permit the donor to control the property once it has been given
charitable intent
Charitable Intent
  • Proves the donor intended the donation to be a gift worthy of a tax receipt
  • New regulations intended to prevent fraud by charities and donors
proving charitable intent
Proving Charitable Intent
  • Must be proved in situations where there is some kind of benefit back to the donor, by either
    • Demonstrating to the Minister that you intended the donation to be a gift
    • Showing that the benefit back to the donor was not more than 80% of the gifts FMV
  • What is a gift?
  • Source of Donation Money
  • Ways to make gifts
  • Types of Gifts
source of donation money
Source of Donation Money
  • Cash based gifts
  • Asset based gifts
cash based gifts
Cash Based Gifts
  • Made from “left-over” cash
  • Generally under $1,000
  • Gifts generally come from the donor’s yearly “charitable budget”
  • Usually only made by handing over cash or writing a cheque
asset based gifts
Asset Based Gifts
  • Gifts made by transferring all or part of the value of an asset
  • Usually require assistance and consultation with family and advisors
  • Made irregularly, usually in estate planning, when they receive a windfall, or special opportunities (naming a chair)
ways to make gifts
Ways to Make Gifts
  • Directly to the charity
  • Through an umbrella charity
  • Through one’s own private foundation
giving directly to charity
Giving Directly to Charity
  • Simplest form of giving
  • Need to be clear about what you’re expecting back in recognition for the gift
  • Generally lose control of the money once the gift has been made
types of charities
Types of Charities
  • Charitable Organizations
  • Private Foundations
  • Public Foundations
charitable organizations
Charitable Organizations
  • Use most of their resources to carry out programs or services (“doers”)
  • 73,791 charitable organizations in Canada
  • Hospitals, schools, churches, animal shelters, food banks, etc.
private foundations
Private Foundations
  • Created by a group of related individuals
  • The foundation issues “grants” each year to other charities
  • Can support multiple sectors or just one organization
  • Good way to have philanthropy last beyond death, or involve family
  • Can be created during lifetime, funded through estate
public foundations
Public Foundations
  • Created by a group of unrelated community members interested in a specific cause
  • The foundation issues “grants” each year to other charities to support that cause
  • Can support several organizations within one cause, or just one
  • Affiliated foundations: support only one specific charitable organization
  • Hospital foundations, school foundations, etc.
giving through an umbrella charity
Giving Through An Umbrella Charity
  • Umbrella charities act as a kind of charitable broker:
    • Community foundations
    • United Ways
  • Good for donors who don’t have a particular cause in mind
  • Need to understand whether you lose control of the gift once it’s gone
giving to a private foundation
Giving to a Private Foundation
  • Offers the donor the most control over the investment, timing and use of the donation
  • Allows the donor to give one large donation to the foundation and then space out the grants from the foundation
types of gifts
Types of Gifts
  • Securities
  • Life insurance
  • Charitable remainder trusts
  • Donor advised funds
  • Private Foundations
  • Can:
    • transfer public securities directly to a charity or
    • donate sales proceeds from either private or public securities
  • Donor will get a tax receipt for amount donated, and must consider gains or losses in own personal tax situation
  • Transfers have better tax results than donations of sales proceeds
sale of securities
Sale of Securities
  • If a donor sells public or private securities and transfers the proceeds to any charity, they must incorporate the gains or losses in their personal taxes at the usual rates
transfers of securities
Transfers of Securities
  • Transfers of public securities to:
    • a public foundation or a charitable organization allow the donor a special inclusion rate – currently only 50%, most recent budget indicates 0%
    • a private foundation have no special inclusion rate
  • Transfers of private securities to any charity have no special inclusion rate
receipting securities
Receipting Securities
  • Public securities transferred to a charitable organization or a public foundation are receipted when received by the charity’s broker, using closing values for the day they are received
  • Receipt value will not be the value when sale order given
things to clarify
Things to Clarify
  • If transferring private securities, will any restrictions be placed on their sale by the donor?
  • Will the charity accept these restrictions?
  • What are the personal tax implications to the donor?
life insurance
Life Insurance
  • Types of gifts:
    • Name a charity as beneficiary
    • Name a charity as irrevocable beneficiary
    • Transfer ownership to a charity
  • IT-244R3 Gifts by Individuals of Life Insurance Policies as Charitable Donations
policy values
Policy Values
  • A life insurance policy will be worth either:
    • NET cash surrender value at time of transfer (CSV – any policy loans), or
    • Death benefits at the time the charity receives the death benefits
life insurance receipts
Life Insurance - Receipts
  • Receipts are given when the charity receives the benefit
    • On transfer of ownership, where there is CSV
    • Receipt of death benefits, where no CSV policies and no ownership transfers
    • On payment of premiums
things to clarify43
Things to Clarify
  • Who’s going to own the policy?
  • Who’s going to pay the premiums?
  • Does the donor want to be able to continue to access any CSV in the policy?
  • Consider creating a legal agreement for multiple beneficiaries or special donor terms
charitable remainder trust
Charitable Remainder Trust
  • Putting money into a trust
    • Donor or donor’s family can benefit from income during donor’s lifetime (“income beneficiaries”)
    • No dipping into capital
    • Charity gets remainder when income beneficiaries have died
receipts for crts
Receipts for CRTs
  • Receipt is given by the charity at the time the CRT is established
  • Receipt value is for the net present value of the benefit to be received by the charity, at the end of the income beneficiaries’ calculated lives
things to clarify46
Things to Clarify
  • Can be challenging to establish net present value of an asset with a subjective value
    • Private company shares
    • Art collection
  • Can be challenging to determine lifespan of income beneficiaries
  • If donor dies 2 weeks after CRT is established, the value of the receipt doesn’t change
donor advised funds
Donor Advised Funds
  • A fund at a charitable organization or a public foundation
  • Donor makes a gift to establish the fund
  • Income from the fund spent each year as donor “recommends”
  • A “deed of gift” will be created to set out the terms of the fund
daf challenges
DAF Challenges
  • Donor loses control over assets – they become the charity’s assets, not the donor’s
    • May not be able to retain assets as they are
    • Cannot dictate ongoing investment options
  • Can’t control costs (administration or investment)
daf challenges cont d
DAF Challenges, cont’d
  • Donor can only make recommendations (not directions) about how income is to be spent
  • Portfolio manager loses assets out of their book
  • May be a minimum gift amount ($10,000)
daf benefits
DAF Benefits
  • Donor doesn’t have to worry about administration of the fund
  • Fund will carry on after the donor’s death
things to clarify51
Things to Clarify
  • Does the donor mind losing control of the assets?
  • Does the charity have some kind of review process in place to ensure compliance with the terms in the deed of gift?
  • Would a private foundation be a better option?
private foundations52
Private Foundations
  • A form of charity established by a group of related people
  • Minimum of 3 directors
  • No minimum dollar amount for initial gift or any subsequent gifts
  • Administrative costs can be as high or as low as you want
private foundation benefits
Private Foundation Benefits
  • Donor can continue to control the way the foundation’s assets are invested
  • Donor can decide when and how much to donate into the foundation
  • Donor can control costs
private foundation benefits54
Private Foundation Benefits
  • Donor can bring family into philanthropy
  • Can survive donor’s death
  • Can control management
private foundation challenges
Private Foundation Challenges
  • Administration issues are not always clear – what needs to happen and when?
  • Donor isn’t always clear about what they want to support
things to clarify56
Things to Clarify
  • What’s the donor’s need for control level?
  • What kinds of assets are going to be put into the foundation?
tax credits for gifts up to 200
Tax Credits for Gifts up to $200
  • Federal Tax Credit Rate: 15%
  • Provincial credits range from 6.05% (BC) to 11% (Sask)
tax credits for gifts over 200
Tax Credits for Gifts Over $200
  • Federal Tax Rate: 29%
  • Provincial Tax Rates range from 14.70% (BC) to 18.02% (Newf.)
  • See Tax Reference Tables in ITA for specific provincial rates
what s the gift worth
What’s the Gift Worth?
  • Receipt will generally be for the fair market value of the donation
  • Must have an objective, provable fair market value
  • Must outline “eligible amount” of the gift
eligible amount of a gift
Eligible Amount of a Gift
  • Every donation has 2 parts to it:
    • The charitable (aka “eligible”) part
    • The benefit to the donor
  • Sometimes the benefit to the donor is $0
  • Receipts have to calculate the eligible amount of the gift
  • Eligible amount of the gift impacts charitable intent
value of receipt
Value of Receipt
  • Receipt can be used up to 75% of income for any given year (100% in year of death)
  • Unused receipt amounts can be carried forward 5 years, back one year if the donor dies
when a receipt cannot be issued
When a Receipt Cannot Be Issued
  • The donation doesn’t fit the legal definition of gift
  • The donor hasn’t demonstrated charitable intent (usually by failing the 80% rule)
when a receipt shouldn t be issued
When a Receipt Shouldn’t Be Issued
  • You are unable to establish a fair market value for the gift
  • The value of the donation is too small for the amount of work involved in issuing the receipt
  • Recognition is the kind of thank-you the donor receives for the gift
    • A letter
    • A plaque
    • A building named after you
  • Stewardship is the ongoing relationship the charity has with the donor
    • Lunch with the President once a year
    • Invitations to events
    • Accountability statements
    • Investment reports
things to consider
Things to Consider
  • Value of recognition can outweigh the value of the gift – if this happens, no receipt!
  • Does the donor want to be anonymous?
  • Does the donor want any relationship with the charity’s board? Staff?
who to ask for help
Who to ask for Help
  • Lawyers for info on tax, legal or estate implications of a gift
  • Accountants for info on tax or estate implications of a gift
  • Gift planners for info on whether the charity can accept a gift, the terms of the gift and the value of the receipt
things to remember
Things to Remember
  • What motivates the donor to make the gift?
  • Is the gift a one-time thing or ongoing?
  • What kind of assets will be used?
  • What kind of control is needed?
  • What will the receipt be worth, and how should it be used?
  • What kind of recognition is sought?


Linda Caisley